Maritime Liens: Unique and PowerfulBusinesses and individuals that supply goods and services to vessels may benefit from unique liens which arise to secure payment. Recognizing how and when maritime liens are created and what can be done to enforce them can result in recovery of revenue which might otherwise be hard to collect. Maritime liens do not have to be filed or recorded to be valid. This article will provide a brief overview of maritime liens and short answers to several frequently asked questions.
The United States Fifth Circuit Court of Appeal artfully described maritime liens in the case Equilease Corp. v. M/V SAMPSON as follows:
The federal maritime lien is a unique security device, serving the dual purpose of keeping ships moving in commerce while not allowing them to escape their debts by sailing away. The lien is a special property right in the vessel, arising in favor of the creditor by operation of law as security for a debt or claim. The lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds. Thus the maritime lien may be defined as a property right that adheres to the vessel wherever it may go. Such a lien has been held to follow the vessel even after it is sold to an innocent purchaser. The maritime lien is a lien on the vessel, "and only indirectly, inasmuch as it conflicts with the owner's rights in the vessel, it is connected with the owner." The maritime lien concept thus somewhat personifies a vessel as an entity with potential liabilities independent and apart from the personal liability of its owner... The Act provides a right to a federal maritime lien to "any person furnishing repairs, supplies, ...or any other necessaries, to any vessel..." ...Necessaries are the things that a prudent owner would provide to enable a ship to perform well the functions for which she has been engaged. These "things" may be money, labor and skill, and personal services as well as materials.
The Commercial Instruments and Maritime Lien Act is a federal statue which instructs that persons providing "necessaries" to a non-public vessel on the order of the owner have a maritime lien on the vessel which can be enforced through a suit in federal court against the vessel. The statutory definition of "necessaries" includes repairs, supplies, towage, and the use of a dry dock or marine railway. The term "necessaries" has also been found to include most goods or services that are useful to the vessel and keep her out of danger, including those things a prudent owner would provide to enable a ship to perform her particular function.
Questions and Short Answers
1. What do you have to prove to succeed on a maritime lien claim for "necessaries"?
To establish a maritime lien for necessaries on a vessel a plaintiff must prove (1) it provided "necessaries", (2) at a reasonable price, (3) to a vessel, (4) at the direction of the vessel's master or agent.
2. What is the time limit within which a suit to enforce a maritime lien must be filed?
There is no bright line time limit. However, a lien holder may forfeit its lien if it unreasonably delays commencing an action to the prejudice of the other party.
3. Can a maritime lien be waived?
Yes, proceed with caution because maritime liens can be waived by agreement or otherwise. Executing a lien waiver may impair your ability to recover from a vessel in rem in the event of non-payment.
Remember that a maritime lien for necessaries provides security for a claim arising out of goods and services provided to a vessel in the event of non-payment. Exercise caution if you are asked to sign a lien wavier(s) without payment in full. Initiating suit against a vessel to enforce a maritime lien as soon as reasonably possible can diffuse opposition to the lien based on undue delay and prejudice.
Article written by W. Brett Mason and Saul R. Newsome.