On 14th December 1848, a Scottish steamer, Bold Buccleugh, ran into and sank an English vessel, William, in the river of Humber. Following the incident, the High Court of Admiralty in Harmer v. Bell (1852) established that “claim or privilege upon a thing to be carried into effect by legal proceeding in rem. This claim or privilege travels with the thing into whosoever possession it may come”. Such ruling became a landmark case which historically sets a precedent of maritime lien as a claim or privilege on maritime property, such as a ship, arising out of goods and services furnished to or injuries caused by that property.
Centuries later, the Brussels Convention of 1926 for the Unification of Certain Rules of Law Relating to Mortgages and Liens was formed but attracted only a relatively small number of ratifications excluding common law countries. Several decades later, the International Convention on Maritime Liens and Mortgages was adopted in 1993, with the objective of harmonizing national laws relating to maritime securities. Indonesia is among the contracting states to the convention which has been ratified by way of Presidential Regulation No. 44 of 2005.
Lien, originated from the Latin word “ligāre” which means to bind, entitles the taking of another party’s property for settlement of his/her obligation or debt owed. Maritime lien is a type of lien in admiralty law that provides security to its holders for services rendered or damage caused by ships. Maritime lien also has several unique features:
- It arises by operation of law thus does not require any registration.
- It is a hidden interest which travels secretly with the ship and can arise at any time.
- It takes priority over any other registered liens for its nature as prioritized receivables.
- It is ranked equally or pari passu between themselves.
- It has droit de suite trait or remains attached to a ship notwithstanding any change of ownership.
Maritime lien in Indonesia
In Indonesia, the Law No. 17 of 2008 on Shipping (Shipping Law) defines maritime lien as preferred maritime receivables. Under the Shipping Law, payment of maritime liens is prioritized over ship mortgage from the proceeds of judicial sale. Apart from the Shipping Law, maritime liens are also recognized in the Commercial Code.
Maritime liens arise from certain type of claims determined under the laws. Those claims are prioritized based on their ranks, as follows:
|Type of claim
|a. Costs of wreck removal carried out by authorities.
|Article 66 par. (3) of the Shipping Law.
|b. Repair costs owed to a shipyard provided that the ship remains at the shipyard which located in Indonesia during judicial sale (including attachment and auction costs).
|Article 316 § 1 of the Commercial Code.
|Article 66 par. (4) of the Shipping Law.
|Note: prioritized over other maritime liens if the salvage costs incurred before the other liens.
|Article 65 par. (2)c of the Shipping Law.
|Article 316 § 3 of the Commercial Code.
|Wages and ship’s manning rights.
|Article 65 par. (2)a of the Shipping Law.
|Article 316 § 2 of the Commercial Code.
|Bereavement payment and medical expenses for injuries.
|Article 65 par. (2)b of the Shipping Law.
|Article 316 § 4 of the Commercial Code.
|Port and any fairway fees/costs including pilotage.
|Article 65 par. (2)d of the Shipping Law.
|Article 316 § 3 of the Commercial Code.
|Damages incurred from physical losses or damage caused by ship operations (excluding losses or damage on cargo, containers, and passenger’s goods carried onboard the ship).
|Article 65 par. (2)e of the Shipping Law.
|Note: including claims related to collision, damage on ship, and total loss.
|Article 316 § 4 and Article 316d of the Commercial Code.
While maritime lien is recognized under Indonesian laws, the enforcement procedure is still not clear. In general, maritime liens are enforceable by a claim in rem which enables the arrest and seizure of the vessel by court order in satisfaction of the claims against her. The Shipping Law implies the same but the procedures to implement ship arrest and the ensued judicial sale are not yet available in Indonesia. Bankruptcy proceedings may likely be the most possible event where maritime liens can be exercised by submission of preferred claims which payment must be prioritized from the sale of the related ships as part of bankruptcy estate liquidation.