Who Gets the Lien? Sometimes Paying for Something Does Not Mean You Own It | ZFZ Postcard Cases

When owner defaulted, BOA sought to foreclose its preferred ship mortgage lien against a vessel under a ship mortgage. The Court ordered the sale of the vessel. Charterers alleged ownership over the vessel bunkers it had purchased, alleging a maritime lien for necessaries.

Under U.S. law, a maritime lien under a charterparty will be preferred if it attaches before a ship mortgage is filed. Here, BOA’s mortgage was filed first.

The Court found charterer’s lien not valid as only a bona fide third-party supplier could seek such a lien – the charterer purchased the bunkers for its own use.

The ruling again emphasizes the significance of order of liens when against a vessel when multiple interests are in conflict.

For further info, reach out to Eva-Maria Mayer or Jiahang Zhou. For the full decision, click here.