In an economic climate like the present, with plummeting markets and corporate failure an increasingly common phenomenon, creditors understandably give paramount importance to the search for security and priority of their claims. In the maritime context, the ancient device of the maritime lien has acquired fresh practical significance as a result. Access to a maritime lien does not guarantee recovery, but it puts a creditor in a far better position than rival claimants whose claims are unsecured. When a lien claimant proceeds in rem against a ship, other claimants often feel forced to bring their claims in the same court for fear of losing their rightful security and priority. As a result, disputes between claimants about security, priority, and the right to a maritime lien are often fought in forums that have little connection with the parties or the dispute, except that the ship happened to be in a particular port when it was arrested pursuant to the first in rem claim. Because of the international nature of the shipping business, it is often the case that U.S. courts are required in consequence to consider in rem actions brought by foreign claimants seeking recovery in claims governed by foreign law. The attractiveness of U.S. courts as a forum for in rem claims is enhanced by the fact that far more claims are secured by a maritime lien under U.S. maritime law than under the law of other countries. As a result, it is often the case that a plaintiff in a U.S. court seeks an in rem remedy that would not be available to it under the foreign law governing the underlying claim. The law governing such cases is complex and often confusing because it calls for an understanding of both admiralty procedure and choice-of-law principles. This Article is an attempt to explain the conceptual framework in which such claims should be understood.
At the outset, it is important to distinguish three choice-of-law questions. First, there is the question of what law governs the plaintiff's underlying claim, the cause of action that is the basis for its claim to redress. Second, there is the question of what law governs access to a maritime lien, the right to bring suit in rem on that claim against a ship or other property. Third, there is the question of what law should govern priority between competing maritime liens, the order in which the claims should be paid if the fund available in court is insufficient to satisfy them all in full.
These are different questions that demand different choice-of-law analyses. In many cases, perhaps most, the answer to the first two questions will be the same, with the result that the law governing the underlying claim also governs the availability of a maritime lien. Nevertheless, it is a mistake to think this must necessarily be so. Thus, for example, it is wrong to assume that a claim governed by a foreign law must necessarily be denied a U.S. maritime lien if the foreign law in question would not confer a maritime lien on that kind of claim. The second choice-of-law question (what law governs the maritime lien) may indicate that a foreign law claim has sufficient connection to the United States to be allowed access to a U.S. maritime lien. Conversely, it is wrong to assume that a claim governed by U.S. law must necessarily be secured by a U.S. maritime lien. The second choice-of-law question may indicate that a claim governed by U.S. law nevertheless has insufficient connection with the United States to warrant conferral of the security afforded by a U.S. maritime lien.
Whether or not the same law governs the first two issues (the underlying claim and the availability of a maritime lien), the answer to the third question (what law governs priorities) must always be U.S. law, the law of the forum (lex fori).
Some of these propositions may seem controversial (or just plain wrong, depending on your point of view), but they flow from the conceptual analysis undertaken in Part II, which deals with the ostensibly straightforward case where the underlying claim is governed by a foreign law that would confer a maritime lien on the claim in question. Part III deals with the consequences of recognizing that the first two choice-of-law questions (what law governs the claim and what law governs the maritime lien) are separate and independent. It focuses mainly, but not exclusively, on the first of the two situations described above, where the underlying claim is governed by a foreign law that would not confer a maritime lien on the claim in question, arguing that it should not follow necessarily that no U.S. maritime lien is available in such a situation. Part IV argues the converse proposition, namely that availability of a U.S. maritime lien should not flow automatically from the fact that the underlying claim is governed by U.S. maritime law. It deals with the second situation described above, where the underlying claim is governed by U.S. law but there is some foreign element to the case. Part V shows why the third question, that of priority, must always be governed by the lex fori.