- 15-Jul-2025
- Cyber and Technology Law
In Indian admiralty proceedings, the priority of maritime liens is a critical issue that dictates how claims against a vessel are settled when it is arrested or sold to satisfy outstanding debts. Maritime liens are a special type of legal claim that attaches to a ship and allows the lienholder to seek payment directly from the vessel’s value, typically in cases involving claims related to crew wages, cargo damage, shipowner debts, or maritime torts.
India follows an established legal framework that governs maritime liens, primarily under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (also known as the Indian Admiralty Act, 2017). This legislation outlines the types of maritime claims that can give rise to a lien and specifies the order in which different claims are prioritized when a vessel is sold or arrested.
Under Indian maritime law, a maritime lien is a right that allows a creditor to secure a claim over a vessel, regardless of the ship's ownership. This lien is enforced through admiralty proceedings. Maritime liens generally arise in cases related to:
The Indian Admiralty Act, 2017 governs the enforcement of maritime liens in India and provides specific guidelines for maritime claims and their prioritization. The Act aligns with international conventions like the International Convention on Maritime Liens and Mortgages (1993).
Section 4 of the Indian Admiralty Act outlines the types of claims that create maritime liens on a vessel, including claims for wages, damage caused by the ship, salvage claims, maritime torts, and supplies of fuel or provisions.
Section 5 specifies the priority of claims that arise in the context of admiralty actions. This priority order determines how different claimants are paid when a ship is sold or its proceeds are distributed.
The Indian Admiralty Act, 2017, ranks maritime liens based on their importance and the nature of the claim. The priority of maritime liens is crucial because it determines the order in which creditors can claim their dues from the sale or seizure of the vessel. Below is the general ranking order of maritime liens in Indian admiralty proceedings:
Priority: First priority
Seafarers' claims, including wages, personal injury, and maintenance and cure, are given the highest priority. This is because the law prioritizes the protection of those who directly serve the vessel and depend on their earnings for livelihood.
This priority includes the wages of officers and crew, sick and injured crew members, and their medical expenses.
The wages of the crew rank above all other claims, including those from shipowners or other commercial creditors.
Priority: Second priority
The next level of claims includes damages caused by the vessel to other ships, ports, or property. For example:
These claims are also given high priority because they are related to the vessel’s operation and its legal responsibilities.
Priority: Third priority
Claims arising from salvage operations (rescue of the ship or its cargo) or towage services (services to tow a disabled ship) rank after wages and collision-related claims. Salvage operations are vital to protect vessels in distress, and therefore, these claims are also highly prioritized.
Salvage awards can include amounts for the rescue and protection of a vessel in peril.
Priority: Fourth priority
Claims related to repairs to the vessel, including dry-docking, maintenance, and the supply of fuel, provisions, or other materials required for the ship’s operation, are ranked next.
These claims ensure that the vessel remains in working order and operational, so they are considered important, but they are below claims for wages, damages, and salvage.
Priority: Fifth priority
The next category includes claims secured by a ship mortgage. Mortgage claims rank after claims related to the vessel’s operational needs (such as wages, repairs, and supplies). Shipowners’ debts or unpaid mortgages are claims by banks, financial institutions, or other parties who have a financial interest in the vessel.
These claims typically include unpaid loans secured against the vessel.
Priority: Last priority
Finally, other commercial claims not directly related to the operation of the vessel or secured by a mortgage (such as contractual disputes between parties involved in the ship's business) are given the lowest priority. These claims are only satisfied once the higher-priority liens have been addressed.
Suppose a vessel, MV Oceanic, is arrested in an Indian port due to unpaid dues. The following claims are made against it:
The claims will be prioritized in the following order:
The proceeds from the sale of MV Oceanic will first be used to satisfy the crew wages, followed by the collision damages, and so on.
The Indian Admiralty Act, 2017 provides a clear structure for the prioritization of maritime liens in admiralty proceedings, ensuring that certain claims—such as those for seafarer wages and salvage services—take precedence over others, such as mortgage claims or shipowner debts. This structure is designed to reflect the critical nature of certain claims, particularly those that ensure the operation and safety of the vessel and protect the rights of individuals working on board. Understanding the priority order is essential for creditors, shipowners, and legal practitioners involved in maritime disputes and ship arrest proceedings in India.
Answer By Law4u Team
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