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Time charterers and maritime liens

If a bank exercises its ship mortgage maritime lien and arrests a vessel for owner’s default, then a time charterer as provider of bunkers and having paid for them, might want bunkers to be excluded from arrest. In The Marine Princess [2022] charterers contended that they had a maritime lien over the bunkers. There were challenges.

Bank of America had the vessel arrested in US and it was to undergo judicial sale. The time charterers claimed they too had a maritime lien, for two reasons – (a) they bought the bunkers, owned them and under US law there is a lien for necessaries; and (b) owner’s failure to fulfil the obligations set out in the charter party constitutes a breach of a maritime contract, giving rise to a maritime lien on the vessel in US. There was a lien clause in C/P allowing charterers to have a lien on the ship under certain circumstances. C/P was subject to English law however and the bank argued that English law does not recognize such maritime liens.

The US Court said that the clear distinction between U.S. and English law on maritime liens is significant. English law does not provide for a maritime lien with respect to claims for breach of C/P and for necessaries such as bunkers, whereas US law does. C/P was governed by English law here. Even if the US law had applied, the Court said that:

  • Charterers would not have a lien over bunkers since it would be contrary to the purpose of allowing bona fide bunker suppliers the protection of a maritime lien.

  • Bank’s mortgage lien would have outranked charterer’s lien (if they had any).

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