The General Maritime Law provides unique protections to those engaged in maritime commerce. For instance, those companies or individuals who provide stores, supplies and services to a vessel can, in the event of non-payment by the vessel owner, take action directly against the vessel served to secure payment of the debt. Also, in the event of a marine casualty, the damaged parties can also proceed directly against the offending vessel to secure payment for their losses. This is because the General Maritime Law treats vessels as specific legal entities and the debt is owed by the vessel, irrespective of its ownership. One reason for this remedy is because the actual owner or operator of the vessel may be beyond the reach of the creditor or damaged party. Another reason is because vessels frequently change their geographic location. Further, the debt or lien attaches to and follows the vessel (in most instances), even though ownership may change. The creditor has relied on the vessel, not the owner.
To protect itself, the law provides that a party aggrieved by a vessel may arrest and seize the vessel and hold it as security for the debt. This requires filing a Complaint for arrest and seizure in the Federal Court where the vessel is located. (This right applies to “vessels” as defined by the Courts. Vessels under construction are not subject to seizure.) These procedures are found in the Federal Rules of Civil Procedure and Special Admiralty Rules.
Once the Complaint is filed and approved by the Judge, orders are issued by the Court directing the U.S. Marshal to board and take control of the vessel. Once seized by the U.S. Marshal, the vessel cannot be moved without court order. The Marshal will not usually interfere with the daily work of the vessel as long as its location does not change, meaning that the vessel stays within the jurisdiction and authority of the Court. Once seized, any other creditor can join in the proceedings and make its claim against the vessel.
Once its vessel is seized, the owner can procure its release by posting security sufficient to cover the obligation asserted. This is done generally by posting a bond or letter of undertaking. Once accepted, the vessel will be released.
If the owner does not provide security, the law provides that the creditor may by default or judgment against the vessel require that it be sold at an auction administered by the Marshal’s office. Proceeds will then be used to pay costs incurred in the seizure and keeping of the vessel and the various liens or debts lodged against the vessel. The liens or debts are ranked in priority as recognized by the courts and paid in that order.
These efforts can be expensive. However, once seized, the vessel owner in most instances promptly provides the necessary security and maritime commerce is rarely delayed for any significant time. In fact, usually the threat of seizure is sufficient to give the owner incentive to provide the necessary security.