Maritime Liens

• Author: Edgar Gold; Aldo Chircop; Hugh M. Kindred; William Moreira
• Pages: 360-392

360

CHA PTER 9

MARITIME LIENS

A. INTRODUC TION

If a ship is a commercial vessel, the shipowner may also need to f‌inance

its operations, or to upgrade it from time to time. As discussed in Chap-

ter 8, a mortgage is a consensual security interest in the ship as mari-

time property given by the shipowner, as mortgagor, in return for a loan.

From the moment the f‌irst keel plate is laid for a ship in the shipyard

and throughout its life, the ship will have numerous responsibilities in

contract, tort or by statute. Once operational, the ship may be chartered

or sub-chartered. It will need to be supplied regularly and repaired or

upgraded as needed. Its owner or charterer will sell its cargo and passen-

ger space. The ship is capable of causing unforeseeable damage through

collision or otherwise. Persons may suffer fatal accidents or personal

injuries while on board. No one can forecast where the ship may need

unexpected assistance from strangers when encountering perils of the

sea. The ship will need to be berthed, docked, use pilots or pass through

a canal, and thus incur charges on a regular basis. All these events in the

life of a ship translate into various charges against the ship, most notably

maritime liens, possessory liens or statutory rights to proceed in rem that

may be claimed against the vessel, its owners, and its operators.

For creditors or claimants, many risks arise from the international

nature of the ship’s business. The ship is mobile property, moving from

jurisdiction to jurisdiction, across what may be very different legal sys-

tems. The ship may incur liabilities or be used as security in different

Maritime Liens 361

ways. The security, perhaps in the form of mortgage, hypothec or lien,

may be enforceable in different ways from one jurisdiction to another.

Also, the ship can easily leave the claimant’s jurisdiction to avoid paying

a claim. As a result, the claimant may have no choice but to institute

proceedings against it in the f‌irst available jurisdiction to arrest it. The

owner of the ship is not always known, his f‌inancial standing may be

equally unknown, and the courts of the country of registry may be in-

eff‌icient or too expensive to approach, and have no means of enforcing

the claim against the owner or the ship in any event.

Where the creditor is in a position to enforce his claim, he may well

do so through an action in rem that can lead to the arrest and then the

judicial sale of the ship. The proceeds of the judicial sale will then be

subject to a process of equitable distribution.

B. L IENS

Special tools have been devised since early days to protect persons and

property that have come into contact with a ship and have suffered dam-

age or incurred expense thereby. The lien in a maritime context is one

such tool. It emerged in a civilian context and was adopted and further

developed in English maritime law. It was then inherited by Canada as re-

ceived law from England and applied to its own maritime policy context.

For many Commonwealth countries, the law of liens is generally very

similar, if not identical, to that prevailing in the United Kingdom. The

common law has played an important role in shaping liens and the rem-

edies they provide. Also, in many modern states, including the United

States and Canada, legislators have intervened in the maritime domain to

create certain privileges for government and many statutory bodies pro-

viding services to ships. New liens and rights of action for creditors have

also been established. This diversity enriches, but also complicates the

law of liens, especially considering that very often the ranking of claims

and distribution of limited proceeds from the sale of a ship will include

claims from different jurisdictions where debts have been incurred by a

ship as part of its international business. Similarities aside, there are also

many important differences in the law and practice of liens, including

differences in the substantive rights, remedies, ranking of claims, and

limitation periods applicable to claims that are advanced.

Even the concepts themselves do not lend themselves to easy trans-

lation or interpretation across different languages and legal cultures.1

1 See Jean Claude Gémar, Traduire ou l’art d’interpréter — Langue, droit et société:

PART III: SHIP OWNERSHIP, FINANCING, INSURANCE, AND CREWING362

Translations at times use mortgage in English and hypothèque in French

(hipoteca in Spanish) as equivalents despite the subtle differences2 be-

tween the concepts. In one old case, an English court equated the French

hypothèque to the maritime lien in English law.3 Courts have also typical-

ly ranked maritime liens ahead of mortgages. It is no wonder that the

discourse on this subject is one of the most voluminous in international

maritime law and practice.

The international maritime community has over decades been very

conscious of the need for international uniformity in securities over

ships and how they should be enforced. After all, this subject is essential

for the f‌inancing of all aspects of the maritime adventure, and without

which international seaborne trade could not prosper. Whereas histor-

ically international consistency was promoted primarily through cus-

tomary law and comity among nations, in more modern times attempts

at promoting uniformity have been undertaken through a process of

unif‌ication of rules by way of treaty law. There have been three such at-

tempts focusing on liens: the International Convention for the Unif‌ication

of Certain Rules Relating to Maritime Liens and Mortgages, 1926,4 the In-

ternational Convention for the Unif‌ication of Certain Rules of Law Relating

to Maritime Liens and Mortgages, 1967,5 and the International Convention

on Maritime Liens and Mortgages, 1993.6 Of the three conventions on

liens and mortgages, only the 1926 convention ever came into force.

Canada is not a party to any of these conventions.7 More recently there

have been attempts, through the International Institute for the Unif‌i-

cation of Private Law (UNIDROIT), to produce a uniform set of rules

for interests in mobile equipment that resulted in the 2001 Cape Town

Convention on International Interests in Mobile Equipment, commonly re-

ferred to as the Cape Town Convention. In the end, marine equipment

was not covered in that convention, although aircraft, space assets, and

railway rolling stock were included. As a result, the interests in ships

Élements de jurilinguistique, vol 2 (Sainte-Foy, QC: Presses de l’Université du

Québec, 1995).

2 Gemma Capellas-Espuny, “The Problem of Terminological Equivalence in Inter-

national Maritime Law” (1999) 3(3) Translation Journal.

3 Colorado (The), [1923] P 102 (CA) [The Colorado].

4 10 April 1926, 120 LNTS 187.

5 27 May 1967, SD No 12 (1967) 3.

6 6 May 1993, 2276 UNTS 39 [Maritime Liens and Mortgages Convention].

7 Canada has not always become party to conventions it supports. For example,

Convention on Limitation of Liability for Maritime Claims, 1976, 19 November 1976,

1456 UNTS 221; Athens Convention Relating to the Carriage of Passengers and their

Luggage by Sea, 1974, 13 December 1974, 1463 UNTS 20, which are implemented

through the Marine Liability Act, SC 2001, c 6 [MLA]; see Chapter 22.