Maritime Liens
The Admiralty
jurisdiction of the Supreme Court of Cyprus can be invoked for both in personam and in rem actions. Maritime liens constitute a prominent category of
actions in admiralty law and are enforceable by a claim in rem which enables the arrest and seizure of the vessel, by an
order of a competent Court, in satisfaction of the claims against her.
Definition and recognised maritime liens
Although there
is no approved definition of a maritime lien, Cyprus courts followed the
English case of The Bold Buccleugh (1851)
7 Moo PC 267, thus interpreting a maritime lien to mean a privileged claim
over a vessel or other maritime property. In particular, it is a right which
accompanies the vessel into whose soever possession she may subsequently pass;
it stays attached to her and may be invoked against her even if sold to a bona fide purchaser, no matter whether
that purchaser was aware of the claim or not. The ratio is that the vessel is
considered liable to pay for the wrong she has done irrespective of her owner. A
maritime lien requires no registration. It arises by operation of law at the
moment when the incident giving rise to the cause of action occurs.
Different
jurisdictions recognise different types of maritime liens. As it is the case
with English law, maritime liens are recognized by Cyprus law for the following
categories of claims:
·
Bottomry
·
Salvage
·
Master and seamen’s wages
·
Disbursements and liabilities
·
Damage done by a vessel.
A maritime lien
is a right of a procedural nature that depends on the remedies available in the
country where relief is sought, and as such it is subject to the law of that
country (lex fori). Accordingly, in
determining the existence of a maritime lien the Cyprus courts will apply
Cyprus law (lex fori), and even where
a maritime lien seems to exist under a different law (e.g. the lex loci contractus) the Cyprus courts
will not recognise it.
This was the
case in Hassanein v The Ship Hellenic
Island and Another (1994) 1 C.L.R. 578, where the Supreme Court did not
accept the submission that, a claim under a contract for the supply of
bunkering fuel, which was considered as a maritime lien under Egyptian law (lex loci contractus), could be recogni0073ed
as a maritime lien under Cyprus law (lex
fori) and accordingly it ranked below the claim of the mortgagees.
Priorities among various claims – the relation to
the statutory liens
Several claims
may be brought against the same vessel. However, the proceeds of a judicial
sale of a ship are not shared equally between all privileged claimants because
a priority in ranking of maritime liens and other claims exists. Although the
courts have an inherent discretion to vary the ranking of priorities on the
basis of equity and natural justice (Tramp
Oil and Marine Ltd v The Ship Pigassios (1989) 1 CLR 46), the following
ranking has been developed through case law:
1.
Marshal’s expenses
2.
Salvor’s Lien
3.
Damage done by a vessel
4.
Master’s and crew’s wages
5.
Bottomry, i.e. the use of a ship
as security against a loan to finance a voyage
Generally,
maritime liens enjoy certain advantages over statutory liens which constitute
an entirely different concept and which are enforceable against the vessel only
after instituting an action in rem.
For example, a mortgage is a special type of statutory lien and as such ranks
below maritime liens. Even though the validity of a mortgage is determined
according to the law of the country in which the mortgage is registered,
priority must be decided according to Cyprus law (see Commercial Bank of the Near East Ltd v The Ship Pegasus III (1978) 1
CLR 597).
Similar is the
case with necessaries which create a statutory lien. According to Cyprus law,
necessaries rank even below mortgages. In the case of Pilefs Ltd and Others v Commercial Bank of the Middle East Ltd (1983) 1
CLR 376, despite the fact that the necessaries were supplied to the vessel
before the registration of the mortgage, the mortgage gained priority over the
necessaries as an action for them was instituted long after the mortgage was
created and the statutory lien did not attach to the vessel until that time.
As it regards
cargo claims, it is established that these carry no maritime lien and rank in
priority after all mortgage claims (see Nordic
Bank plc v The Ship Seagull (1989) 1 CLR 420). Finally, a ship repairer
having physical possession of the ship may have a possessory lien over it and a
right to proceed in rem against it. In principle, a possessory lien has
priority over a mortgage even if the mortgage was executed before the
assumption of possession. However, the position in priority of a ship repairer
will be much worse if possession is given up and the mortgage will prevail.
Essentially, a
maritime lien is always secured in contrast to a statutory lien which only
comes into existence upon the commencement of proceedings. Particularly, if the
ship is sold before an action is brought a maritime lien will still be capable
of enforcement, whilst an action in rem
in relation to a statutory lien subsequent to the sale will be defeated. Therefore,
a delay in bringing an action can prejudice the enforcement of a statutory
lien. The Supreme Court in Demetriou
Pampos and others v The Vessel S.S. Sapphire Seas (2000) 1 CLR 1680 ruled that
if an action in rem is brought the
plaintiff can proceed in order to satisfy his claim against the res by a subsequent judicial sale of the
vessel even though a sale to a bona fide
purchaser has intervened. What remains always important however, is which claim
has priority in case where various claims exist against the vessel.
The content of
this article intends to provide a general guide to the subject matter.
Specialist advice should be sought on your specific circumstances. For further
information, please contact Andreas Lytras at [email protected]