By: Jeff Dutson, King & Spalding, LLP
U.S. maritime law permits assertion of liens over shipping vessels themselves, even when chartered, for necessaries such as shipping fuel, absent actual notice of no-lien provisions of charter to supplier of necessaries; and reference to terms and conditions of sale, printed on the order form, sufficient to allow specified choice of law terms to prevail in in rem proceeding. ING Bank, N.V. v. M/V Charana Naree, 446 F.Supp. 3d 163 (W.D. La. 2020)
A global supplier of fuel oil (bunkers) sold and arranged for delivery of bunkers to a shipping vessel under time charter. Subsequently, the charterer went bankrupt and failed to the pay the invoice. Two years later, while the vessel was docked in a Louisiana port, ING Bank N.V., a secured creditor of the bunker supplier, filed suit in Louisiana federal court to enforce liens against the shipping vessel and its current owner. The vessel’s owner responded that (i) U.S. law was inapplicable as the transaction exclusively involved non-U.S. parties and occurred outside of the U.S. and (ii) the liens were unenforceable as the charterer both (x) lacked authority to secure the vessel and (y) was bound by a no-lien provision in the charter.
Unpersuaded, the court found for ING at summary judgment. The court stressed the in rem nature of the action and sophistication of the parties, in determining that the terms and conditions of the bunker supplier, furnished in their entirety online but only referenced in the sales orders, would govern the transactions. These terms clearly stipulated US maritime law “shall always apply with respect to the existence of a maritime lien.” The location of the sale and delivery of the bunkers and of the parties were irrelevant to the application of agreed-upon law when the vessel was docked in a U.S. port.
The court proceeded to construe US maritime lien law. Noting there is a presumption that charterers possess the authority to bind vessels by ordering necessaries, the court declined to rebut such presumption in the absence of actual notice the charterer lacked authority. It did not allow emails sent to the company delivering the bunker supply to constitute notice of a lack of authority to the contracting supplier, nor did it allow dealings between the vessel’s owner and far-east affiliates of the bunker supplier to establish notice of the vessel owner’s no-lien policy. Accordingly, the court ruled ING entitled to liens against the vessel and its owner.