Every day, individuals and companies across the Gulf Coast provide valuable services or goods to vessels and their owners. These folks rightfully expected to get paid for their work, but sometimes a vessel’s owner will either fail to meet their obligations or otherwise try to nickel and dime a vendor, laborer, or service provider into accepting less that they are entitled to. Fortunately, maritime law provides powerful tools that can help protect creditors who are owed money for goods and services – or “necessaries” — they supply to Gulf Coast vessels.
Liens for the Provision of “Necessaries”
The Federal Maritime Lien Act provides a maritime lien on a vessel to a person that provides necessaries at a reasonable price to a vessel at the direction of the vessel’s master or agent if the services are maritime in nature and facilitate the “vessel’s use in navigation or maritime commerce.” “Necessaries” are broadly defined under the law and have been interpreted to include any item reasonably needed for the venture in which the ship is engaged, including such things as:
- Dockage fees
- Fuel charges
- Mechanic’s invoices
- Towage charges
- Refurbishment and painting invoices
How Maritime Liens Work
The United States Court of Appeals for the Fifth Circuit in New Orleans did a good job of laying out the basics of what makes maritime liens unique and how they work. In its 1985 decision in Equilease Corp. v. M/V Sampson, the Court said (with citations omitted):
The federal maritime lien is a unique security device, serving the dual purpose of keeping ships moving in commerce while not allowing them to escape their debts by sailing away. The lien is a special property right in the vessel, arising in favor of the creditor by operation of law as security for a debt or claim. The lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds. Thus the maritime lien may be defined as a property right that adheres to the vessel wherever it may go. Such a lien has been held to follow the vessel even after it is sold to an innocent purchaser.
As noted, one of the characteristics that makes maritime liens unique is that recording of the lien is not required for the lien to be valid and enforceable; it “arises when the debt arises.” What makes a maritime lien powerful is that it gives the lien holder the right to have the vessel arrested by having a warrant of arrest issued and served and the vessel taken into custody by a U.S. Marshall. The ship’s owner may choose to pay the outstanding debt to get the ship released from arrest, or the lienholder may ask the court to sell the vessel at a U.S. Marshal’s sale.
Recording a Notice of Lien Can Put Additional Pressure on a Vessel Owner
Though filing a notice of maritime lien is not required, it is advisable to file a lien notice with the U.S. Coast Guard National Vessel Documentation Center. Filing the notice with the Coast Guard can cause additional headaches for the vessel owner that may encourage payment and resolution, as such a filing may constitute a violation of the vessel owner’s mortgage or place a cloud on the vessel’s title that may hinder the owner’s attempt to sell the vessel.
The process of enforcing a maritime lien can be confusing, costly, and time-consuming, and can intersect with other liens that may have attached to the vessel leading to conflicts about priorities and payment. If you have supplied goods or services to a vessel along the Gulf Coast and have questions or concerns about maritime liens or obtaining payment for your work, please give the experienced Biloxi maritime law attorneys at Rushing & Guice a call.
Rushing & Guice, P.L.L.C: Mississippi and Gulf Coast Maritime and Admiralty Law Firm
At Rushing & Guice, experienced, aggressive, and innovative legal services on the Gulf Coast are a phone call away. Call us at (228) 374-2313 or fill out our online form to arrange for a free, limited initial consultation. We look forward to hearing from you, and look forward to the opportunity to serve as your attorneys.
This website has been prepared by Rushing & Guice, P.L.L.C for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.