If there is an accident at sea or if there is lost cargo, the injury victim or the cargo owner can sue for damages. Often times, if the litigation is successful, the litigant will gain a maritime lien against the vessel. Because the lien is on the vessel itself, the lien travels with the vessel. Therefore, if the vessel is sold, the lien travels with the vessel and the litigant will have a lien on the vessel despite the vessel having a new owner.
A maritime lien can also be given in favor of those who work on the vessel. People who provide services, if not paid, can gain a lien on the vessel as well. On a cruise ship, for example, the wait staff can attain a lien if not paid. Engineers and others that perform work for the vessel can get a lien if not paid. A person who fuels the ship has an automatic lien against the vessel until paid.
The lien attaches not only to the ship but to the equipment, as well. A lien will apply to the cargo of a ship until the cargo is delivered. At that time, the lien is extinguished against the cargo. In this way, the lien against the cargo is a “floating” lien.
A maritime lien is called a silent lien because the lien does not need to be recorded. Therefore, anyone who purchases a vessel needs to be concerned that there is a lien against it. Nonetheless, many maritime liens are recorded. Therefore, when conducting a sale of a ship, the purchaser needs to be concerned about maritime liens, especially when there is a sale of a large cargo ship or a cruise ship. There is no way to ascertain with certainty how the lien is structured.
Terminating a Lien
A maritime lien can be terminated or destroyed by several mechanisms.
Involved in maritime shipping? Operate a ship? Do you ship cargo? Partner with the Kolodny law firm, experienced maritime lawyers.
(image courtesy of Jens Rademacher)