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Maritime and Statutory Liens: can the ‘guilty’ vessel be sold in executing a judgment?
Last Update: September, 2016

The Admiralty jurisdiction of the High Court of Cyprus can be invoked for both in personam and in rem actions. Judgments against physical or legal persons, for claims in personam or for claims in rem where the relevant person has appeared to defend the case, can be executed against all the assets of that person who is personally liable to the full extent of the claim. Nevertheless, as regards actions in rem the execution of a judgment is directed against the res in question and thus the claim is limited to the actual value of the vessel. However, the fact that a claim in rem is limited to the value of the vessel is not a deterrent factor for invoking the in rem jurisdiction. Besides, the vessel can also be sold under a writ of movables in execution of a judgment in personam since it forms part of the assets of the physical or legal person found to be liable. In any case, however, the actions in rem are mostly preferable as a mode of enforcement of both maritime and statutory liens.

‘Maritime lien’ is a concept unique to Admiralty law enforced by a claim in rem. Although there is no approved definition of a maritime lien, it has been well-established through the case in The Bold Buccleugh (1850) 13 English Reports 884 that “[a maritime lien is] a claim or privilege upon a thing to be carried into effect by legal process […] a process to make perfect a right inchoate from the moment the lien attaches […] This claim or privilege travels with the thing, into whosesoever possession it may come […].” The maritime lien is a privilege that is secret since no registration is required and indelible because it stays attached to the vessel even if in the meantime the vessel is sold to a bona fide third party; this kind of lien travels with the vessel and survives into the new ownership. It arises automatically at the moment the events, out of which the cause of action arises, take place by mere operation of the law. Admittedly, the maritime lien constitute one of the most powerful weapons of law. The maritime lien prefers a claim in the sense that the payment of such a lien always precede the payments of any other claims. Maritime liens arise immediately and automatically, so that delay is not relevant to their existence, though an unreasonable delay in their enforcement may result in the liens being extinguished.

Since the national public interests vary from country to country, different types of maritime liens are recognized in different jurisdictions. Following the English example, Cyprus has only a short list of maritime liens. These are the liens “accrue under English law” according to the decision in the case of Kamal Hassanein v The ship “Hellenic Island” (1989) 1 CLR 406, 490. The traditional maritime liens under the English, and subsequently under the Cypriot, law are the following:

  • maritime lien for damage done by a vessel (collision)
  • maritime lien for salvage
  • maritime lien for seamens’ wages
  • maritime lien for master’s disbursements
  • maritime lien for bottomry and respondendia bonds

Notwithstanding, are all the maritime liens recognized under foreign jurisdictions? The answer to this question is a bit complicated since there is no common approach. The English Court of Appeal in The Halcyon Isle [1981] AC 221 held by the majority that a maritime lien is a remedy subject to the law of the forum (lex fori) and therefore, it is a procedural rather than substantive right. In contrast, the dissenting judgment presented the view that a maritime lien constitutes a proprietary right given by way of security for a maritime claim; thus, it is a substantive right similar to the right of mortgage on the property. That dissenting view emerged from the approach of the Supreme Court of Canada. More specifically, in the case of The Ioannis Daskalelis [1974] 1 Lloyd’s Rep 174 the judges in fact used the lex fori to give effect to a foreign maritime lien. In particular, it was held that a maritime lien acquired under the law of a foreign state will be recognized and may be enforced in Canada (substantial portion) but the question of whether that lien takes precedence over respondent’s mortgage claim –or any other claim- must be determined according to the law of Canada that is the lex fori (procedural portion).

Apparently, the Canadian approach appears to be most reasonable since it is more flexible and useful. It can better strike a balance always retrieving from the prevailing circumstances of each particular case. However, in any case, the nature of a foreign maritime lien, the certainty of law within every jurisdiction and the forum shopping in case multiple courts have concurrent jurisdiction over a claim, are the three basic elements of the determination of the significance to be given to a foreign maritime lien.

Nevertheless, the idea is not the same as regards the statutory liens which constitute an entirely different concept –in contrast to the maritime lien- despite the fact they are enforced in the same way, by an action in rem. In particular, in order for a statutory lien to be enforced, the claimant must act very quickly because certain legal steps have to be taken. Particularly, delay in bringing an action in rem, thereby securing the statutory lien, will definitely prejudice the enforcement of a statutory lien since it may allow the vessel to be sold and further resold to new bona fide owner(s), thus defeating a subsequent action in rem. Consequently, if a sale is made before the commencement of proceedings, there exists no statutory lien nor the right to arrest the vessel. Thus, delay is obviously against the person who seeks recovery against the vessel. On the contrary, once the claimant issues proceedings and the statutory lien comes into existence, it identically attaches to the vessel and so although the vessel is sold, it can be arrested. A well-established principle in this respect, derives from the English decision in The Monica S [1967] 2 Lloyd’s Rep 113 where it was held that “[…] once a plaintiff has properly invoked that jurisdiction by bringing an action in rem […] he should […], despite a subsequent change of ownership of the res, be able to prosecute it through all its steps, up to and including judgment against the res, and payment of the amount of the judgment out of the proceeds […]“. This approach has been ratified by the Supreme Court of Cyprus in the case of Demetriou Pampos and others v The vessel S.S. SAPPHIRE SEAS (2000) 1 C.L.R. 1680 where the Supreme court indicated that where an action in rem is brought, the claimant can proceed in order to satisfy his claim against the res by a subsequent judicial sale of ship though a sale to a bona fide party has intervened. In particular, the eventualities forming ground of a statutory lien are those listed in article 1(1) of the English Admiralty Jurisdiction Act 1956 which is the law applicable in Cyprus by virtue of article 19(a) of the Courts of Justice Act N.14/60. At first, the judicially-established maritime liens are also included in the list of statutory liens. Further, retrieving from the aforesaid article, the most common statutory liens result out of:

  • claims to the -whole or partial- possession or ownership of a vessel
  • claims regarding to mortgages of or charges on a vessel or a share of it
  • claims for damages received by a vessel
  • claims for loss of life or personal injuries
  • claims for loss or damage to the carried goods
  • claims arising out of agreements relating to the carriage of goods in a ship
  • claims arising out of agreements relating to the use of hire of a ship
  • claims for towage
  • claims for pilotage
  • claims in relation to goods or materials supplied
  • claims in respect of the construction, repair or equipment of the vessel
  • claims falling within the meaning of general average
  • claims for forfeiture or condemnation

In principle, a vessel against which an action in rem has been brought is entrapped and cannot avoid the execution of a potential judgment for the awarded sum. Essentially, any claim brought on the basis of a maritime lien is always secured. On the counter side, however, any claim giving rise to a statutory lien must be brought very quickly in order to ensure that the lien will attach the vessel as in the case of a maritime lien. Therefore, once jurisdiction has been properly invoked enforcing either a maritime or a statutory lien, a potential awarding judgment can be executed against the guilty vessel. However, the crucial point remaining due is which claim has priority in case more than one claimants have acquired a judgment that can be executed against the vessel in any of the aforesaid ways.

Essentially, in determining the priorities over the various claims only the judgment creditors who have acquired a judgment against the res through an action in rem can claim for a priority against the proceeds of the sale of the vessel. Consequently, the judgment creditor of an in personam action cannot claim for such a priority. Identically, judgment issued by consent of the parties that has not been proven by evidence before the court, is regarded as in personam judgment even if the action had commenced in rem. This principle has been adopted by the Supreme Court of Cyprus in the case of Demetriou Pampos and others v The vessel S.S. SAPPHIRE SEAS (2000) 1 C.L.R. 1680.

Publish Date: 01 October, 2014
Antria Aristodimou Antria is an Advocate – Legal Consultant. Antria was born in Limassol. She obtained her LL.B degree from the University of Cyprus in June 2013 and her LL.M in Maritime Law from the University of Southampton in December 2014. Antria joined our firm in July 2014 ...

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