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Admiralty — Court Enforces Maritime Fuel Lien

By: Deborah Elkins//April 22, 2015

Admiralty — Court Enforces Maritime Fuel Lien

By: Deborah Elkins//April 22, 2015

World Fuel Services Trading DMCC v. Hebei Prince Shipping Co. Ltd. (Lawyers Weekly No. 001-070-15, 39 pp.) (Agee, J.) No. 14-1434, April 17, 2015; USDC at Norfolk, Va. (Davis, J.) 4th Cir.

Holding: The 4th Circuit affirms summary judgment in favor of World Fuel Services Trading DMCC in its in rem action against the vessel, M/V Hebei Shijiazhuang, to enforce a maritime lien for the supply of necessaries – “bunkers” of marine fuel – under the Federal Maritime Lien Act.

The district court held that DMCC was entitled to a maritime lien for the amount due for marine fuel, or “bunkers,” provided to the vessel. The vessel is owned by Hebei Prince, a corporation organized under Chinese law and registered in Hong Kong. The vessel was leased to a Greek organization, Tramp Maritime Enterprises Ltd., under three consecutive time charters covering the period from May 23, 2012 to Nov. 28, 2012. The terms of the time charters prohibited Tramp Maritime from incurring any lien or encumbrance against the vessel.

Throughout its brief, Hebei Prince argues that the district court lacked admiralty jurisdiction and therefore the case should be dismissed. We agree with plaintiff World Fuel Services Trading DMCC that Hebei Prince confuses the district court’s admiralty jurisdiction with the merits of DMCC’s claim of a maritime lien arising under the FMLA. The district court had admiralty jurisdiction to consider DMCC’s claim, and we have jurisdiction over this appeal under 28 U.S.C. § 1291.

We agree with the district court that the applicable law on the issues of contract formation would be the same whether Greek or U.S. law is applied.

We conclude the district court did not err in determining that DMCC was in privity of contract with Tramp Maritime. It follows that regardless of its eventual success on the claim, DMCC could assert a cause of action based on an alleged breach of the Bunker Confirmation, including a claim that it had an enforceable maritime lien under the FMLA.

The district court also did not err in concluding Greek law would recognize the language contained in the Bunker Confirmation to validly incorporate World Fuel Service’s General Terms & Conditions. The General Terms do not create doubt as to their applicability to DMCC or otherwise undermine the Bunker Confirmation’s incorporation of the General Terms by reference. The General Terms’ choice-of-law provision authorizes DMCC to pursue a maritime lien under the FMLA.

We conclude that the FMLA’s § 31341(a)’s presumption of authority to procure necessaries applies to the Bunker Confirmation transaction. Hebei Prince failed to demonstrate or even proffer evidence creating a genuine issue of material fact as to whether DMCC had actual knowledge of Tramp Maritime’s lack of authority to bind the vessel. DMCC was entitled to bring this action to enforce a maritime lien against the vessel.

Summary judgment to DMCC affirmed.

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