Australia: Maritime lien challenge appeal successful: Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26

Last Updated: 3 October 2016
Article by Andrew Tulloch and Stuart Hetherington

In brief - Australia unlikely to depart from The "Halcyon Isle" case position

The much anticipated decision of the Full Court of the Federal Court in the appeal from the first instance decision of McKerracher J in Reiter Petroleum Inc v The Ship "Sam Hawk" [2015] FCA 1005, which we referred to in our most recent issue of Transport & Logistic News, was handed down on 28 September. The appeal was allowed unanimously.

Do Australian rules of private international law recognise maritime lien in circumstances of the case?

As we reported in the September 2015 issue of Transport & Logistic News, bunkers had been supplied to the vessel in Istanbul at the request of time charterers. The bunker supplier, Reiter Petroleum Inc arrested the vessel in Western Australia and the owners sought to have the arrest set aside. McKerracher J had identified the issue for his consideration as being "whether Australian rules of private international law would recognise a maritime lien in the circumstance of this case." His Honour, in declining to stay the arrest, did not follow the Privy Council's decision in The "Halcyon Isle" [1981] AC 221 and applied the lex loci contractus as giving rise to a maritime lien, although the lex fori did not recognise the supply of necessaries as giving rise to a maritime lien.

The contract between the time charterer and Reiter Petroleum contained an express provision that the seller of the bunkers should be entitled to assert a lien and that the law of the United States of America should apply to determine the existence of any maritime lien, regardless of the Court in which the proceedings are instituted.

Section 15 of Admiralty Act found not to apply

The very detailed and thorough Full Court judgments of the five appeal judges include an analysis of both Australian law in relation to maritime liens but also of relevant case law in other jurisdictions.

Chief Justice Allsop and Edelman J delivered a joint judgment, finding that there was no jurisdiction under section 15 of the Admiralty Act 1988 (Cth) as "a proceeding on a maritime lien", as the lex causae was not either Canadian or United States law (on which the claimant relied to assert a maritime lien against the shipowner for the supply of bunkers) and also that even if that law did apply, those rights would not be characterised under Australian law as a maritime lien within section 15. Instead, Australia should follow the long established English approach as set out in The "Halcyon Isle".

Justices Kenny and Besanko also found that neither Canadian nor US law applied and section 15 of the Admiralty Act had no application in this case. They also concluded that there was no reasonable prospect of success on a claim based on section 17 ("general maritime claim").

Justice Rares agrees with orders proposed but disagrees on lex fori conclusion

Finally, Justice Rares agreed with the orders proposed by the other judges, (i.e. allow the appeal, set aside the writ and arrest warrant and order costs to be paid by Reiter Petroleum) but disagreed with the conclusion that the lex fori was the proper law for the classification of a foreign maritime lien. In so doing he was not inclined to follow the reasoning in The "Halcyon Isle". However, in factual circumstances where there was no reason for a US lien to arise, there was no enforceable maritime lien on the vessel "San Hawk".

The decision removes the international uncertainty - albeit by a majority decision - and it now seems unlikely, despite the views expressed by Rares J, that Australia will soon depart from the position as stated in The "Halcyon Isle".

Andrew Tulloch
Stuart Hetherington
Transport and logistics
Colin Biggers & Paisley

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