It is a great honour to be invited to give this address to the annual conference of MLAANZ. I was in my final year of Sydney Law School in 1977 when the first Dethridge Address was delivered by the Rt Hon Sir Ninian Stephen. The address now serves a significant educative function for our two nations’ maritime professionals.
Ships are probably the paradigm examples of the effects of cross-border insolvencies. The commercial failure of a ship on an international voyage had been a well known legal problem for perhaps millennia before the more recent advent of the collapse of a multinational corporation or corporate group.
Ships can incur not only debts but liabilities anywhere they sail. The principles of what we know broadly as maritime law developed over time to deal with the recognition of what claims each forum will recognize as enforceable against a ship when she enters its port.
In this address I want to explore how a maritime lien can be classified and which choice of law rules may be used to ascertain whether a foreign maritime lien could be recognised under Australia law, particularly in light of the High Court’s recent development of Australian private international law rules. I will discuss the Privy Council’s controversial majority decision and dissent in TheHalcyon Isle1, concerning the choice of law for recognition of a foreign maritime lien, and the competing theories of whether the private international law doctrine of renvoi may apply in relation to Australian law, maritime liens and contracts. Lest it be thought that this collection of topics sounds like it came from the over excited mind of a professor of law, I must reveal that it is a greatly simplified part of the subject matter of a case that I heard recently which has settled. I do not propose to give any of the answers that I came to but rather I will work through some of the issues that arose in argument.
The problem in the Halcyon Isle
First, I should give a little history from the New Straits Times of 9 September 1974 concerning the arrest of the 17,000 ton oil tanker, Halcyon Isle. She was part of a fleet operated by the London based company, Court Line. Court Line collapsed in mid August 1974, during the recession caused by the oil price crisis. The ship, which was registered in London, had been mortgaged the previous year to a British bank. Because Court Line was in financial trouble, the ship could not take on a full load of provisions when she called at Dubai on 11 August 1974 en route for Singapore. She broke down in the Straits of Malacca just after her owners’ own collapse and was without her engines or generators for a week until she was towed into Singapore on 5 September 1974.
Earlier, on 28 August 1974, the bank began proceedings in Singapore and obtained a warrant for the ship’s arrest in support of its claim for over S$14 million. On the same day, Todd Shipyards Corporation, the New York repairers (the necessaries men), who had worked on the ship in their Brooklyn yard in March 1974, also issued a writ in Singapore claiming about S$240,000 for work, materials and interest.
When Halcyon Isle was arrested, her crew told of their week long ordeal while stranded without power, and with food and water running low. The New Straits Times reported that in desperation they tore up deck boards to cook their food. When the ship was sold, the proceeds were insufficient to satisfy all the creditors. The necessaries men claimed priority for the maritime lien they had under Title 46 of the United States Code.
That brings me to the legal history. In December 1972, in The Ioannis Daskalelis2 the Supreme Court of Canada had upheld a similar claim by Todd Shipyards for a United States maritime lien as having priority over a ship’s mortgage, even though no such maritime lien was conferred by Canadian law.
In December 1977, the Singapore Court of Appeal decided The Halcyon Isle by following the Supreme Court of Canada. It upheld the necessaries men’s assertion that the law of Singapore would recognise their maritime lien as created by the law of the place of its creation, being there, the lex loci (contractus), and gave the lien priority over the bank’s mortgage.
The bank appealed and the question for the Privy Council was whether a maritime lien that arose under the lex loci created a substantive right that the law of the forum (lex fori) should enforce or whether only those categories of maritime lien that arose under the law of the forum should be enforceable. All of their Lordships agreed that the law of Singapore on this issue was the same as the law of England3.
The majority, Lords Diplock, Elwyn Jones and Lane, held that English conflicts of law rules provided that the law of the forum (lex fori) governed the questions of recognition and priority in respect of maritime liens. They held that, accordingly, the only maritime liens that could be enforced were those that could be maintained by an action in rem brought in England: i.e. maritime liens enforceable in the English Court of Admiralty for salvage, collision damage, seaman’s wages, bottomry4 and the statutory maritime liens created in the 19th century for master’s wages and master’s disbursements5. In the majority, only Lord Diplock was a recognised commercial judge with some maritime experience.
In contrast, Lord Salmon was a commercial judge with maritime experience and Lord Scarman had commercial experience in appellate work. They held that a maritime lien was a right of property given by way of security for a maritime claim and, if validly conferred by the lex loci, was equally entitled to recognition in the forum by an action in rem as a foreign mortgage that was validly created by the lex loci6. Effectively, the difference between the majority and minority was that the former classified the right to proceed in rem on a maritime lien conferred by a foreign law as procedural and the latter classified it as substantive.