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Admiralty 03.02 02/03/2010 15:01:00

[Beginning @ 46:05 with maritime liens]

MARITIME LIENS

- from Gilmore and Black, reading about law of maritime liens

law of maritime liens has been plagued by an inept terminaolgy andoverdose of theory and a failure to abide by Holmes admonition that general

proposition

- a maritime lien is not a lien at all in the common law sense of the

term

- a consensual dry land lien has the following characteristics:

it is a interest in a debtors property held by a creditor to secure

repayment of a debt contractual in origin

lien holder may only foreclose after debtor has defaulted on the

principal

foreclosure may be had by legal process or extralegal action taken

by the creditor himself (repossession)

priority among competing liens goes according to time at which

attached, first in time takes priority

validity of most liens against 3rd persons depends on the

lienholders taking possession fo the collateral or filing public notice

of the lien (to make good against the world, the creditor must

either have possession fo property ro file notice of lien in publicrecords)

Land liens may be voluntary or statutory

Maritime lien

- arises out of K or tort

- parties cannot confer lien status on a claim by agreement; can only

get where law provides

- in case of tort liens, no credit period, no concept of default

except for preferred shipment, K (couldnt understand)

- maritime lien can only be executed (foreclosed upon) by admiralty

court acting in rem

- priority: among liens of same rank, last in time is first in right

(opposite0

- validity: depends neither on possession or notice being filed

(therefore sometimes called a secret lien also referred to as indelible @

50min); lien is good against the world

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- the mere fact that we are studying maritime liens, means that we

are studying something uniquely maritime

Look on p. 171, see a list of claims that give rise to maritime liens:

1. Lien law varies from country to country; the US probably has the

widest variety of claims that give rise to maritime liens

there are arrest and lien conventions but have not and will not be

adopted in US

Why are liens important?

Bc allow you to arrest the property (obtain jurisdiction and get

security for claim)

More importantly, claims secured by liens have very hi priority

among creditors

o Lien claimants have a higher priority and even within the lienclaims themselves there is a certain priority

o So whether or not creditor will get paid depends greatly on

whether have a lien and where in the priority spectrum the

lien falls in

What is a maritime lien in terms of legal theory?

The question whether or not this comes from old roman law.by

and large our courts dont worry about this much

The Brig Nester (263)

Justice Story puts in his two cents about the derivation and source

of maritime liens.but there are disagreeing scholars

Doesnt appear worth reading because thats all he said about it

The Bold Buccleugh (p. 263)

Facts: Have a collision between a vessel owned by A and a vessel

owned by B. An action is commenced by A against B. Result of

which the property of B is seized. Ultimately the property is

released and B sells the vessel to C. A then has the vessel

arrested. C comes in and contests.

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Reasoning: The first action (seizure) was merely an attachment,

not an action to execute the lien. Therefore, the seizure did not

strip the vessel of the lien. (remember if vessel is sold by judicial

sale, all liens remain attached; different from sale of vessel under

arrest, in which all liens stripped). The court said that A has a

maritime lien resulting from the collision with B, the tortfeasors.

That lien remained until it was discharged. Therefore the mere fact

that there was a prior proceeding or the fac that thtere was a sale

to a g.f. purchaser for fair value does NOT destroy the lien

The lien is a secret lien because not based on possession or filing in

public records

This means if you are engaged in the sale of a used vessel, you

must be very very careful about finding out whether or not there

are any liens on the vessel (because will greatly affect the vessels

value).

There are limited circumstances in which a lien will be lostone ofthe circumstances is laches (if the P waits too long to assert the

lienesp if in the interim 3d parties have intervened and would be

disadvantaged)

o In looking at laches, must look at the practices in the industry

to see if P has waited too long to assert the claim

o

The Brig Malek Adhel

Facts: The D. Ct of MD issued a decree of seizure of BMA for

violation of an anti-piracy act. Cir Ct affirmed. Between the July 6

and August 20, the crew was accused of engaging in pirate

aggression but the owners were innocent.

Issue: Whether the owners can be faulted by the vessels violation

of the anti-piracy statute?

Reasoning: Act makes no exception for aggression made without

cooperation of woners.

Force: Under US law, ships engaged in piractical acts are subject

to forfeiture. Here, the ships master was acting as pirate withoutcooperation of the ships owner. This is based on the idea that the

ship commits the wrong; product of the personification of vessels.

A ship is responsible for its torts and Ks and in this particular case,

the owner says that had nothing to do with the ships piracy. Ct:

We are not holding the ships owner personally responsible for the

piratical acts; but are holding the ship responsible. Therefore ship

owner has no complaint.

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What about the cargo of the vessel? When one has a lien against a

vessel, do you have a lien against the cargo?

No, when there is Congressional silence as to the cargo, dont

presume that it is involved

If there is a collision between As vessel and Bs vessel and B is at

fault, then innocent cargo on Bs vessel not subject o lien

Can there be liens against cargo? Yes, for ex, where the shipper

has not paid freight or where a salvor saves the vessel and the

cargo (then salvor would get lien against both). May get lien

against cargo for general average

But generally, where the ship is subject to a lien pursuant to a tort

commited by a ship or a breach of contract committed by a ship,

then no lien against cargo.

Notes post case

Maritime liens only attach to vessels Vessels considered to consist of the hull, tackle, apparel and

furniture (i.e. component part included; component parts = things

attached to vessel so as to become an intergral part of it)

Maritime lien attaches to component parts of vessel even if the

component parts are owned separately.

Accessories = things placed on a vessel for its completion or

ornamentation, but not attached so as to become an integral part of

it

o When accessories belong to vessel owner, then subject to any

liens placed on vessel

o When not owned by shipowenr, then courts tend to apply the

common-law rules developed with respect to Fixtures

o Accessories belong to a vendor under a conditional sale are

reached by maritime liens on vessel

Leased things

o Maritime liens do not attach to leased things such as radio

equipment, fishfinders, wireless equipmento Lease equipment DOES not beome subject to a preferred ship

mortgage even if it could become subject to traditional

maritime liens.

Cargo, etc

o Cargo maritime lien doesnt attach

o Prepraid freight = no lien

o Unpaid seamen however may have a lien for wages on earned

freight.

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