Halcyon times for shipowners – not so good for physical bunker suppliers.

 

 

A victory for owners in the latest round of arrests by physical bunker suppliers left unpaid by their contracting party, the time charterers. In The Sam Hawk [2016] FCAFC 26 the Full Court of the Federal Court of Appeal of Australia has just held that a claim by bunker suppliers, which would not constitute a maritime lien under Australian law, did not constitute a “proceeding on a maritime lien” under s15(1) of the Admiralty Act 1988 (Cth) (Act). A foreign maritime lien would be recognised, but only if it was analogous to the four categories of lien set out in s15(2) – salvage, damage done by a ship; wages of the master, or of a member of the crew, of a ship; master’s disbursements.

 

The claim arose out of a supply of bunkers to the vessel in Istanbul by a Canadian bunker supplier. Its contract with the time charterer expressly provided that the “laws of the United States and the State of Florida” applied “with respect to the existence of a maritime lien”. The bunker supplier argued that this contractual provision showed that the lex causae was that of the US, which recognises claims by suppliers of necessaries to vessels as a maritime lien.

 

The Court of Appeal unanimously rejected this argument as there was no privity of contract between the bunker supplier and the vessel. For this reason the arrest did not fall under s.17 of the Admiralty Act which covers statutory liens, as the shipowner was not the ‘relevant person’ a “relevant person” who would be liable on the claim in a proceeding commenced as an action in personam. The claim was non-contractual and could be subject to Turkish law as the place of supply, or to the law of Hong Kong where the vessel was flagged. No evidence had been led as to the law on maritime liens in Turkey or Hong Kong and the Court of Appeal dealt with the matter on the assumption that the law of the forum, Australia, applied – under which a claim for necessaries supplied to a vessel did not constitute a maritime lien.

 

The Court of Appeal then went on to consider the position had the bunker suppliers made out their allegation that the lex causae was that of the US. Four of the five Justices, Rares J dissenting, were of the view that the claim would still not fall within s. 15(1) of the Admiralty Act as it did not constitute a maritime lien under the law of Australia, the lex fori, a position previously adopted by the Privy Council in The Halcyon Isle [1981] AC 221.

One thought on “Halcyon times for shipowners – not so good for physical bunker suppliers.

  1. Professor Andrew Tettenborn

    The other winners are banks, big-time. They will, if you will forgive the flippancy, be laughing all the way to themselves. Remember that a maritime lien holder prevails over a mortgagee, whereas a person with a mere claim in rem does not. The US is one of the few jurisdictions to give people like bunker suppliers a maritime lien: most make him come in behind mortgagees. What this case says is that even if you would be a lienee in the US you can’t bring your status over to England (or Australia). Still less can you leapfrog the insolvency queue by agreeing to have your contract to supply bunkers governed by the law of a US state.

    Liked by 2 people

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