Much like vehicles, homes, and other valuable possessions, ships are often purchased and owned by payment of a mortgage. Also similar to those circumstances, it is the vessel itself that is responsible for the payment of liens and mortgages once the owner of the ship encumbers it with a First Preferred Ship's Mortgage.
If, for some reason, the vessel falls behind on its responsibility to pay the mortgage, the creditor or owner of the ship can take actions to secure the lien and collect owed payments.
The process that would be taken must involve an Admiralty Court. When a creditor comes to show they have not received payments, the vessel must first be seized—or arrested—before the court can have jurisdiction over the matter. This takes place when a federal court, by request of the creditor, issues a warrant of arrest and sends a U.S. Marshall aboard the ship to arrest the vessel. Obviously, the ship owner cannot use the vessel under arrest.
Maritime liens arise out of unpaid services or goods to the creditor. The creditor can bring a lawsuit against the vessel over delinquent liens after being denied their request for payment.
A maritime lawyer can also seize the vessel involved in a previous accident, or any vessel in the defendant's fleet, in order to gain jurisdiction in a personal injury case, wage claim case (such as maintenance and cure), and in wrongful death matters. We will file a lawsuit in federal court against the vessel, in rem (which means against the vessel itself), the court will issue a warrant of ship arrest to seize the ship, and then we can recover the amount owed.
When a valid lawsuit is filed, a warrant will be issued and the vessel will be put under arrest. In order to release the vessel, the ship owner must either provide a security deposit or have the vessel sold. The court will hold security realized by selling the vessel until the lawsuit is settled and the profits from the sale are directly given to the creditor to cover the claim. Arrest of the vessel is not always the first action taken by creditors. Another option is to file a Notice of Lien against the ship owner through the U.S. Coast Guard National Vessel Documentation Center. While this does not arrest the vessel, it does place a proverbial cloud over the vessel—deterring potential buyers away from the vessel and compelling the ship owner to come up with a payment.
Arnold & Itkin represented nearly a third of the crewmembers injured in the Deepwater Horizon explosion.
Because maritime law is so complex and so complicated, it is crucial that you work with an attorney who has an in-depth understanding of how it works and who has proven themselves in similar cases before.