Liens
A maritime lien is a very different concept from a consensual land lien.
The maritime lien arises out of contract or tort. Only certain types of
maritime claims can give rise to a lien and the parties cannot by agreement
modify the status of a claim. The maritime lien can only be foreclosed,
or "executed" in maritime parlance, by an admiralty court acting in
rem. Priority among the same class of competing maritime liens is
determined by the time of their attachment but in inverse order: last
in time is first in right. The maritime lien is often referred to as "secret"
or "hidden" because it depends neither on possession nor notice through
filing (with the exception of the preferred ship mortgage which is statutory).
It is also said to be "indelible" because since it can only be executed
by an admiralty court acting in rem it is valid against the whole
world, including a bona fide purchaser of the vessel without regard to
even bankruptcy or reorganization.
Aside from the obvious way of extinguishing a maritime lien by paying
the underlying claim, a lien can also be extinguished by laches. The in
rem decree of an admiralty court following a judicial sale extinguishes
all liens regardless of whether a claimant has participated in the proceeding.
As we have seen earlier, the demise charter places the ship in the custody
and control of the charterer. The question then arises as to the effect
on the ship of actions by the charterer which may or may not be authorized
by the owner. The law seems to be settled on this point in that the ship
itself is to be treated as a principal, and as personally liable for the
negligence of anyone who is lawfully in possession of her.
a claim needs to be maritime in nature to give rise to a lien. This brings
us back to the section on jurisdiction, i.e. what types of structures
are deemed vessels, which contracts are maritime, which torts are maritime.
Once again, it must be stated that it is not possible to provide an exhaustive
list. A tentative rank of liens, however, can be the following:
1) Seamen's claims for wages. As Justice Gray wrote in the John
G. Stevens, "sacred liens, and, so long as a plank of the ship remains,
the sailor is entitled, against all other persons, to the proceeds as
a security for his wages.";
2) Salvage;
3) Tort. This includes both collision and personal injury claims;
4) General Average. The lien can be in favor of the vessel against
cargo or the other way around;
5) The preferred ship mortgage. As we have seen, lien status is
given by statute;
6) Supplies and repairs;
7) Towage, wharfage, pilotage, stevedoring and related services;
8) Cargo damage caused by improper loading, stowage and custody;
9) Ship's claims against cargo for unpaid freight;
10) Charter party breach either by the owner or the charterer;
11) Claims for marine pollution.
The Maritime Lien Act was enacted by Congress in 1910 and amended
in 1920 with further amendments in 1971. The Act consists of
five sections also issued as Sections 971 to 975 of Title 46 of the United
States Code and it clarified some issues that had created confusion in
the case law up to the enactment of the law. Section 971 provides that:
"Any person furnishing repairs, supplies, towage, use of dry dock
or marine railway, or other necessaries, to any vessel, whether foreign
or domestic, upon the order of the owner of such a vessel, or of a person
authorized by the owner, shall have a maritime lien on the vessel, which
may be enforced by suit in rem, and it shall not be necessary to allege
or prove that credit was given to the vessel."
Section 974 provides that liens can be waived "by agreement or otherwise"
and then adds that "this chapter" shall not be construed to affect existing
rules with respect to (a) advances; (b) laches; © actions in personam;
(d) lien priorities; (e) priorities between maritime liens and mortgages
other than preferred mortgages under the Ship Mortgage Act.
Section 975 attempts to clarify the issue of state statutes as follows:
"This chapter shall supersede the provisions of all State statutes
conferring liens on vessels, insofar as such statutes purport to create
rights of action to be enforced by suits in rem in admiralty against vessels
for repairs, supplies, towage, use of dry dock or marine railway, and
other necessaries."
The Maritime Lien Act in 1920 was amended and reenacted as part
of the Ship Mortgage Act. We have already discussed
preferred ship mortgages under the section on sale of vessels. What needs
to be pointed out at this juncture is that Section 974 does not effect
".......the rules of law existing on June 5, 1920, in regard to (4) the
rank of preferred maritime liens among themselves, or (5) priorities between
maritime liens and mortgages, upon vessels of the United States."
The statute of limitations for lien based claims must be noted here.
Damage claims for damage brought by cargo which moves under Cogsa
bills of lading must be commenced within one year from the date of delivery;
the Salvage Act of 1912 requires salvage claims to be brought
within two years of the act of salvage; actions for wrongful death under
the Death on the High Seas Act or under state legislation must
be brought within two years for the Federal Act and the state statutory
period; suits against the United States under the Suits in Admiralty
Act must be brought within two years after the accrual of the cause
of action. While other maritime claims are not directly subject to a particular
statute of limitations they may be barred by laches. The admiralty court
will look at what it considers the applicable local or foreign statute
of limitations.
A libel in rem or in personam brought after the state statute of limitations
would have expired for a state action will not be automatically dismissed
by the admiralty court. The court will instead consider the extent of
the delay and the degree of prejudice to the defendant.
The execution of a lien by in rem decree is one of the examples
of the unique character of admiralty law. As was noted earlier, only an
admiralty court acting in rem can divest liens by a judicial
sale. A maritime lienor may have the ship arrested by filing a libel
in rem in any district in which the ship is found. The Marshall will
then take the ship into custody. Notice of the libel must be given by
publication so that other claimants may intervene. If the ship is not
released on a stipulation for value and a judgement in favor of one or
all of the libellants becomes final, the ship will be sold on order of
the court. As was noted earlier, such a sale will extinguish all liens.
The owner of the ship which is libeled in rem may have the vessel
freed by posting a bond. The release of a vessel from arrest is governed
by 28 U.S.C.A. ß 2464 and by the former Admiralty Rules.
