IX) 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. § 2464 and by the former Admiralty Rules.

Return to Table of Contents