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GODWIN DJOKOTO LECTURER, FACULTY OF LAW, UNIVERSITY OF GHANA, LEGON.

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Presentation on theme: "GODWIN DJOKOTO LECTURER, FACULTY OF LAW, UNIVERSITY OF GHANA, LEGON."— Presentation transcript:

1 GODWIN DJOKOTO LECTURER, FACULTY OF LAW, UNIVERSITY OF GHANA, LEGON

2 ORDER OF PRESENTATION Nature and characteristics of maritime liens Brief history Types of maritime liens Priority of maritime liens Extinction/extinguishment of maritime liens Defect in the law Way forward

3 NATURE OF MARITIME LIENS Maritime liens is Ghana are governed by Sections 66 to 76 of the Ghana Shipping Act, 2003(Act 645). Act 645 does not define the term maritime lien. At common law, maritime lien is said to be a privileged claim upon a vessel (and sometimes freight and cargo) in respect of services rendered to the vessel, or injury caused by it, to be carried into effect by legal process by a proceeding in rem. See for eg. The Bold Buccleugh 13 ER 884 at 890. In Comeau’s Sea Food Ltd. v. Frank and Troy [1971] F.C. 556, the Canadian Supreme Court also defined a maritime lien as “a privileged claim, upon maritime property, for services done to it or injury caused by it, arising from the moment when the claim attaches, traveling with the property unconditionally, and enforced by means of an action in rem.”

4 Subject matter of maritime liens Generally, at common law, a maritime lien may attach to the vessel, vessel’s freight and /or cargo (or maritime property) However, under Act 645 maritime lien attaches to a vessel only. Neither does it cover freight nor cargo. See section 66 of Act 645. Section 66 states that “…any of the following claims against the owner, demise charterer, manager or operator of the vessel shall be secured by a maritime lien on the vessel…”. A maritime lien does not attach to the vessel’s freight and cargo presumably because they arise by the operation of law or from contract.

5 Characteristics of maritime liens Privileged claim (i.e. has priority over other maritime claims such as mortgages or statutory rights in rem). Comes into existence automatically without any antecedent formality, registration or court action. Attaches from the moment the claim is created and it relates back to the date when it first attached. Its existence can be secret/invisible and it travels with the ship everywhere, even into the hands of a purchaser for value without notice. Carried into effect by legal process by an in rem proceeding A maritime lien is not extinguished by change of nationality or registration in another registry. Under the GSA, 2003 a lien is not only enforceable against the ship in connection with which the claim arose, but also against a sister ship.

6 BRIEF HISTORY No statutory provision governing maritime liens prior to the enactment of the GSA, Maritime liens primarily governed by the traditional common law rules. In recognition of this state of affairs, Ghana acceded to the 1993 International Convention on Maritime Liens and Mortgages and implemented this Convention into domestic legislation. Section of the GSA, 2003(Act 645)

7 UNDERPINNING OBJECTIVES OF MARITIME LIENS As a means of contributing to the safe and efficient operation of ships. To reduce the number of maritime liens that existed at common law in order to encourage ship financing(eg. bottomry and respondentia bonds) The application of uniform rules in the recovery of loans by ship financiers.

8 TYPES OF MARITIME LIENS. SEC.66 Master and Seafarer’s Wages Claims in respect of loss of life or personal injury; Claims for rewards for salvage of the vessel; Claims for ports, canal and other waterway dues and pilotage dues; and Claims based on tort arising out of physical loss or damage caused by the operation of a vessel.

9 MASTER & SEAFARERS’ WAGES. Sec. 66(a) These are claims for wages and other sums due the master, officers and other members of the vessel’s complement in respect of their employment on the vessel. Examples would include the payment of salaries, social insurance contributions, repatriation costs, agreed bonuses, paid leave, sick leave and gratuity, unlawful termination of contract of employment.

10 Personal injury claims Sec. 66(b) This arises from harm or death caused to a person by the operation of the vessel. A lien would attach whether harm or death occurs either on land or on water. However, there must be a direct nexus with the operation of the vessel, although direct physical contact with the vessel is not required in order to give rise to the claim.

11 Personal injury (cont) Exclusion of maritime liens for claims arising from radioactive and chemical substances No maritime lien attaches to a vessel to secure a claim arising from loss of life or personal injury or collision damage when death or harm or damage is caused by oil transported by sea for which compensation is payable to the claimant under an international convention, for example, the International Convention on Civil Liability For Oil Pollution Damage, 1969(as amended), or under the laws of Ghana which provide for strict liability and compulsory insurance or other means of securing the claim. (See section 71(a)) Secondly, maritime lien does not attach to a ship where harm or death or damage is caused by radioactive substances or in combination with toxics, explosives or other hazardous or noxious substances. (See Section 71(b))

12 Salvage liens Sec. 66 (c ) Salvage operations take precedence over all other claims because it is the salvor’s exertions that preserved the property for the benefit of all other claimants. Properties that could be salved include human life, the vessel, cargo, freight at risk and the wreck. However, under the Act 645, a salvor’s right to exercise a lien arises only in respect of “reward for salvage of the vessel”. See Section 376. The Zephyrus [1842]166 E.R. 596 at 597. No lien attaches if salvage operation fails.

13 Who is entitled to claim a salvage lien? In The Waterloo (165 E.R.1537 at 1538) it is stated that “the clearest right they who have saved lives and property at sea should be rewarded for their salutary exertions”. Hence all persons who perform salvage services are entitled to claim a salvage reward. These persons would include seafarers, cargo owners or even passengers whose services exceed what would ordinarily be expected of them.. Where the government of Ghana renders salvage services to salve a vessel, it can also exercise a lien on the ship. (See section 402 of Act 645) However, a salvage lien cannot be exercised against a non- commercial cargo owned by a state entitled, at the time of the salvage operations, to sovereign immunity. It can also not be exercised on humanitarian cargoes donated by a state where the state has agreed to pay for salvage services rendered in respect of the humanitarian cargo. (See Section 393).

14 Ports, Canal and other waterway dues and pilotage lien. Section 66(d) At common law, these rights were treated as special legislative rights with a right to detain and sell. However, under Act 645 both pilotage claims and ports and waterway dues have been elevated to the status of maritime liens ranking after crew’s wages, personal injury claims and salvage claims. The consequence of their new status is that these claims follow the vessel even into the hands of bona fide purchasers or change of nationality.

15 Collision liens(Sec. 66(e) Collision liens arise when a ship causes damage to another ship or other property external to it or to an object as a result of a wrongful act of navigation for want of skill or negligence. Collision lien must result from the direct or indirect activity of the vessel. Although the vessel must be the instrument of the damage, the crew’s acts are attributable to the ship. Collision liens under the GSA, 2003 arise from tort and, therefore, exclude all contractual claims for cargo, containers and passengers’ effects carried on the vessel. No collision lien attaches for pure economic loss since the Act refers to “physical loss or damage”.

16 Priority of liens Order of Priority Salvage liens Liens in respect of crew’s wage and other benefits Liens in respect of loss of life or personal injury; Liens in respect of ports, canal and other waterway dues and pilotage Liens for damage caused by the operation of the vessel. Maritime liens within each category recognized under section 66 follow the first in time has priority rule except for salvage liens which rank inter se in inverse order based on the time when claims they secure accrued.

17 Extinction/extinguishment The payment and acceptance of the debt or underlying claim owed by the ship-owner or charterer. where the claimant elects to take securities instead of cash eg. Bank guarantee by the express waiver of the lien holder. Under the GSA, 2003 if a seafarer desires to waive a lien, he must sign an attested release instrument. by the loss or destruction of the res. Nevertheless, the lien holder may bring an action in personam against the ship owner to recover his claim or against a sister ship. by the effluxion of time. Under the GSA, 2003 a lien is extinguished after a period of one year, unless prior to the expiring of the period, the vessel has been arrested or seized, and the arrest or seizure leads to a forced sale.

18 Defect-A curious omission Absence of Rights of Assignments and subrogation of maritime liens Article 6 of the International Convention on Liens and Mortgages, 1993 provides that: “The assignment of or subrogation to a claim secured by a maritime lien set out in the Convention entails the simultaneous assignment of or subrogation to such maritime lien”. Act 645 is silent on the subrogation or assignment of maritime liens in Ghana

19 Defect (Continued) The Ghanaian position perpetuates an alleged common law prohibition to assign or subrogate maritime liens. See The Petone [1917] P Plaintiff paid the crew’s wages and made some disbursements at the request of the master of the ship. The plaintiff brought an action in rem to exercise a lien on the vessel in respect of the payments the plaintiff had made. Hill J., held that a third party who pays seamen’s wages is not subrogated by the law to the maritime lien for the wages of the seamen.

20 Defect(continued) Rule not conclusive at common law. See The Tagus [1903] P. 44. Dr. Lushinton & Sir Robert Philimore The Petone decided only the subrogation of liens regarding seamen’s wages, and no other maritime lien. The Petone is only of persuasive authority since it was given after The current tide of judicial decision in most common law countries suggests a change in judicial attitude towards the so- called common law prohibition against subrogation of maritime liens. See Metaxas v. Galaxias(1988), where SCC held that an organization which paid crew wages were subrogated to the seamen’s wages and were, therefore, paid ahead of mortgagees.

21 Conclusion Maritime liens play an important role in the maritime industry by assuring those who render services to vessels or those who activities are adversely affected by the vessels that their privileged claims would be settled ahead of other maritime claims. This comfort promotes maritime trade. The uniform and consistent application of maritime liens are encouraged. Therefore, the omission of assignments and subrogation of maritime liens constitute a blind spot that must be healed either by parliament or by the courts by resorting to the general law particularly section 16 of the Contract Act 1960(Act 25).

22 Appreciation THANK YOU


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