2 - Contracts - Liens

Lien
Search the net to find the meaning of ‘Lien’
1. In your own words what does it actually mean?
…and then…
Lien
Search the net to find the meaning of ‘Lien’
1. Can you think of any situations where a lien may be

used in the maritime industry, relating to:
– Carriage of cargo
– Ship’s repairs
– Crew remuneration
2. What is the difference between ‘in personum’ and ‘in
rem’. Which applies to an action against a company?
3. What do you think would happen if a party exercises a
lien after a ship has departed port?
Lien
• A right of a person in possession
of another person’s property to
retain possession of it as security
for the performance of a
contractual obligation, or for a
claim.
Examples of Liens
• Salvor’s lien (after successful completion)

• Seaman’s lien (eg wages)
• Master’s lien (eg wages)
• Lien after a collision (against ship at fault)
• Lien after a grounding (against ship at fault)
• Lien after charter party breach
• Lien after work carried out on ship (eg docking)
• Lien against unpaid Demurrage
Lien Pick up here
• A right of a person in possession

of another person’s property to
retain possession of it as security
for the performance of a
contractual obligation, or for a
claim.
• A lienee may commence an
action in a court having
jurisdiction by an:
– action in personam: against
individual or company.
– action in rem: against a thing
(res), eg a ship. Commenced
by serving a writ on lienor.
Liens
• Common Law Lien – right to retain property until
obligations are discharged (usually payment made).
• Contractual Lien – contract clause giving security to
one party in a contract agreement.
(potentially arguable that it is an agreement)
Charter Party Terms?
What does the GENTIME contract state about Liens (cl 14)?
Liens
• Particular Lien – specific to a particular transaction
(not a series of transactions), eg against a single
payment of a Port Agent’s fee.
• General Lien – usually for multiple actions, a Lien
for all sums owed. Against a Shipowner for
multiple unpaid transactions due to a Ship
Management company towards the end of a
contracted agreement.
Possessory lien
• Is in personam (against a legal person, can include
a company).
• Is particular – it is only on property to which the
claim relates.
• Physical possession must be continuous; lien is lost
on surrender of property to owner.
• Examples:
1. Shipowner’s lien on goods carried for unpaid
freight and general average contribution.
2. Ship repairer’s lien on vessel in its drydock for
unpaid repair charges.
So, a sea carrier’s ‘Possessory’ lien on
goods carried
• A carrier has an implied lien at common law on

goods carried for freight and general average.
• Carrier must have actual or constructive possession

of goods.
• lien may be exercised by discharging cargo into

bonded warehouse, etc and withholding goods from
deliver to receiver. (Allows discharged ship to sail.)
Maritime lien
• A privileged claim upon maritime property which
may be enforced by an action in rem (ie against an
item of property (res)) and which is not extinguished
by a transfer of title in the property.
• Maritime property: ship, cargo, freight earned. (Most

commonly on a ship.)
NB Lien will survive change of ownership even if new

owner was unaware of claim at time of acquisition.
Think of an HP financed car…
Exercise of maritime lien
• May be enforced by arrest and sale of the res

(property).
• Arrest law differs between countries. Claimants
prefer ‘claimant-friendly’ jurisdictions, eg UK,
Gibraltar, NZ & South Africa
• ‘Sister ship arrest’ is possible in some jurisdictions.
• ‘Associated ship arrest’ is possible in South Africa.
Multiple claims against a Ship?
In a case where multiple liens were made on a ship, where the
value of the claims exceeds that of the vessel.
How would the payments be prioritised?
Salvage claims
Wages lien
Expenses of Admiralty Marshals
Repair costs, Services, etc
Master’s disbursements
Multiple claims against a Ship?
In a case where multiple liens were made on a ship, where the
value of the claims exceeds that of the vessel.
How would the payments be prioritised?
There is no statutory ranking and order of disbursement will be

set by court, but the ‘general order’ is:
1. Expenses of Admiralty Marshals

2. Salvage claims
3. Wages lien
4. Master’s disbursements
5. Other maritime liens (Repair costs, Services, etc)
Principles of law of contract; liens.
So… with respect to the law of contract:
1. Explain the term ‘lien’.

2. Identify and explain the difference between the two
main types of Lien of importance to seafarers
(Possessory & Maritime).
3. State FIVE examples of maritime lien and explain how a
claimant may obtain satisfaction of their claim through
a maritime lien.
1. Explain the term ‘lien’.
A lien is the right of a party to a contract to retain possession of
another party’s property, either as security for the performance of
an obligation under a contract, or to secure satisfaction of a claim.
2. Identify and explain the difference between the two main types
of Lien of importance to seafarers (Possessory & Maritime).
Possessory Lien - possessory lien depends on actual or
constructive possession of the other party’s property, whereas a
maritime lien can exist even if the property is not in the possession
of the claimant.
Maritime Lien - privileged claim on the property of another
(usually a ship), which arises with a maritime claim in respect of
damage caused by the property or a service performed to it.
3. State FIVE examples of maritime lien and explain how a claimant
may obtain satisfaction of their claim through a maritime lien.
1. a salvor’s lien - on a ship and/or her cargo for his reward

2. a seaman’s lien - on his/her ship for wages owed
3. a master’s lien - on his/her ship for wages and disbursements
(sums spent on behalf of the owners)
4. lien on a ship at fault in a collision - in which damage has been
done to property
5. a lien on a ship at fault in a grounding - in which coasts have
been polluted

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Lien

Search the net to find the meaning of ‘Lien’

1. In your own words what does it actually mean?

1. Can you think of any situations where a lien may be

• Salvor’s lien (after successful completion)

• A right of a person in possession

• A carrier has an implied lien at common law on

• Carrier must have actual or constructive possession

• lien may be exercised by discharging cargo into

• Maritime property: ship, cargo, freight earned. (Most

NB Lien will survive change of ownership even if new

• May be enforced by arrest and sale of the res

There is no statutory ranking and order of disbursement will be

1. Expenses of Admiralty Marshals

1. Explain the term ‘lien’.

1. a salvor’s lien - on a ship and/or her cargo for his reward

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