Transcript MARITIME LIENS IN GHANA

GODWIN DJOKOTO
LECTURER, FACULTY OF LAW,
UNIVERSITY OF GHANA, LEGON
ORDER OF PRESENTATION
 Nature and characteristics of
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maritime liens
Brief history
Types of maritime liens
Priority of maritime liens
Extinction/extinguishment of
maritime liens
Defect in the law
Way forward
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.”
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.
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
antecedent formality, registration or court action.
any
 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.
BRIEF HISTORY
 No
statutory provision governing
maritime liens prior to the enactment of
the GSA, 2003.
 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 66-76 of the GSA, 2003(Act 645)
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.
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.
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.
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.
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))
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.
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 noncommercial 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).
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.
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”.
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.
Extinction/extinguishment
 The payment and acceptance of the debt or
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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.
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
Defect (Continued)
 The Ghanaian position perpetuates an
alleged common law prohibition to
assign or subrogate maritime liens. See
The Petone [1917] P. 198.
 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.
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 1874.
 The current tide of judicial decision in
most common law countries suggests a
change in judicial attitude towards the socalled 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.
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).
Appreciation
 THANK YOU