Rules of Priority in Maritime Law

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Rules of Priority in Maritime Law

By

S J  Tubrazy

The rules of priority are explain in detail in British Shipping Law Vol. I Admiralty practice page 742 para. 1574 published in 1964 where Rules of priority have been summarised as follows:‑

“(1)      Marshal’s charges, expenses, etc. are in practice paid in priority to all claims, priorities are determined in relation to the net fund available thereafter or, alternatively, if an arresting plaintiff pays the charges, etc., in accordance with his undertaking, he will recover the sum paid as costs.

(2)        The costs of the plaintiff in whose action the res was arrested up to the moment of arrest and including the costs of arrest, and later costs up to and including appraisement and sale, either of the plaintiff or, where the order for appraisement and sale was obtained in a different action, of the plaintiff in the latter action, are accorded priority over all other claims, whether for costs or not. These apart, costs are ranked with or immediately before or immediately after the claim in respect of which they arise.

(3) A possessory lien, although postponed to earlier maritime liens, has priority over subsequent liens, maritime or not. If the Court orders possessory lien holder to relinquish possession the order will include protection for any rights he may prove to have.

(4)        (1) Salvage has priority over:

            (a) earlier damage;

            (b) earlier salvage, if distinct and on a different occasion;

.           (c) earlier wages;

(d) earlier claims to forfeiture by the Crown;

(e) subsequent possessory liens; (f) necessaries;

(g) execution creditors causing the ship to be seized by the sheriff after the salvage services were rendered, and the sheriff claiming in respect his charges and expenses;

(h) mortgages.

(2) Salvage claims in respect of the same casualty rank pari passu.

(3) Claims for life salvage have priority over claims for salvage of property.

(5)        (1) Damage the priority over:

            (a) earlier salvage;

            (b) Wages;

            (c) subsequent possessory liens;

            (d) necessaries;

            (e) execution creditors and sheriff as in 4(1) (g), supra;

            (f) mortgages.

            (2) Damage ranks pari passu with damage, earlier or later.

(6)        (1) Wages have priority over:

            (a) earlier salvage;

            (b) subsequent possessory liens:

            (c) necessaries:

            (d) execution creditors and sheriff, as in 4(1) (g), supra;

            (e) mortgages.

            (2) Masters’ wages and disbursements both rank as masters’ wages.

            (3) Masters’ wages and disbursements rank, subject to (6) infra, p­ari.

            (4) Crews’ wages rank subject to (6) infra, pari passu.

(6) Where salvage is interposed between wages earned before and wages earned after the services, the later‑earned wages have priority over earlier‑earned.

            (7) Wages include repatriation expenses, subsistence allowance, etc.

(8) Special considerations apply in certain circumstances where a is also a part‑owner.

(7)        Mortgage priorities are as follows:

(1)British registered mortgages have priority by registration over earlier (or later) unregistered or foreign mortgages even through there is notice of the unregistered or foreign mortgage.

(2) British registered mortgages have priority inter se according to date of registration.

(3) Mortgages have priority over necessaries unless the ship was already under arrest for the necessaries when the mortgage was entered into.

(4) Unregistered and foreign mortgages have priority inter se according to the dates when they were entered into, subject to the rules of equity governing equitable mortgages.

(5) A mortgage has no priority over a possessory lien, for a possessory lien has priority over all claims except earlier maritime liens.

(6) A mortgage has no priority over a martitime lien.

(8)        Necessaries usually have a very low priority.

(1) When a ship has been arrested in a necessaries action, the necessaries have priority over mortgages entered into after the arrest.

(2) Under similar conditions, necessaries have piority over an execution by which a sheriff seizes the arrested ship.

(3) Necessaries rank pari passu inter se and no date is of any consequence.

(9)        Contractual claims, e.g., for breach of chart party, seem to rank as if the claims were claims in respect of necessaries.

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