Please ensure Javascript is enabled for purposes of website accessibility

Admiralty – Maritime lien not affected by prior settlement

By: S.C. Lawyers Weekly staff//February 18, 2021

Admiralty – Maritime lien not affected by prior settlement

By: S.C. Lawyers Weekly staff//February 18, 2021

Although a fuel supplier had already entered into a settlement agreement with a vessel charterer who failed to pay for fuel, that settlement did not prevent the supplier from enforcing a maritime lien against the vessel.


Addax Energy SA filed this in rem action against an ocean vessel. Addax had entered into a fuel supply agreement with the charterer of the vessel (Windrose). When Windrose failed to pay the amount due, Addax filed this action against the vessel to enforce a maritime lien under the Commercial Instruments and Maritime Lien Act, or CIMLA, and Supplemental Admiralty Rule C. In response, the vessel asserted that Addax’s right to a maritime lien was extinguished when Addax settled its breach of contract claim with Windrose in a separate proceeding.

The district court granted summary judgment to Addax, concluding that the maritime lien arose by operation of law and was unaffected by Addax’s settlement agreement with the charterer. After a bench trial held to determine damages, the court entered judgment in favor of Addax.


The vessel contends that Addax lacks standing to assert its maritime claim because Addax purportedly assigned its right to collect the receivables from the fuel invoice to a third-party financing company. However, the question whether Addax assigned its right to collect receivables to a third party does not implicate Addax’s standing under Article III.

Rather, the true principle underlying the vessel’s argument relates to whether Addax is the real party in interest; whether Addax “was legally entitled to pursue” the maritime lien on its own behalf, or whether the claim belonged to a third-party assignee. Given the dearth of evidence in the record that Addax actually assigned its rights, the vessel did not establish a genuine dispute of material fact that Addax was not the real party in interest to assert the maritime lien.


The vessel contends that the district court lacked admiralty jurisdiction over this in rem action because the settlement agreement superseded the underlying fuel supply contract. In the vessel’s view, by failing to reserve expressly the right to a maritime lien in the settlement agreement, Addax settled both its in personam claim against Windrose and its in rem claim against the vessel.

The vessel’s argument misapprehends the nature of the claim that Addax advances here. Addax’s complaint in this case does not arise under the settlement agreement, but instead asserts a single in rem claim under the CIMLA. Addax does not assert a claim for breach of the settlement agreement, nor does Addax name Windrose, the only other party to the settlement agreement, as a defendant. Addax similarly does not assert a breach of contract claim based on Windrose’s failure to pay the amount owed under the original fuel supply contract. Thus, on the face of the complaint, the terms of the settlement agreement do not affect Addax’s in rem claim except insofar as Addax might be seeking a double recovery on the debt.

Moreover, the vessel was not a party to the settlement agreement between Addax and Windrose. Because the vessel was not a party to the settlement agreement, Addax was not required to expressly reserve in that agreement Addax’s right to the maritime lien.

The vessel also contends that the district court erred in declining to credit the value of the Cargill claim against the amount of the maritime lien. It is undisputed that Addax has not received any payment from Cargill toward the underlying debt. The district court therefore correctly declined to credit the value of the Cargill claim toward the amount of the lien.

The vessel also contends the court violated the vessel’s due process rights by failing to hold a prompt hearing under Supplemental Admiralty Rule E(4)(f). The court disagrees. The vessel did not file a motion to vacate the arrest until the middle of the discovery proceedings. Nor did the vessel timely request a hearing on the motion. Finally, it raised a due process argument for the first time at the damages trial, after the court had granted summary judgment to Addax.



(Agee, J.): Given the uncertainty surrounding whether Addax has assigned its rights to collect on the invoice at the heart of this dispute—as well as the dearth of record evidence concerning that point—I would remand the case to the district court for an evidentiary hearing to verify Article III standing for purposes of our jurisdiction.

Addax Energy SA v. M/V Yasa H. Mulla (Lawyers Weekly No. 001-020-21, 23 pp.) (Barbara Milano Keenan, J.) (G. Steven Agee, J., dissenting) Appeal No. 18-2438. Jan. 22, 2021. From E.D. Va. (Henry Coke Morgan, S.J.) James H. Power for Appellant. Lauren Brooke Wilgus for Appellee.

Business Law

See all Business Law News


See all Commentary


How Is My Site?

View Results

Loading ... Loading ...