Court: Court of Appeals for the Fourth Circuit; October 4, 2006; Federal Appellate Court
The court affirmed the dismissal of Bominflot, Inc. and Bominflot Ltd.'s maritime lien claim against the vessel M/V Henrich S. Judge Williams authored the opinion, with Judge King concurring and Judge Widener dissenting. The case arose from three fuel oil deliveries by Bominflot to the vessel in early 2003, governed by their General Conditions of Sale and Delivery. Bominflot, an international conglomerate, alleged non-payment for these deliveries. The district court dismissed the claim under Rule 12(b)(6) for failure to state a claim, determining that English law applied and does not recognize maritime liens for bunkers. Bominflot appealed, invoking admiralty jurisdiction under 28 U.S.C.A. 1333, and the appellate court reviewed the dismissal de novo. Bominflot cited two clauses from their General Conditions: one asserting the right to enforce a lien against the vessel and another establishing English law as the governing law. The court upheld the district court’s ruling, concluding that Bominflot could not establish a valid claim for a maritime lien under the applicable law.
Bominflot argues that the contract clauses necessitate the application of U.S. law, which recognizes a maritime lien for bunkers, despite Section 18.1 indicating that the contract is governed by English law, which does not recognize such liens. The document clarifies that the General Condition clauses do not support the application of U.S. maritime lien law. It outlines the nature of maritime liens, emphasizing their unique characteristics in admiralty law as powerful, in rem claims that arise by law, not by agreement. Unlike common law liens, maritime liens are attached to the vessel itself and are secret, arising automatically without formalities and enduring with the ship regardless of ownership changes.
In England, maritime liens are limited to specific claims such as bottomry, salvage, and wages, explicitly excluding claims for necessaries like bunkers. Such claims in England are against the debtor's property rather than the vessel itself, resembling blanket liens. Conversely, the U.S. and some civil law countries allow broader maritime lien applications, including a statutory right to a lien for necessaries, such as bunkers, as defined under U.S. law (46 U.S.C.A. 31342). Thus, while Bominflot seeks to invoke U.S. law for maritime liens on bunkers, the text asserts that English law does not support this claim.
Rule C of the Federal Rules of Civil Procedure’s Supplemental Rules allows for an action in rem to enforce any maritime lien where a U.S. statute permits such action. A key difference between U.S. and English maritime lien laws is highlighted: under U.S. law, a company supplying bunkers to a vessel has a maritime lien, while under English law, it only has a less robust statutory right to arrest the debtor's ship. To determine Bominflot's entitlement to a maritime lien for necessaries, it is essential to establish whether U.S. or English law applies. This case presents complex conflicts of law issues due to the diverse national interests involved, including a German-flagged ship owned by a German company, a Taiwanese time charterer, and bunker deliveries made in South Africa and Brazil, with the action initiated in the U.S.
However, both parties agreed to apply "the law of England or other law, as specified by [Bominflot] in the Contract." Since no alternative law is specified and public policy permits it, English law will be applied, respecting the parties' intentions as supported by precedent. Bominflot argues that exceptions to English law exist within the General Conditions of the contract, citing provisions that warrant a lien against the vessel and allow enforcement in any jurisdiction. Bominflot contends that disregarding U.S. law would render these provisions meaningless, referencing the Fifth Circuit's decision in Liverpool, London SS Prot. and Indem. Ass’n Ltd. v. Queen of Leman MV, which upheld the enforcement of a maritime lien under U.S. law despite a contract designating English law as governing.
The contract allows the insurer to enforce its lien rights according to local law in any jurisdiction. It specifies that the supplier's ability to enforce lien rights on ships or secure amounts owed remains intact. In contrast to the case of *Queen of Leman*, Bominflot's General Conditions do not include a provision for enforcing lien rights per local law, but rather state that rights can be safeguarded in any court, which is a forum selection clause and does not specify applicable law. Therefore, the intent of the parties indicates that English law governs. Bominflot argues that the warranty of a lien would be rendered meaningless without recognizing a maritime lien. However, this argument is flawed as maritime lien rights cannot be established merely through warranty but arise by law when necessaries are provided to a vessel. Additionally, the warranty does not imply a maritime lien specifically, as it could pertain to English in rem actions. The contract lacks the explicit exceptions found in *Queen of Leman* that would allow for deviation from the choice of law clause. Consequently, the judgment of the district court is affirmed. The delivery of bunkers to the vessel occurred on specified dates in South Africa and Brazil, totaling amounts of $202,431.49, $281,581.47, and $141,272.33, respectively.
Kien Hung was tasked with purchasing bunkers under the time charter and was restricted by a "Non-Lien Provision Clause," preventing any liens that could overshadow the Owners' title and interest in the Vessel. Bominflot initially included an in personam claim under Rule B of the Federal Supplemental Rules but later moved to dismiss it, which was granted. Bominflot now appeals the dismissal of its Rule C maritime lien claim.
The concept of a bottomry bond, a mortgage on a ship for raising funds in foreign ports, has largely fallen out of use. South Africa's maritime lien law, based on English law, does not recognize liens for necessaries, which means Bominflot cannot claim a maritime lien for bunker shipments there. Conversely, Brazil recognizes such liens, but if a claim were made there, Brazilian courts would likely apply the law of the flag, which is German law in this case, and would dismiss the claim as Germany does not recognize liens for necessaries.
Bominflot argues that the phrase "subject to" in the contract does not definitively indicate the application of English law; however, the clause titled "Governing Law" suggests otherwise. The phrase indicates the contract is governed by English law. Bominflot's claim that the forum selection clause is ineffective without a corresponding choice of law exception is unfounded, as there could be various reasons for its inclusion unrelated to choice of law.
Citing the Fifth Circuit's decision in Queen of Leman, courts have consistently declined to recognize maritime liens in cases with similar contractual language. In Marine Oil Trading, Ltd. v. M/V Sea Charm, despite broad forum selection language, the court ruled that the seller could not enforce a maritime lien as their rights were expressly determined by English law. Similarly, in Marine Oil Trading Ltd. v. Motor Tanker Paros, the court found that the contract did not clearly indicate intent to apply non-English maritime lien law, concluding that parties would not expect a maritime lien to arise without invoking American law. The court refrains from speculating on outcomes had Bominflot’s contract explicitly reserved rights for a lien in accordance with local law.
