MARITIME LEIN

Introduction

• A maritime lien in admiralty law is a privileged claim upon maritime property, such as
a ship, in respect of services rendered to, works done to, or the injuries caused by that
property.
• In common law, a lien is the right of the creditor to retain the properties of his debtor
until the debt is paid.
• There are two definitions of a maritime lien:
1. a right to a part of the property in the res; and
2. a privileged claim upon a ship, aircraft or other maritime property in respect of
services rendered to, or injury caused by, that property.
Meaning of Maritime lein
➢ The dictionary definition of lien states, ‘The right to take another’s property if an
obligation is not discharged.’
➢ In simple terms, Lien means that if a person owes something to another person, the
latter can take custody of the former’s property until the debt due to him is cleared.
Even in maritime law, there exists a concept of a maritime lien.
➢ Maritime liens, in general, arise from maritime transactions and maritime accidents.
➢ A maritime lien is a privileged claim against maritime res (or property) for services
rendered or damage caused by it. The ship, its cargo, apparel, furniture, tackle, or
freight are all examples of maritime res.
➢ Though the lien is not specifically mentioned or registered; nonetheless it grants rights
against a vessel that endure the sale of the ship and that have priority over registered
mortgages.
➢ The idea that the ship is a separate legal entity from the people who own it is the
foundation for the existence of a maritime lien.
➢ The lien is created by the obligation that the vessel itself has under a contract, not by
a security interest derived from the owner's or operator's individual obligation under
a contract.
Features of Maritime lein
A few of the important features and characteristics of maritime Lien can be explained as
follows:
1. A maritime lien can be terminated if the vessel is destroyed. However, if the ship has
been demolished partially, then the Lien will still be applicable. Another way of
terminating the Lien against the person who holds the lien papers is if the marine
admiralty finds that enforcing the Lien has not been done on time.
2. The lateness in the enforcement of the maritime Lien by the lien holder to judge
whether the Lien needs to be terminated or not is decided based on the causes and
factors of the delay. There is a specified time period provided by which the lienholder
has to file the claim for the Lien
 3. The ship’s parts that come under the purview of maritime Lien are the hull, engines,
lighters, scows and tackles. The amount raised by the sale of this equipment is used to
settle the maritime Lien to the lienholder
4. The causes for a maritime lien arising are accidents to the vessel and thereby injuries
to the ship’s personnel in the oceanic waters or because of mortgage transactions. This
means that any damage caused because of the ship and indirectly because of the ship’s
equipment will invoke the application of a maritime lien
5. To claim the damages, the lienholder must take action by applying in the courts. In
case of multiple maritime Lien and shortage of funds, the claims with the highest
amount of priority get the compensation
6. A maritime lien is a complete series of legal measures to safeguard the rights of
affected parties, requiring detailed features that encompass possible issues on the
vessel. Some of these protected features under admiralty law are:
• Crew wages
• Ship mortgages (preferential)
• Pollution claims
• Charter party breach cases
• Essential maintenance, cure and supply contract claims
• Maritime tort liens
• Unpaid carrier claims
• Salvage claims

Difference between Maritime Lien and other leins

❖ A maritime lien is a very important aspect of maritime law.
❖ A maritime lien can arise even when the ship owner did not directly contract the goods
or services.
❖ Traditionally, such liens did not arise for goods or services provided in the home port
as owners were local and would possibly know the supplier, who decided whether to
furnish credit or not.
❖ However, the Federal Maritime Lien Act, enacted in 1910, offers a maritime lien to the
supplier of necessaries irrespective of the location. The US is one of the few nations
that accept a lien for “necessaries”.
❖ The fundamental difference between a maritime lien and the normally applicable Lien
is that in the case of the former, the liability of the contract falls on the ship and the
other particulars (equipment and parts) of the ship rather than the ship’s owner, as it
is the case of the latter where the person responsible is liable to pay the Lien. Briefly
put, a maritime lien assumes that the guilty party in case of a maritime problem is the
ship by itself rather than the shipowner.
❖ Also another difference between maritime liens and other liens is that the former can
only be enforced under the jurisdiction of a federal court. Interestingly, unlike other
countries, the United States is not a signatory to ship arrest conventions.
 ❖ A federal maritime lien need not be recorded anywhere, but one can register it with
the US coast guard.
How can a maritime lien be Discharged or Terminated?
❖ A maritime lien is designed to prevent the shipowner from selling the vessel with a
clear record while it is still under investigation.
❖ Thus, it is paramount that the Lien must be discharged or terminated for future sales
with a clear record.
❖ An analogy of this Lien is as follows:
o For a car involved in an accident, the car’s condition before the incident is
important for investigators. Details of past services, accidents, and owners are
also required to establish the role played by the driver (or car owner) in the
incident.
o If the vehicle is sold during the investigation, it may be difficult to trace and
resume work. The new owner might have serviced it or moved to a different
location
o Similarly, for transferring ownership of a vessel, the Lien must first be
terminated. This is commonly achieved by way of settling the claim.
❖ The owner can pay the fines, waive his ownership of the vessel, sell or auction it to the
authorities for realizing payments of the affected parties, or legal foreclosure of the
vessel.
❖ If the owner intends to pay the fines rather than auction the vessel, they must inform
the court of maritime law at the earliest.
What is Shipowner’s Lien, and How Does It Differ from a maritime lien?

• a maritime lien’s terms and legal implications have been laid down. Another commonly
used term that is often confused is the shipowner’s Lien.
• In the case of a maritime lien, the affected parties can stake a claim on the ship, with
a preference for the earliest claimants.
• In such cases, the proceeds from the vessel are used for adequate compensations. The
shipowner assumes the responsibility for the ship and is liable to meet damages.
• However, in some scenarios, the shipowner is also a claimant.
• For instance, if the shipper or maritime carrier defaults on payment for carriage of
goods, the shipowner recovers costs from the Lien on cargo or containers on board.
• “Lien” arbitrarily refers to a stake, claim, or legal right to possess cargo.
• The cargo is maintained as a form of security against possible payment defaults by the
shipper.
The Relation Between “In Rem” Litigation and a maritime lien
Rem and Personam are Latin terms used in law to indicate the party against whom the
case is brought. Rem refers to property, while Personam is against an individual and is
used to differentiate liability in judicial proceedings.
 In Rem action, it is brought against the vessel, cargo, freight, or equipment attached
to the ship (attached legally, not physically). The reason for a convoluted system of
Admiralty Law for such claims is because of the ease with which a guilty party can be
assigned.

For instance, the organizational leadership that manages a shipping company is not
comprised of a single shipowner. Instead, there are multiple individuals led by a
chairperson. Certain smaller vessels can have a single shipowner, in which case the
same “in rem” proceedings apply.
Instead of a time-intensive investigation to identify the liable shipowner and the
responsible parties, the liability is attached to the vessel. While owners and operators
might change, the ship alone remains constant and can be identified easily for legal
proceedings.
Another reason is the differing jurisdictions of the various parties involved. To prevent
responsible parties from escaping the legal system by arguing that they are outside the
jurisdiction of the admiralty court, the ship can always be held liable for the damage.
It also overcomes the issue of different registration procedures across countries.
Lastly, by bringing an In Rem a maritime lien claim, the affected parties are assured of
receiving payment either by security by the shipowner or by selling the res (the
property).

Maritime lein in India

❖ Maritime lien means a maritime claim as recognised under section 4 (1) (w) of the
Admiralty Act (2017) against the owner, demise charterer, manager or operator of the
vessel referred to in clauses (a) to (e) of sub-section (1) of section 9, which shall
continue to exist under sub-section (2) of that section;
❖ Maritime lien and its characteristics are:—
a) claims for wages and other sums due to the master, officers and other
members of the vessel's complement in respect of their employment on the
vessel, including costs of repatriation and social insurance contributions
payable on their behalf;
b) claims in respect of loss of life or personal injury occurring, whether on land or
on water, in direct connection with the operation of the vessel;
c) claims for reward for salvage services including special compensation relating
thereto;
d) claims for port, canal, and other waterway dues and pilotage dues and any
other statutory dues related to the vessel;
e) claims based on tort arising out of loss or damage caused by the operation of
the vessel other than loss or damage to cargo and containers carried on the
vessel.
❖ The maritime lien shall continue to exist on the vessel notwithstanding any change of
ownership or of registration or of flag and shall be extinguished after expiry of a period
of 1 year unless, prior to the expiry of such period, the vessel has been arrested or
seized and such arrest or seizure has led to a forced sale by the High Court.

❖ Provided that for a claim for wages and other sum due to the master, officers and other
members of the vessel, the period shall be 2 years from the date on which the wage,
sum, cost of repatriation or social insurance contribution, falls due or becomes
payable.

❖ In admiralty law, a maritime lien is a privileged claim upon sea-connected property,

such as a ship, for services rendered to, or the injuries caused by that property.

❖ In common law, a lien is the right of the creditor to retain the properties of his debtor
until the debt is paid. It is a proprietary lien where interest is about the property.

❖ It should be understood that “res” may be the vessel including its appurtenances and
equipment, the cargo, the freight or even the proceeds of sale.

❖ The rights include jus in re (right on the property) and jus in rem (right against the
property).

❖ The doctrine of maritime lien is that a ship will be treated as a wrongdoer, not the
owner, that the loss, damage or harm is caused by the maritime property, itself, and it
has to make good for the loss.

❖ The attachment of maritime lien will start when the cause of action arises and will not
be eliminated even by change of ownership in a good faith purchase.

❖ Two significant differences between maritime liens, which only exist in admiralty law,
and the right to keep that exist in general civil law are that in general civil law, "Prior
in time is prior in right", i.e., the rights of the lien holder with the earliest lien are
superior to those of later lien holders, whereas in maritime law the rights of the most
recent lien holder are superior, and all maritime liens are superior to all non-maritime
liens.
❖ Fraudulent companies often front a shipper who is incapable of payment. Once the
voyage is complete, they default on payment and claim bankruptcy. To prevent the loss
incurred by the shipowner, the shipowner’s Lien empowers them to use cargo as
security. This is the primary difference with a maritime lien.
❖ In some countries, the shipowner’s Lien is not used, and only a maritime lien is
applicable for claims by both affected parties and the owner.