Maritime Lien in the United States

Maritime Lien Definition and Description

See Lien.

A right against a vessel arising out of certain maritime contracts and maritime torts. Claims that are subject to maritime liens include the wages of a seaman, a bottomry loan (in U.S. law), a respondentia (in U.S. law) loan, repairs and supplies to vessels, affreightment contracts (in U.S. law), tort (in U.S. law) and collision claims, towage (in U.S. law), wharfage (in U.S. law), stevedore services, salvage (in U.S. law), general average loss (in U.S. law), and pilotage.

One having a maritime lien can sue the ship itself in rem and, if successful in the litigation, can cause the ship to be sold and the purchase moneys applied to one’s claim. The proceeding in rem is begun by the seizure of the vessel by the marshal of the district in which the suit is brought.

Unlike the common law lien (in U.S. law), the possessor of a maritime lien does not have to retain possession of the object (the vessel or cargo) to retain his or her claim. The lien on a ship and the right to proceed against it will remain even if the ship is sold to another. Only a sale by a United States marshal will strip the vessel of its liens.

(Revised by Ann De Vries)

For other meanings of it, read Maritime Lien in the Legal Dictionary here.

History of Maritime Lien in the United States

The codification of maritime lien law

The civilian heritage of American maritime law may also be seen in the drafting of U.S. legislation (46 U.S. Code, Chap. 313) governing maritime liens and ship mortgages, now generally known as the “Commercial Instruments and Maritime Liens Act” or the “Maritime Commercial Instruments and Liens Act” (46 U.S. Code 30101, 31301-31309, 31321-31330, 31341-31343, approved November 23, 1988 and in force January 1, 1989, and also sometimes referred to under older names, such as the “Federal Maritime Liens Act” or the “Ship Mortgage Act of 1920 as amended”).

Corresponding statutes in other common law countries, such as the United Kingdom and Canada, do not specify what types of maritime claims give rise to maritime liens. They merely list the various maritime claims over which the Admiralty Court has jurisdiction (see Supreme Court Act 1981, U.K. 1981, c. 54, sect. 20(2)(a) to (s) and Federal Court Act, R.S.C. 1985, c. F-7, sect. 22(2)(a) to (s)). Nor do those statutes mention any order of ranking of the various maritime claims falling within Admiralty jurisdiction.

By comparison, the United States statute defines the different types of claims which constitute “necessaries” and “preferred maritime liens” (46 U.S. Code sect. 31301(4) and (5)) and declares expressly that providing “necessaries” to a ship gives rise to a maritime lien enforceable by a civil action in rem (46 U.S. Code sect. 31342(a)). In addition, the ranking of both preferred and contract maritime liens and ship mortgages is provided for at sect. 31326. American therefore has a virtual codification of its maritime lien law (although the statute does not define the term “maritime lien”). This codification closely resembles that of civilian jurisdictions such as France, which, by its Law no. 67-5 of January 3, 1967 (J.O. January 4, 1967, p. 106), also states expressly what claims give rise to maritime privileges (art. 31) and provides an order of ranking (arts. 32, 33, 37 and 38).

Maritime liens are rights

It is not surprising that maritime liens, codified in the U.S. legislation as they are in civilian countries such as France, are regarded as substantive rights in American maritime law.

In the United Kingdom and many British Commonwealth countries, a very different understanding prevails. There, the right exists only because the court has jurisdiction over the claim. This view, reflected in the mode of drafting of the applicable statutes, is very deep-seated, harkening back to the long centuries of conflict between the Admiralty and common law courts in England and the historic common law preoccupation with forms of action. Neither civilian countries nor America experienced those conflicts or that fixation.

In consequence, one does not look to the statute to find what maritime liens are recognized in the U.K. or Canada, as one does in the U.S. Rather, one must look primarily to the case law of the old High Court of Admiralty and its successors to ascertain the six traditional maritime liens recognized in those jurisdictions (seamen’s and masters’ wages, masters’ disbursements, salvage, damage, bottomry and respondentia).

Moreover, the U.S. is very civilian in conferring full maritime lien status on many claims which in British Commonwealth countries are secured by only a statutory right in rem (notably, claims for necessaries, general average contributions, and contract maritime liens for cargo damage and breach of charterparty).

Liens on cargo for demurrage without contract

Traditional English common law and Admiralty law granted the carrier a possessory lien on cargo for freight (i.e. a right to retain the cargo on which freight was payable at delivery as long as it remained in the carrier’s possession, until the freight owing upon it was paid in full). The carrier’s lien was limited to freight, however, and did not extend to other claims, such as demurrage, unless the charterparty or bill of lading expressly conferred such a lien on the carrier. (Demurrage is really liquidated damages payable for delay in loading or discharging cargo beyond the “laytime” allowed for these operations under the charterparty.)

Civilian maritime law, on the other hand, did not require the carrier’s right of retention of cargo for unpaid demurrage to be expressly granted by contract, but recognized its existence as part of the general maritime law. It was the civilian rule that was accepted in the United States. Lowell D.J. in The Hyperion’s Cargo 12 Fed. Cas. 1138 (No. 6987) (D. Mass. 1871), aff’d sub nom. Donaldson v. McDowell 7 Fed. Cas. 887 (No. 3985) (D. Mass. 1873), after reviewing the French commercial code and referring to the writings of civilian authors including Valin and Pardessus, and also taking note of the Rôles of Oléron, concluded:

“My own conviction is that the privilege of the ship-owner in the admiralty is not limited by the master’s lien at common law, but depends on the law- merchant, and that by the law-merchant the privilege extends to all charges, damages and expenses arising out of the affreightment.” (12 Fed. Cas. at p. 1139).

The general maritime law rule on this matter was codified at sect. 25 of the Pomerene Act of 1916 (formerly 49 U.S. Code sect. 105), recodified in 1994 as the U.S. Bills of Lading Act (49 U.S. Code sect. 80101 et seq.). Sect. 80109 now provides in pertinent part:

“Liens under negotiable bills
“A common carrier issuing a negotiable bill of lading has a lien on the goods covered by the bill for —
(1) charges for storage, transportation, and delivery (including demurrage and terminal charges), and expenses necessary to preserve the goods or incidental to transporting the goods after the date of the bill; …”

The U.S. carrier is thus protected as regards all costs of the shipment, even if the contract of carriage is silent, although in practice American bills of lading and charterparties usually provide for the carrier’s lien to encompass all such expenses.

Also, the carrier in the U.S. may enforce his lien for freight by in rem proceedings, a right not available in British Commonwealth jurisdictions such as the U.K. and Canada, where only the carrier’s cargo lien is purely possessory. Again, American maritime law resembles the law of France, where the master (as representative of the carrier) enjoys a privilege on cargo for freight for fifteen days after delivery (Law of June 18, 1966, art. 23), which privilege is enforceable at law (Decree of December 31, 1966, art. 53).

A similar possessory lien for charter hire exists under the general maritime law of the United States, which, in the words of Justice Clifford in The Bird of Paradise: “…arises from the usages of commerce, independently of the agreement of the parties, and not from any statutory regulations.” (72 U.S. (6 Wall.) 545 at p. 555 (1866)). No such lien exists without a contractual stipulation in the U.K. or Canada, however, but a corresponding privilege is recognized in France (Law no. 66-420 of June 18, 1966, art. 2), which privilege is also enforceable by civil action (Decree no. 66-1078 of December 31, 1966, art. 3).

The collision lien

A second major contribution of the common law to Admiralty law is the tort lien. A maritime lien was recognized as arising from collision damage done by a ship, at least by the time Sir John Jervis decided The Bold Buccleugh in 1851 ((1851) 7 Moo. P.C. 267, 13 E.R. 884 (P.C.); see also Gorrell Barnes J. in The Ripon City [1897] P. 2226 at p. 242, who referred to a maritime lien arising out of service done to a ship or “injury caused by it”). The Admiralty Court’s jurisdiction was extended to damages done by a ship by the Admiralty Court Acts of 1840 (3 & 4 Vict. c. 65, sect. 6) and 1861 24 & 25 Vict., c. 10, sects. 7 and 35). Not only property damage, but bodily injury claims as well were covered by the jurisdiction and the lien (see The Sylph (1867) L.R. 2 A. & E. 24). The lien has proven especially beneficial in the twentieth century in cases of marine pollution (see The Eschersheim [1976] 1 Lloyd’s Rep. 81 (C.A.), upheld [1976] 2 Lloyd’s Rep. 1 (H.L.)).

Traditional civil law, however, could not accept the concept of a privilege arising out of delict, because civilian privileges were purely contractual in nature (see the Ordonnance de la Marine, 1681 and the Code de Commerce of 1807, neither of which contemplated a delictual privilege). The frequency of marine collisions and allisions, however, made the English tort lien an attractive aspect of the common law, which civilians eventually realized to be a useful addition to their own maritime law, because it gave the injured party a recourse against the ship itself (Rodière, Le navire, Dalloz, Paris, 1980 at para. 146 saw the incorporation of the common law maritime tort lien into the Mortgages and Liens Convention 1926 as a welcome addition). France first enacted a maritime privilege for damage in 1949 (Law no. 49-226 of February 19, 1949, J.O., February 20, 1949 at p. 1890) and has retained that right under its present Law. no. 67-5 of January 3, 1967 at art. 31(5)).

The Maritime Liens and Mortgages Convention 1926 (art. 2(4)) granted maritime liens for both personal injury and material damages done by ships, which liens are also recognized in the 1967 Convention (art. 4(1)(iii) and (iv)) and the 1993 Convention (art. 4(1)(b) and (e)).

The United States had no difficulty with the maritime tort lien, because it fit so neatly into the “personification theory” of maritime liens which has always flourished in America (W. Tetley, Maritime Liens and claims, 2 Ed., 1998 at p. 53 and authorities cited there). As Gray J. held in The John G. Stevens (170 U.S. 113 at p. 120 (1898):

“The foundation of the rule that collision gives to the party injured a jus in re in the offending ship is the principle of the maritime law that the ship, by whomsoever owned or navigated, is considered as herself the wrongdoer, liable for the tort, and subject to a maritime lien for the damages. This principle,…has been more clearly established, and more fully carried out, in this country than in England.”

The U.S. early on abandoned the distinction between torts arising on the High Seas and those arising within the ebb and flow of the tide, a “hangover” from the old limitations on English Admiralty jurisdiction (The Genesee Chief 53 U.S. (12 How.) 443 (1851)). Nor did America have difficulty extending the lien to cover oil pollution damage in the twentieth century (State of California v. S.S. Bournemouth 307 F. Supp. 322, 1970 AMC 642 (C.D. Cal. 1969). American judges have also taken an expansive view of the lien, applying it not only to ship damage, personal injury and death claims, damages to port installations and waterways, but also to such claims as conversion and governmental wreck removal and pollution clean-up (see W. Tetley, Maritime Liens and Claims, 2 Ed., 1998 at pp. 396-398 and decisions cited there). The Commercial Instruments and Maritime Liens Act confers a “preferred maritime lien”, outranking even ship mortgages, for all “damage arising out of maritime tort” (46 U.S. Code sect. 31301(5)(B) and 31326(b)(1)).

By William Tetley, Q.C.