The Ship "Sam Hawk" v Reiter Petroleum Inc [2016] FCAFC 26

The basis for the rule in authority before The 'Halcyon Isle'

1. In the 5th edition of Dicey Conflict of Laws (Keith, AB (ed), Sweet & Maxwell, 1932), Professor Dicey wrote that "the court has jurisdiction to entertain an action in rem for the enforcement of any maritime lien if the case is one in which, according to English law, a maritime lien exists" (emphasis added). This passage was quoted with approval by Scott LJ in The 'Tolten' [1946] P at 161 who explained that the statement, by "a great master of the whole subject of Conflict of Laws" was accurate and "intentionally expressed by the author in general terms ... He was far too careful and prudent a writer to omit any relevant qualification when enunciating an absolutely general principle of law, such as the above paragraph." The same quotation was approved and applied by the Admiralty judge, Hewson J, in The 'Acrux' [1965] P 391 at 402. As we explain below, it is a long standing principle which was applied in England in a succession of cases prior to The 'Halcyon Isle', which we consider separately below, where the majority also followed those cases.
2. The root of the principle, in the earliest cases, may have been that the lex causae of a right amounting to a maritime lien was invariably considered to be the lex fori because of the characterisation of the question as one of "remedy". Prior to the 19th century, there was controversy in English courts about the extent to which security should be recognised for necessaries. In the second edition of Lord Tenterden's text on shipping, he wrote of the conflict between the views of Lord Mansfield and Lord Kenyon. Lord Mansfield had held that the supplier of necessaries has "the security of the specific ship" in cases such as Rich v Coe [1777] EngR 14; (1777) 2 Cowp 636; 98 ER 1281 and Farmer v Davies [1786] EngR 41; (1786) 1 TR 108; 99 ER 1000. But Lord Kenyon had held that this principle did not apply to the supply of necessaries in England: see Westerdell v Dale [1797] EngR 477; (1797) 7 TR 306 at 312; [1797] EngR 477; 101 ER 989 at 993. As to the supply of necessaries in foreign ports, at the start of the 19th century Lord Tenterden did not take a clear position whether Lord Mansfield's Civilian approach continued to apply in those cases in Admiralty. Instead he focused upon hypothecation in such cases arising from an instrument of bottomry executed by the master or by agreement with the master: see Abbott C, A Treatise of the Law relative to merchant ships and seamen (2nd ed, Butterworth, 1804) at Pt 2, Ch 2, 127-128 quoting Sir Joseph Jeykll MR in Watkinson v Bernadiston [1726] EngR 519; (1726) 2 P Wms 368 at 368; [1726] EngR 880; 24 ER 769 at 769:

But it is true, that if at sea, where no treaty or contract can be made with the owner, the master employs any person to do work on the ship, or to new rig, or repair the same, this, for necessity and encouragement of trade, is a lien upon the ship, and in such case the master, by the maritime law, is allowed to hypothecate the ship.

1. As Lord Tenterden explained, quoting from Lord Hardwicke LC, the reason why the master had the power to hypothecate the ship at sea but not in England was the combination of his authority as master "and the necessity thereof during the voyage: without which both ship and cargo would perish" (Abbott_, op cit_, at Pt 2, Ch 2, 128 quoting Buxton v Snee (1748) 1 Ves Sen 154 at 155; [1748] EngR 411; 27 ER 952 at 952). Lord Tenterden continued, at Pt 2, Ch 2, 134, explaining the manner in which the master could hypothecate the ship. He explained that the "nature of those instruments of contract, by which a ship itself is expressly made security" by the master are contracts of bottomry (or, in the case of pledges of the cargo, contracts of respondentia).
2. In 1825 in The 'Zodiac' (1825) 1 Hagg 320 at 325; [1825] EngR 351; 166 ER 114 at 116, a bottomry bond case, Lord Stowell explained that:

[i]n most of those countries governed by the civil law, repairs and necessaries form a lien upon the ship herself. In our country the same doctrine had for a long time been held by the Maritime Courts, but after a long contest it was finally overthrown by the Courts of Common law, and by the highest judicature of the country, the House of Lords, in the reign of Charles II. There might be some reason to fear that other countries might mete out the same measure of justice to our ships in their ports, if this mode of personal contract were not resorted to and supported, for cases of imperious necessity in their ports, and with the benefit of a high premium or maritime interest, to encourage the relief of our ships.

1. By the second half of the 19th century the clear position was explained by Blackburn J, giving the opinion of himself, as well as of Bramwell B, Mellor J, Cleasby B and Brett J, in Castrique v Imrie (1870) LR 4 HL 414. In the course of considering a question of enforcement of a French judgment, Lord Blackburn considered the approach taken by the French courts in the case. He explained that the mistake made by the French courts was one for which they were not to blame (at 431). He explained that both in England, and in every other country, persons "who supply necessaries to a ship in a foreign port" may sometimes acquire a right over the ship. Indeed, Lord Tenterden, in his 1827 edition, had explained that jurisdictions which applied the Civil or Roman law recognised "a privilege, or right of payment, in preference to other creditors, upon the value of the ship itself, without any instrument of hypothecation, or any express contract, or agreement, subjecting the ship to such a claim (D 42.5.26)". The passage cited from the Digest was from Paul who said that "One who advances money to build, equip, or buy a ship is a preferred creditor". However, as Blackburn J explained, in England, before the supply of necessaries to a ship in a foreign port could give rise to a right to the ship, "such a right was required to be by a written contract or hypothecation".
2. Hence, throughout the 18th and 19th centuries although there had been debate about the rule of English law to apply to claims for necessaries, it became established that English law did not follow the Roman law rule which generally recognised a maritime lien in cases of necessaries supplied in foreign ports. Rather, English law required a bottomry bond, or instrument of hypothecation, before such a right would be recognised. And, most fundamentally for this case, the rule to be applied was a rule of English law or the law of the forum. There had never been any suggestion that English law should apply a foreign law rule as part of private international law which rule might not have reflected English law and policy. See also for the history of this debate and its resolution, Hart, EL and Bucknill, AT MacLachlan's Law of Merchant Shipping (6th ed, Sweet and Maxwell, 1923) at 50-52; Bucknill, TT and Langley, J Lord Tenterden's Treatise of the Law relative to Merchant Ships and Seamen (13th ed, 1892, Shaw and Sons) at Pt 2 ch3; Bruce, G A Treatise on the Jurisdiction and Practice of the English Courts in Admiralty Actions and Appeals (being Williams' and Bruce's Admiralty Practice (2nd ed, Maxwell, 1886)) at 178-179.
3. One of the earliest cases to consider the private international law approach to foreign maritime rights was The 'Milford' (1858) Swab 362; 166 ER 1167. In that case, the master of the vessel sought to arrest the vessel in England, relying upon his claim for unpaid wages which were due by a contract said to be governed by United States proper law. The law of the United States was said to deny a maritime lien to the master, but the law of England allowed it. The question was whether the English court should apply the lex loci contractus or the lex fori. The court had no contract before it. Dr Lushington held that he had no means of knowing whether the contract contained any choice of law or jurisdiction clause. In any event, he concluded that the court had jurisdiction because "the proceeding originated [in England]; it is a question of remedy, not of contract at all" (366; 1170).
4. Dr Lushington followed this decision in The 'Jonathan Goodhue' (1859) Swabey 524; 166 ER 1246. This was a claim by a master for wages which was opposed by the holders of a bottomry bond, who claimed priority. Dr Lushington said that he "adhere[d] to" his judgment in The 'Milford' although it was a case of "great doubt and difficulty" (526; 1247). In the application of English law, Dr Lushington held that the bondholders whose bonds were subsequent to much of the master's claim for wages were, based on the terms of the bond, entitled to priority over the master's lien for wages.
5. The same result was reached in The 'Tagus' [1903] P 44. In that case, a claim was brought by the master of the vessel for wages and disbursements. The lex loci of the ship was Argentina, but Argentine law restricted the master's rights to those arising from the last voyage. The master relied on English law which permitted him to claim based on all voyages under his captaincy. The Court held that the question was purely remedial and the master was entitled to the whole of his wages and disbursements in priority to the mortgagees (at 51-52).
6. Each of the The 'Milford', The 'Jonathan Goodhue', and The 'Tagus' involved the recognition by the forum court of rights which might not have existed by a foreign law if a foreign lex causae had been applied. These cases were decided upon a principle of private international law that the law of the forum governs questions of "remedy". Such a distinction based on "remedy" no longer applies: see John Pfeiffer Pty Ltd v Rogerson. But the rule persisted in England that the forum court must characterise the rights as a maritime lien based on whether the same circumstances would give rise to a maritime lien in English law.
7. In these cases where the lex fori is applied to recognise a maritime lien that might not have existed by a foreign lex causae, the central role for the lex fori might not be seen as parochial but might be seen as an indication of the importance placed, by way of policy, by the place where rights are able to be and are being enforced. Take seafarers' wages. A feature of maritime law over the centuries has been the protection of the rights of seafarers - so often put upon and exploited. The attitude of Courts of Admiralty to seafarers as almost wards of the court (see e.g. Harden v Gordon 11 F Cas 480; 2 Mason 541; 2000 AMC 893 (1823)) was a reflection of this. Articles of engagement might be made pursuant to a law of a flag of convenience which expressly excluded a maritime lien for seafarers, which exclusion might be recognised by the law of that jurisdiction. The consequence of recognising a foreign lien by reference to a lex causae in circumstances where the lex fori does not, is that if the lex causae does not recognise a lien, there may be no principled basis for the lex fori to do so. If the question of whether a lien exists for seafarers' wages is to be governed by the proper law of the engagement, a deep and wide pathway for injustice could be created in the name of the symmetry of private international law. Although these questions do not arise in this case, there might be said to be a parallel with the situation where, if the lex causae for the recognition of the lien for the supply of necessaries is to be the proper law of the contract, a mechanism is thereby given to parties to a contract (to which the owner may not be a party) to create a favourable lien regime against the owner by the choice of law. As we have explained, that situation hardly advances certainty or fairness and equality of claims of equal circumstantial entitlement. However, we are not called on in this case to consider the role of the lex fori in circumstances where it recognises a maritime lien, and the lex causae of the claim does not, or the question as to whether The 'Milford', The 'Jonathan Goodhue', or The 'Tagus' would be decided similarly today. It may be that in such circumstances, depending on the type of lien involved, the legal policy of the forum and universal conceptions and values in the general maritime law will assume an important role.
8. One of the most influential cases was the decision of the Court of Appeal of England and Wales in The 'Colorado' [1923] P 102. That was a decision by a powerful bench: Bankes, Scrutton, and Atkin LJJ. It was argued by leading admiralty counsel of the day: R A Wright KC (later Lord Wright) and C Robertson Dunlop KC, and was an appeal from the then Admiralty Judge (Hill J).
9. The 'Colorado' was not a case concerned with a maritime lien. It involved a priority dispute between the holder of a French hypothèque and claims by Cardiff necessaries providers in relation to a French ship, registered in France. The ship was arrested in Cardiff and sold. The proceeds were paid into court, but they were not sufficient to satisfy the claims of both the hypothècaire and the necessaries providers. The hypothèque had been executed and registered in France over the ship. Under French law the necessaries providers would take priority. Under English law there was no concept of a hypothèque, but a mortgagee or the holder of a maritime lien would have taken priority over the necessaries providers.
10. The Court of Appeal in The 'Colorado' recognised the hypothèque and its incidents under French law and applied the English law approach to priorities. They characterised the hypothèque as a maritime lien and gave the hypothècaire priority over the necessaries providers. We refer below to the controversy concerning whether the hypothèque should have been characterised as a maritime lien or as a mortgage. However, the important point was that the Court of Appeal reached its conclusion by considering the circumstances and characterising the rights created as a matter of English law. For instance, Atkin LJ said (at 110):

Where parties are litigating in this country in respect of rights created elsewhere, to ascertain their rights we may look, in appropriate cases, to the law of the country where the contract was made. ... A claimant claims as possessing a maritime lien. This might appear to be an intermediate case, as a maritime lien gives a right against the ship, which continues notwithstanding a change of ownership. Nevertheless, in determining whether there exists a maritime lien the court will apply the lex fori, and will give effect to the lien as it exists by English law. (emphasis added)

1. The decision in The 'Colorado' was applied in the context of a maritime lien in The 'Zigurds' [1932] P 113 at 122-126. Although The 'Zigurds' was overturned on appeal and then subsequently affirmed by the House of Lords, this was on a different point. The issue of private international law considered below was not the subject of the appeals.
2. In The 'Zigurds', the ship was supplied with necessaries, bunker coals, by German suppliers at a German port. The English courts recognised the claim by the German necessaries providers and quantified the claim. A further question arose concerning whether the German necessaries providers were entitled to rank in priority ahead of other necessaries providers, and also ahead of a mortgagee. The necessaries suppliers pointed to the German Commercial Code which they asserted had shown that their claim was one which was treated by German law as indelible and as having priority over mortgagees. Counsel for the necessaries providers claimed that German law therefore gave the necessaries providers a "maritime lien" (125) relying upon The 'Colorado'. The primary judge, Langton J, described this submission as a "contention at once so novel and so bold" (120). He rejected the submission for a number of reasons. One reason was that German law, and German rights, only applied if the ship was arrested in Germany (at 122-123). Another reason was that a characterisation of a foreign right as a "maritime lien", to afford the priority as such, could not occur where the claim would not have been characterised on the same facts as a maritime lien by English law. His Lordship said (125-126):

Because in The Colorado case the Court, in special circumstances, first turned aside to look at a foreign law, in order to obtain light concerning the legal character of a foreign instrument, I do not think that the case can be claimed as an authority for the introduction of any foreign law which any party chooses to adduce in order to qualify and alter the English rules of ranking. Indeed it is noteworthy that both Hill J and the Court of Appeal declined to take any note of the French law in the matter outside of the instruction which they derived from the evidence as to the nature of a French "hypothèque". Once they were clear as to what it was, they returned at once to the English law to decide the order of its ranking. I am of opinion, therefore, that Mr. Carpmael's valiant and determined effort to persuade me that The Colorado decision affords ground for enabling him to say that his necessaries man has a maritime lien, thus forcing me to disregard the lex fori as to necessaries men, is unavailing.

1. The same lex fori approach to characterisation was taken in The 'Acrux' [1965] P at 399-404. In that case, an Italian statutory corporation brought an action in rem against the proceeds of sale of Acrux. The corporation was required to pay social insurance benefits to seamen. It argued that this obligation was the same as an English obligation to make National Insurance contributions and, therefore, it was part of the wages of the seamen. The unchallenged, and accepted, expert evidence was that under Italian law the shipowners would be personally liable to the corporation for the contributions. Italian law treated this liability as a "privileged lien" against the ship which ranked in priority immediately after port dues, pilot's fees and crew's wages. The lien was exigible against a subsequent, innocent owner of the ship. But it persisted only for three years. The primary judge, Hewson J, held that although the rights were of the nature of a maritime lien (403), the English court would not recognise it as a "maritime lien" because the circumstances would not have given rise to a maritime lien in English law (402):

In my view, this particular maritime lien for unpaid insurance contributions is not one which is recognised by this court. In view of the approval given by Scott L.J. to Dicey's pronouncement, I am unable to stretch this court's equitable jurisdiction to include it.

1. The reference to Dicey's pronouncement was to the quotation from the 5th edition of his book, set out above at [107]. The decision in The 'Acrux', in 1965, represented a consistent approach to the determination of jurisdiction in maritime law for three decades since Dicey had confidently asserted it to be the position in 1932.
2. Meanwhile, a different approach had been taken in Canada. In The Ship 'Strandhill' v Walter W Hodder Co Inc [1926] SCR 680; 4 DLR 801, the Supreme Court permitted the enforcement of a maritime lien for necessaries by reference to the law of the contract. The lien was analysed and recognised simply as a foreign right. No question of priorities arose and the Court reserved its position if the question of conflicting priorities arose, though the Court expressed the view (at 809) that the plea of bona fide purchase did not raise such.
3. This approach was also taken by the Supreme Court of Canada in The 'Ioannis Daskalelis' [1974] SCR at 1259. See also Marlex Petroleum Inc v The 'Har Rai' [1987] 1 SCR 57; Imperial Oil Ltd v Petromar Inc [2002] 3 FCR 190; Kent Trade and Finance Inc v J P Morgan Chase Bank [2009] 4 FCR 109. In The 'Ioannis Daskalelis' Todd Shipyards had performed necessary repairs to the ship in New York. They were not paid for the repairs. The ship was arrested in Vancouver, sold, and the proceeds were paid into court. The case concerned whether the necessaries providers should obtain priority over a prior mortgagee. The Supreme Court held that they did.
4. The decision of the Supreme Court was given by Ritchie J. His Honour distinguished The 'Zigurds' on the basis that in that case the necessaries providers did not prove that their claim would be recognised in Germany as being equivalent to an English maritime lien (at 178). With respect, this is not an accurate description of the findings concerning German law (summarised above). But, in any event, it omits Langton J's explanation for the approach to characterisation taken in The 'Colorado'. In other words, as Langton J had explained, once the nature of the foreign right was understood, the Court of Appeal in The 'Colorado' had returned to English law for the purposes of characterisation.
5. The Supreme Court of Canada concluded that Canadian law would recognise the rights of the necessaries providers and the court characterised that right as a "maritime lien", giving the necessaries providers priority over the prior mortgagee. Although Ritchie J held that the question of priorities was a question for the lex fori (177), his Honour characterised the right as a maritime lien by disregarding the circumstances in which the right arose. In effect, his Honour therefore gave the right the priority it enjoyed in the United States in those circumstances, not in Canada. His Honour said (at 179):

Although the supplier of necessaries is not entitled to a maritime lien under Canadian law ... a valid maritime lien takes priority over a mortgage, and as the claim for necessary repairs furnished in the United States is recognized as creating that particular kind of lien and as being enforceable as such in Canadian Courts, it follows, in my opinion, that the appellant's claim in this case must be afforded priority over the mortgage held by the respondent.

1. Justice Ritchie said (at 178) that the decision in The 'Colorado' "is authority for the contention that where a right in the nature of a maritime lien exists under a foreign law which is the proper law of the contract, the English Courts will recognise it and will accord it the priority which a right of that nature would be given under English procedure". The reference to a "right of that nature" in The 'Colorado' must be understood as part of a line of authority (some decisions of which were quoted in The 'Colorado') which treated the characterisation of a "right of that nature" as including the circumstances in which the right arose. But Ritchie J disregarded those circumstances when characterising the right as a "maritime lien" for the purposes of Canadian priorities.

Consistency with other provisions in the Admiralty Act

1. The rules of private international law picked up in s 15(1) must be consistent with the text and structure of the Admiralty Act. There is an immediate textual indication that whatever private international law rule is adopted for the purposes of s 15(1), that rule requires that any foreign right be characterised by reference to the circumstances in which it arose and described consistently with Australian law. The textual indication is the words "maritime lien or other charge". The words "or other charge" are a reference to charges that arise by Australian legislation. As the Australian Law Reform Commission said at [122] ALRC Report:

The expression 'other charge' in the proposed provision is intended to cover statutory charges created by the formula '[the amount] shall be a charge upon the ship' which is found in Commonwealth, Imperial and State legislation. It would be possible to omit the expression. In most situations in which the formula is used the legislation creates its own means of enforcement, either by creating a power of detention or by assimilating the 'charge' to a maritime lien. A possible advantage of omitting 'other charge' would be that it would force legislatures wishing to take advantage of the admiralty procedure explicitly to create new maritime liens (or at least not to rely upon the word 'charge', which arguably leaves it unclear whether or not a full maritime lien is being created). On the other hand the term is used without elaboration in all relevant overseas legislation. It is desirable that the admiralty courts have jurisdiction over statutory charges analogous to liens, especially in dealing with insolvent ships, where priorities issues are likely to arise involving such charges. (Emphasis added)

1. Consistency would require foreign rights also to be recognised only where they are analogous to maritime liens where, again, priorities issues are likely to arise.
2. A second requirement for consistency is s 15(2). That subsection requires the Australian court to recognise, as a "maritime lien", a lien that arises for (a) salvage; (b) damage done by a ship; (c) wages of the master, or of a member of the crew, of a ship; or (d) master's disbursements. As we have explained, these are categories of maritime lien under Australian law. In other words, although s 15(2) of the Admiralty Act is only an inclusive provision it requires any foreign law right which involves a lien in one of these four categories to be characterised as a "maritime lien" as it would be under Australian law. The reason why s 15(2) was expressed as an inclusive provision was explained by the Australian Law Reform Commission at [122]:

the proposed legislation is not the appropriate place to attempt either to reform, or comprehensively to restate, the existing law of maritime liens ... To help those unfamiliar with admiralty jurisdiction, an indicative list of the four significant categories of lien (salvage, damage, wages and master's disbursements) should be added. The legislation should also make it clear that no new class of maritime lien is being created.

1. This is another indicator in the Admiralty Act that, to the extent that foreign rights are recognised in Australian law, they should be characterised, prioritised, and treated as Australian law would have recognised them. Section 6 provides that the Admiralty Act (other than in the provisions for unjustified arrest) does not create a new maritime lien or other charge. Although the recognition of a foreign right (together with a recognition of its foreign characterisation as a "maritime lien") under s 15 does not create a new maritime lien, it would have the effect of creating a new maritime lien if Australian law then attached that label to a claim of a kind giving no lien in Australia. Section 6 confirms that this was not the intention of s 15.

1. Another merit of this private international law rule is that it promotes clarity and predictability. As Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said in Regie National des Usines Renault SA v Zhang 210 CLR at 517 [66], "one of the objectives of any choice of law rule" is "the promotion of certainty in the law". See also Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331 at 364 [92] (Gummow and Hayne JJ).
2. If a right arose by the lex causae, then it would not be extinguished merely because the ship entered Australia where such a right might not have been created. This preserves the rights that are created by a foreign lex causae. However, there is also a need for certainty and predictability concerning the characterisation of those foreign rights as maritime liens and, associated with this, their consequences. The characterisation of a right as a maritime lien attaches the consequence of priority over other rights in rem. And that is governed by the law of the forum. As we have explained, the only alternative - that of recognising a foreign right as a "maritime lien" for the purpose of jurisdiction, but not necessarily for the purposes of the applicable priority rules - would tend to create (through the operation of priority rules, if they were to override the characterisation of the claim as a foreign maritime lien) a new, and previously unknown, form of maritime lien in Australia. We have mentioned the difficulties of such an approach. The difficulty involved in a governing lex causae analysis can be seen in World Fuel Services Corporation v The Ship 'Nordems' 2011 FCA 73; [2012] 4 FCR 183 (Canadian Federal Court of Appeal), and by the practical operation of a test such as enunciated in Lauritzen v Larsen. Further, as to certainty, the recognition, by characterisation, of a new form of maritime lien without priority would create uncertainty and a lack of uniformity. Whilst the priority scheme is flexible, we have explained that it is based upon reliable signposts and should not be "capricious, erratic or unpredictable" as would occur if a new maritime lien without priority were recognised. As Scott LJ said in The 'Tolten' [1946] P at 142:

uniformity of sea law throughout the world is so important for the welfare of maritime commerce that to aim at it is a right judicial principle - as many of our admiralty judges have said in the past.

1. The two-fold approach we have described ensures the preservation, and certainty, of foreign rights conferred by a lex causae, but in relation to characterisation of the nature of those rights (including for the purposes of s 15 of the Admiralty Act) it also preserves the rule, described three decades ago by Lord Diplock, about which "every such creditor whose claim is based on contract or [unjust enrichment] must have known", that in so far as the legal consequences of his or her claim under its own lex causae included rights to priority over other classes of creditors, "that particular part of the lex causae would be compelled to yield to the lex fori of any foreign court in which the action in rem might be brought": The 'Halcyon Isle' at 231. As we will see below, this point is of fundamental importance in relation to the characterisation of a foreign right as a "maritime lien" particularly where, as we have explained and as we explain further below, that characterisation is inextricably associated with the functional consequence of high priority.

Preservation of the priority rules of the forum

1. Closely related to the first point about clarity and predictability is the preservation of the priority rules of the forum. It was conceded by the necessaries providers in The 'Halcyon Isle' (227), as it was conceded by Reiter Petroleum on this appeal (tscpt p66), that the "ranking of priorities is a matter for the lex fori and that the machinery of remedies cannot be altered by the existence of a foreign system". This concession reflects the legal position that has always existed. It should be accepted. A choice must be made as to the system of priorities to be applied to claims. The claims might arise from events which would be governed by multiple leges causarum including locally, in foreign territory, or on the high seas. There is no right answer concerning the manner in which claims should be ranked. Different answers will be based on the different weightings given by particular legal systems to policy concerns underlying various claims. It would also be incoherent, and impossible, for a system of priorities to be based on the multiple, potentially conflicting, priorities of different leges causarum. The only conceivable choice for a single system of law to govern the question of priority is the law of the forum. As we explain below, this conclusion is also consistent with the Personal Property Securities Act.
2. Although a foreign right arising from its lex causae will be recognised, s 15 of the Admiralty Act requires the characterisation of that right as a "maritime lien". If the circumstances in which a foreign right arose are disregarded in the exercise of characterisation then this could alter the forum's rules of priority, unless the maritime lien were decoupled from its effect on priorities. So, for example, if Reiter Petroleum's submissions were accepted, a necessaries provider in the United States would obtain a different priority from the same necessaries provider in Australia or England. In effect, the foreign rules of priority would be applied. The only way in which this conclusion could be avoided would be to characterise the foreign right as a "maritime lien" for the purposes of s 15, but not necessarily for the purposes of priority. We have explained why this is neither desirable, nor consistent with the scheme of the Admiralty Act.

Reasons of coherence and lack of demonstrated policy for change

1. The High Court of Australia has emphasised, and re-emphasised, on numerous occasions the importance of principles of coherence in the law: Sullivan v Moody [2001] HCA 59; 207 CLR 562 at 576 [42], 579 [50], 581 [55] (Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ); Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; 238 CLR 570 at 602 [100] (Kirby J); CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; 239 CLR 390 at 406-410 [39]- [42] (Gummow, Heydon and Crennan JJ); Miller v Miller [2011] HCA 9; 242 CLR 446 at 454 [15]- [16], 467 [56], 482 [102] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498 at 513 [23], 518 [34], 520 [38], 523 [45] (French CJ, Crennan and Kiefel JJ).
2. The private international law rule concerning recognition of a foreign maritime lien should take into account principles of coherence with other related rules of private international law. The Personal Property Securities Act, s 238 provides for choice of law rules for goods which are governed by that Act. The "main rule" for choice of law concerning the perfection, and the effect of perfection or non-perfection, of a security interest in goods is contained in s 238(1A). That rule is that the proper law is the "the law of the jurisdiction (other than the law relating to the conflict of laws) in which the goods are located at that time".
3. There are exceptions to the main rule. In s 238(3), in relation to goods (such as ships) that are normally moved between jurisdictions, the proper law including the choice of law rules is the law where the grantor of the security interest is located when the security interest attaches, under that law, to the goods. A further departure from the main rule is created for goods (including ships) that are entered on a register of ships in a country which has laws which govern the question of title to the ship (in s238(4)). That rule is that:

at a particular time, the perfection, and the effect of perfection or non-perfection, of a security interest in goods is governed by the law of a country if:

(a) the goods are entered in a register of ships maintained by the country containing the names and particulars of ships; and

(b) in proceedings in the country, the law of that country governs title to the goods.

1. This rule is also consistent with obiter dicta supporting a very similar approach to the sale of a ship. In The 'Cape Moreton' 143 FCR at 65ff, the Full Federal Court held that as a matter of construction of s 17 of the Admiralty Act, "owner" did not mean "registered owner". It was alleged that Cape Moreton had been sold to a new (but unregistered) owner prior to her arrest. The question arose whether the phrase "the owner" in s 17 necessarily meant or included "the registered owner," or whether it was a broader conclusion as to property to be reached by reference to what the parties to the transaction had done. In the course of considering these questions, the Full Court had regard to the proper law that applied to the question of whether ownership had passed. It was not necessary to reach a concluded view because no foreign law had been proved, but the Full Court expressed reasons supporting the proper law of a sale as the situs of the ship, being the place of registration (as opposed to where by luck or by mere coincidence the ship was situated at the time of the relevant acts in the transaction) (at 80 [148]):

Given the importance of the register in the workings of international maritime law and commerce and the importance of the law of the flag state in many contexts, it would be odd to decline to give effect to a statute of the flag state governing the transfer, or not, of rights created or recognised by the statute of that country. Particularly for reasons of clarity and certainty in commercial dealings and conformity with notions of ship nationality, there is much to be said for regarding the situs of a merchant ship as its country of registry. These circumstances also commend the relevance and admissibility of evidence of the law of the flag state as to the role and effect of the register, in particular whether it gives title or rights by the fact of registration or merely acts as a prima facie record of such matters, and what recognition it gives to rights created by transactions dealing with the ship before registration.

1. The lex causae (the lex situs so identified) was to be used to understand the rights created by the transaction and acts involved therein. The lex fori, however, was to be used to characterise such rights as falling (or not) within the meaning of the phrase "the owner" within the statute.
2. Unlike the private international law rule concerning consensual creation of security interests in ships in s 238(3) (which also reflects the common law), the Personal Property Securities Act does not apply to the creation of a maritime lien. This is because a maritime lien arises by operation of law rather than by a consensual transaction. Hence, it does not fall within the choice of law rule in this subsection (see s 8(1)(c), and the definition of "security interest" in s 12(1)). However, a maritime lien is part of the priorities regime contemplated by the Personal Property Securities Act. That regime includes both security arising by consensual transactions which are governed by the lex situs choice of law rule as well as securities (such as maritime liens) arising by operation of general law. Section 73(1)(a)(ii) provides that

(1) An interest (the priority interest) in collateral has priority over a security interest in the collateral if:

(a) the priority interest arises (by being created, arising or being provided for):

(i) under a law of the Commonwealth ...; or

(ii) by operation of the general law; ...

1. The Personal Property Securities Act priorities regime includes local maritime liens as they are interests that arise by operation of the general law and, at least arguably, foreign maritime liens which are recognised under s 15 of the Admiralty Act, either because they arise under the general law or are an interest that is "created, arises or is provided for under a law of the Commonwealth [s 15 of the Admiralty Act]" (see s 8(1)(b), 8(1)(c) and s 8(2), item 1).
2. However, the priority interest that maritime liens enjoy under the Personal Property Securities Act is subject to qualifications. One qualification is if the maritime lien arose "in relation to providing goods or services in the ordinary course of business" (s 73(1)(b)). If it did not, then it does not have the priority conferred by the Act. Another qualification is that "the person who holds the priority interest acquired the interest without actual knowledge that the acquisition constitutes a breach of the security agreement that provides for the security interest" (s 73(1)(e)).
3. In summary, although the Personal Property Securities Act does not create a choice of law rule for maritime liens, it does (i) create particular choice of law rules for other security interests in ships and (ii) it also recognises a priorities regime for interests in goods (including ships) which priorities regime includes maritime liens, both local and, at least arguably, recognised foreign maritime liens.
4. The effect of this scheme of the Personal Property Securities Act is to make even more difficult any submission that it could be possible to recognise a foreign right as a "maritime lien" for the purposes of s 15 of the Admiralty Act, but to disregard that characterisation for the purposes of determining priority.
5. As discussed earlier, in an age of instantaneous communication, including modern electronic payment systems, there appears to be no demonstrated pressing commercial imperative for the just and efficient carrying on of maritime trade and business to accord the necessaries man, and in particular the commercial bunker supplier, a maritime lien. No such commercial imperative was argued. No aspect of legal policy to accord with some demand of commerce arises.

The decision in The 'Halcyon Isle' and its application

1. The 'Halcyon Isle' was decided by the Privy Council on appeal from the Court of Appeal in Singapore. The appellant mortgagees were an English bank. They held a mortgage over a ship, Halcyon Isle, which was registered in London. The respondents were ship repairers (United States necessaries providers) who repaired the ship in New York State. The mortgagees arrested the ship in Singapore. The ship was subsequently sold but the proceeds of sale were insufficient to meet all the claims. The ultimate issue was whether the mortgagees should take priority over the necessaries providers.
2. Although the issue was reasonably clear, and the judgments were not lengthy, the issue was so important that it was heard over four days. The Privy Council divided 3:2 in favour of the priority of the English mortgagees over the United States necessaries providers. The judgment of the majority (Lords Diplock, Elwyn-Jones and Lane) was given by Lord Diplock. The minority judgment was given by Lords Salmon and Scarman. Both judgments discussed the position in English law. Although, strictly, the forum was Singapore, English law was not relevantly any different from Singaporean law ([1981] AC at 229).
3. The reasoning of the majority can be summarised as follows:

(1) At first sight, priorities between claimants to a limited fund being distributed by English law are matters of procedure and governed by the lex fori.

(2) However the claims for the purposes of determining priorities might arise on the high seas or in a foreign jurisdiction, so the systems of law applicable to the claims might differ.

(3) The choice was between

(a) recognising foreign rights by reference to the lex causae (see below in the discussion of The 'Colorado'), but classifying and characterising each claim by reference to its legal effect under the lex fori although the event might have occurred elsewhere, and then applying the priorities rules of the forum; or

(b) classifying and characterising each claim by reference to its lex causae and then applying that classification by "giving to the foreign claim the priority accorded under the lex fori to claims arising from events, however dissimilar, which would have given rise to the same or analogous legal consequences if they had occurred within the territorial jurisdiction of the distributing court" (230).

(4) The choice preferred by the majority was (a), for the following reasons:

(a) simplicity (compared with the "complicated kind of partial renvoi" in (b)) (230);

(b) distribution of a limited fund is not a process which is concerned with enforcing original rights but is based on relativity of rights and the legitimate expectations of creditors concerning rights to priority arising from actions in rem against a ship (231). An example of this point is that the necessaries providers were experienced in courts of admiralty and were aware that when they relinquished their possessory lien and allowed the ship to depart from New York, their rights to priority would depend upon the laws of the forum where the ship was arrested (231);

(c) an additional problem of classifying foreign maritime claims is due to the civilian nature of a maritime lien which is a "sui generis" right (231) which is recognised in many European countries as applying beyond the six English categories, so the recognition of any new class of maritime lien based on a foreign lex causae would alter the system of priority (235); and

(d) the question of who is entitled to bring a claim in an English court is a question of jurisdiction governed by the lex fori, so the same rule should apply to questions of priority (235).

1. For these reasons, the majority held that the law of the forum applied.
2. There were some principles which were common ground between the majority and the minority. These included that (1) the question of priority of creditors was a matter to be governed by the lex fori; (2) the mortgagee has priority over the necessaries men under English (and Singaporean) law; and (3) English and Singaporean law recognise that a claimant who has a maritime lien has priority over a mortgagee.
3. There is a necessary qualification to the way that the majority in The 'Halcyon Isle' described their approach as one of "classifying and characterising each claim by reference to its legal effect under the lex fori although the event might have occurred elsewhere and then applying the priorities rules of the forum". The qualification is that the claim might itself arise from events that occur in a foreign lex causae. The majority implicitly recognised that this was the case in their discussion of The 'Colorado'. The point that the majority was making, however, was not that the law of the forum would refuse to recognise the foreign right. The point that the majority was making was that the foreign right would be classified and characterised by reference to the law of the forum. This is the two stage process to which we have referred.
4. In contrast with the approach of the majority, the minority concluded that the United States necessaries providers took priority over the English mortgagees. With respect, the minority might be seen to have reached this conclusion by asking the wrong question. The question posed by the minority was "does English law, in circumstances such as these, recognise the maritime lien created by the law of the United States of America, ie the lex loci contractus where no such lien exists by its own law?" (246). The problem was that the minority conflated two different questions. The first was whether English law would recognise the rights created by the law of the United States for the necessaries providers. The answer to that must have been "yes", as the minority recognised. The second question was whether English law would characterise those rights (and therefore give them the same priority) as United States law by characterising them as maritime liens. As we have explained, the answer to that question should have been "no".
5. The minority primarily relied for their conclusion on three points. The first was the substantive character of the foreign law rights and priorities. The second was the decision in The 'Colorado'. Each of those points can be considered separately below. The third point was their dispute with the assertion by the majority that the necessaries providers were well aware that the foreign maritime lien was likely to be disregarded by the lex fori in its determination of priorities (247). The minority considered that this was wrong because in many countries the lex loci and the foreign maritime lien would be respected in the determination of priorities. It can be seriously doubted whether, apart from Canada, there were many countries which departed from the older English approach taken by the majority in The 'Halcyon Isle'. But even if this point were correct at the time of The 'Halcyon Isle' it was not correct at the time of passage of the Admiralty Act, and it is not correct now. As we will explain, judicial decisions in New Zealand, Cyprus, South Africa, Singapore, and Malaysia have all followed the majority in The 'Halcyon Isle'. As the New Zealand Court of Appeal explained in The 'Betty Ott' v General Bills Ltd [1992] 1 NZLR 655 at 665, the majority approach in The 'Halcyon Isle' was stated emphatically in the 11th edition of Dicey and Morris in 1987 (the year before the Admiralty Act) and said to be based on the primary concern of the court with "evenhanded justice".

The substance/procedure issue in The 'Halcyon Isle' is a distraction in this case

1. In this case, before the primary judge the parties made substantial submissions concerning whether the majority in The 'Halcyon Isle' should not be followed. Reiter Petroleum submitted that the majority should not be followed because their decision was based on a view, now rejected in Australia, that the order of priorities and the distribution of the proceeds of sale of a ship in an action in rem or in a limitation action was "a matter of practice and of procedure" (229) and therefore governed by the law of the forum.
2. As the primary judge observed, the historical treatment of matters falling within the conception of "procedural matters" was greatly narrowed by the High Court of Australia in John Pfeiffer Pty Ltd v Rogerson. In that decision, the High Court said, 203 CLR at 543 [99], that

matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain [1991] HCA 56; 174 CLR 1 at 26-27, "rules which are directed to governing or regulating the mode or conduct of court proceedings" are procedural and all other provisions or rules are to be classified as substantive.

1. The primary judge correctly identified that rules as to priority are matters of substance in this sense and are not procedural matters. But this point did not ultimately affect the relevant reasoning in The 'Halcyon Isle'. Nor does it affect the conclusions in this case_._ It was conceded by the necessaries providers in The 'Halcyon Isle' (227), as it was conceded on this appeal, that the ranking of priorities is a matter for the lex fori. It does not matter that the majority in The 'Halcyon Isle' was incorrect to describe a system of priorities as a matter of procedure rather than substance. Even though we agree with the primary judge that the system of priorities is a matter of substance, the question of priorities must still be determined by the law of the forum for the reasons we have explained.
2. On one view, the concession on this point might have been fatal to the appeal in The 'Halcyon Isle'. The submission by the necessaries providers (at 227) that a court could take foreign rights and "fit them in to its jurisdiction's existing pattern of priorities" could not be sustained in light of the concession. The effect of "fitting in" a foreign right would, by definition, alter the ranking of priorities unless the court analyses the nature of the foreign right and determines that the foreign right has the same or similar content to the right of the forum. In that circumstance, the recognition of that right will not distort the forum's rules for priority. As explained below, the majority appeared to contemplate this possibility in their discussion of The 'Colorado'.

1. A central case relied upon by both the majority and the minority in The 'Halcyon Isle' was The 'Colorado'. Both the majority and the minority in The 'Halcyon Isle' considered the result in The 'Colorado' to be correct. The difference between the majority and the minority in The 'Halcyon Isle' concerned only how the hypothèque was characterised by the Court of Appeal. Was it characterised as a mortgage or as a maritime lien?
2. The majority in The 'Halcyon Isle' pointed to the expert evidence in The 'Colorado' which described the characteristics of the hypothèque as very similar to an English mortgage. Like a mortgage, it was a consensually created right to secure a debt. It was also an immediate right, not an inchoate right. It required registration. It was enforceable by judicial sale. The only difference from a mortgage was that the hypothèque did not give a right to possession of the ship. The majority said that the Court of Appeal in The 'Colorado' could hardly have been suggesting that the hypothèque was a maritime lien in the English sense, which would take priority over a prior English mortgage. The majority appear to have recognised The 'Colorado' as a case where the rights conferred by the foreign lex causae were recognised and given effect in the lex fori by reference to English categorisation and labels. To do otherwise would distort the English priorities.
3. The minority in The 'Halcyon Isle' referred to the references in each judgment in The 'Colorado' to the hypothèque as a maritime lien. The minority referred to the decision of Bankes LJ ([1923] P at 107) where his Lordship said that the hypothèque "had attributes which entitled it to rank on a question of priorities in the same class as a maritime lien or the right created by an English mortgage" (emphasis added). The other judges were less equivocal: "the same as a maritime lien" (Scrutton LJ at 109), and "a right closely resembling a maritime lien" (Atkin LJ at 112).
4. There were several points of common ground in the treatment of The 'Colorado' by the majority and the minority in The 'Halcyon Isle'. The first point of common ground was that the French rights could be recognised in England even though English law had no directly equivalent concept in maritime law to a hypothèque (essentially a mortgage without a right to possession). The second point of common ground was that when English law recognised the French rights, it did so without regard to the priority of those rights in French law. In other words, English law disregarded the priority that French law gave to the necessaries providers.
5. Ultimately, the difference between the way that The 'Colorado' was treated by the majority and by the minority in The 'Halcyon Isle' involved only the issue, not necessary for the result of the case, of whether the Court of Appeal (i) had characterised the hypothèque as akin to a mortgage and were just "speaking loosely" in their references to a "maritime lien" or (ii) whether the judges had characterised the hypothèque as a maritime lien. But, however the hypothèque is characterised, the decision in The 'Colorado' is consistent with the two-step process we have described. Determination of rights held by the secured party without reference to the foreign priorities and then characterisation of those rights, including the circumstances in which they arose, by the closest analogy in the law of the forum.

1. The decision of the minority in The 'Halcyon Isle' is not the only decision to have conflated (in our respectful view, incorrectly) the issues of (i) the existence and recognition of a foreign right, and (ii) the local characterisation of that foreign right. One case that followed the minority in The 'Halcyon Isle' but, again, by the same process of conflation of the exercises of recognition of a foreign right and characterisation of the right, was The 'Khalij Sky' 1986 (1) SA 485; 1985 AMC 2794. In that decision, Munnik JP in the Cape of Good Hope Provincial Division of the South African Supreme Court preferred the minority view in The 'Halcyon Isle', in part because the Judge President considered that the majority had held that it was for "the lex fori to determine whether the litigants in question were entitled to exercise their rights" (at 2801). That is not so. The lex fori recognises foreign rights by reference to their lex causae, but only the characterisation of those rights is a matter for the forum.
2. However, the effect of that decision was short-lived. A different approach was taken by the Appellate Division of the Supreme Court of South Africa in Transol Bunker BV v MV Andrico Unity (The 'Andrico Unity') [1989] ZASCA 30; 1989 (4) SA 325. The decision of the Appellate Division was given, in many pages of close analysis, by Corbett JA shortly before his Honour's elevation to Chief Justice. The other appellate justices (Hoexter JA, GrossKopf JA, Milne JA and Nicholas AJA) expressed agreement with Corbett JA. See also the concurrent decision delivered by Corbett JA in Brady-Hamilton Stevedoring Company v The Motor Vessel 'Kalantiao' Unreported, 29 March 1989, Supreme Court of South Africa (Appellate Division) to the same effect.
3. In The 'Andrico Unity', the ship was arrested in South Africa for non-payment for provisions and bunkers in Argentina. The appellants argued that the court had jurisdiction because (i) they were entitled to a maritime lien based on the lex loci contractus which was Argentina and (ii) Argentinian law recognised their rights as a "privileged credit" which was said to be the equivalent of a maritime lien. The only issue on the appeal was (i) because (ii) was left for trial.
4. The question was remarkably similar to that which arose in this case. The Admiralty Jurisdiction Regulation Act, 105 of 1983, s 2 gave the South African court "jurisdiction... to hear and determine any maritime claim". Justice Corbett observed that The 'Halcyon Isle' was concerned with a priorities dispute, not with the question of whether a claimant had standing to bring a claim in rem under the Act as a "maritime lien". However, at 338, his Honour said:

Common to both these enquiries, however, is the basic question as to whether the court hearing the matter should, in accordance with the rules of private international law, give recognition to a foreign maritime lien arising in accordance with the lex loci contractus, but not having that status according to the domestic rules of the lex fori.

1. After observing that the majority view in The 'Halcyon Isle' was that the indelible nature of the maritime lien and its priority were characteristics that go "hand in hand" so that there was no possibility of recognising the one without the other, Corbett JA said, "it seems most unlikely that English law, or any other cognate system of law, would have one rule for priorities and another (different) rule for locus standi to bring the action in rem" (338). His Honour explained that he was not bound to follow the majority in The 'Halcyon Isle', and also doubted (but ultimately accepted) the "procedural" characterisation by the majority in The 'Halcyon Isle' of questions such as priorities. As we have explained, this point makes no difference because the question of priorities as a substantive question must still be governed by the law of the forum. Most relevantly, Corbett JA explained a series of reasons why the majority in The 'Halcyon Isle' should be followed. Three of these reasons can be quoted, although they closely echo some of the remarks already made in these reasons.
2. First, Corbett JA said that (at342):

the recognition of a foreign maritime lien (not accorded that status by the law of the forum) affects the right of strangers to the contract giving rise to the lien, where the court is dealing with the distribution of a limited fund. Bearing in mind that the proper law of the contract may be one chosen by the parties, the anomaly of thus subjecting a stranger to the proper law so selected becomes all the more apparent.

1. Secondly, Corbett JA illustrated the close association between the two aspects of the maritime lien with the following example (at 343):

a ship mortgaged in England to an English creditor, which is furnished with necessaries successively by an English supplier at an English port and an American supplier at a port in the United States of America. In the event of the ship being arrested and sold in pursuance of an action in rem instituted in an English court, the application of the lex loci approach ... will result in the American necessaries man enjoying priority in regard to the proceeds of the ship not only over the British necessaries man, but also over the British mortgagee, who in terms of the lex fori would himself have priority over a necessaries man.

1. Thirdly, Corbett JA noted the inconsistency that would arise in the example given if the law of the forum were not to characterise the rights because the British claimant, who would be forced to concede priority to his American counterpart by the adoption of the lex loci approach, would gain no correlative advantage were the situation to be reversed and the suit to come before a United States court (at 343).

The 'Halcyon Isle' and the relevant private international law rules in other maritime jurisdictions

1. The decision of the majority in The 'Halcyon Isle' has been followed or approved in numerous jurisdictions since it was decided. The contexts in which it has been followed or applied, and the purposes for which this has occurred, have varied. The reasons why the lex fori has been favoured have also varied, including the erroneous theory that remedial issues are procedural. However, we refer to some of these authorities below to illustrate that the courts have maintained a consistent pattern of applying the lex fori to characterise rights as a maritime lien and to afford priority to those rights.
2. In the High Court of New Zealand, in Fournier v The Ship 'Margaret Z' [1999] 3 NZLR 111, Fisher J explained that in New Zealand the lex fori applies to determine both the availability of maritime liens as well as their priority. His Honour emphasised the "local advantages of simplicity, speed and reduced cost" (116).
3. In Cyprus in Hassanein v The Ship 'Hellenic Island' [1904] HCA 17; (1989) 1 CLR 406, A Loizou P held that the existence of a maritime lien was governed by the lex fori (which denied the existence of a maritime lien for the supply of bunkers) rather than the Egyptian proper law of the contract (which would have allowed a maritime lien) (at 409-410).
4. In Singapore, the leading authority is obviously the decision in The 'Halcyon Isle', as a decision of the Privy Council from Singapore. In The 'Andres Bonifacio' [1993] 3 SLR 521; 3 SLR(R) 71, the Court of Appeal held that the lex fori applied to determine questions of beneficial ownership of a ship. In doing so, the Court approved the comments of the majority in The 'Halcyon Isle' that "the question as to the right to proceed in rem against a ship as well as priorities ... falls to be determined by the lex fori, as if the events that gave rise to the claim had occurred in Singapore" (at 80-81).
5. In Malaysia, in Ocean Gain Shipping v The Dong Nai [1996] 4 MLJ 454, Abdul Malik Ishak J explained, in reliance upon an extrajudicial Malaysian work, that the law of Singapore and Malaysia was the same as the law of England, relying upon the decision of the majority in The 'Halcyon Isle' (at 463).

1. As we have explained, the first step is to determine what rights exist by reference to the lex causae. The second step requires the characterisation of those rights, in the circumstances in which they arose, for the purposes of Australian law to determine whether they can be described as a "maritime lien".
2. The first step of determining the nature of the rights that exist requires identification of the lex causae. This process of choice of law begins with the definition and characterisation of the issue. It is "axiomatic" that the system of law which furnishes the choice of law rules is the law of the forum. In the absence of a choice of law rule in s 15 of the Admiralty Act that system of law is the common law of Australia: John Pfeiffer Pty Ltd v Rogerson 203 CLR at 527-528 [42]-[44] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) (explaining McKain v RW Miller & Company (SA) Pty Ltd [1991] HCA 56; 174 CLR 1 at 34 (Brennan, Dawson, Toohey and McHugh JJ)).
3. The exercise of describing and characterising the issue is therefore a matter governed by the law of the forum. As Auld LJ put it, "the proper approach is to look beyond the formulation of the claim and to identify according to the lex fori the true issue or issues thrown up by the claim and the defence": Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1995] EWCA Civ 55; [1996] 1 WLR 387 at 407. The issue, so described, must then be characterised in order to determine the proper law rules to apply. As Dicey, Morris and Collins express the point, the "problem of characterisation consists in determining which juridical concept or category is appropriate in any given case": Collins, L (ed) Dicey Morris and Collins on The Conflict of Laws vol 1 (15th ed, Sweet & Maxwell, 2012) [2-003]. At a very high level of generality the characterisation exercise might involve asking whether the issue falls within a category such as "contract" or "torts" or "property". As Professor Briggs puts the point, where English law is the forum "English law designs the pigeonholes, and an English sorter decides which facts belong in which pigeonhole": Briggs, A The Conflict of Laws (3rd ed, Oxford University Press, 2013) at 15.
4. In written submissions the appellant described the issue as "whether the asserted claim is a maritime lien" ([38]). The respondent described the issue as "the identification of a permissible assertion of a maritime lien" ([4]). This may be the ultimate issue but, as we have explained, the first necessary step towards determination of that ultimate issue requires the identification and characterisation of issues which might give rise to any right under the lex causae. The foreign law right is then characterised according to Australian law to determine whether it is a "maritime lien", or sufficiently analogous to a maritime lien, within s 15.
5. Any foreign law right in issue in this case arises from a contract between Reiter Petroleum and EBC for the supply of bunkers. As we have explained, the owner was not a party to that contract and there was no evidence that the owner knew of the contract when it was made. The issue is whether a contract between parties who have no interest in a ship can create a maritime lien, in rem, in relation to that ship which binds the owner of the ship.
6. When the issue is thus identified, it is extremely difficult to see how it can be characterised as an issue which falls within the category of "contract". The category "contract" is concerned with identification of the proper law governing those matters that are either agreed between the parties or, in the absence of agreement, the proper law which has the closest and most real connection with the transaction underlying the contract: Akai Pty Ltd v People's Insurance Co Ltd 188 CLR at 434, 442-443. Although there might be difficult questions underlying the characterisation of the closest and most real connection (as to which see Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 [64]-[71]), the category of "contract" cannot, by the application of Australian law characterisation, include the question of whether proprietary rights to a ship are created by operation of law by a transaction between parties with no interest in the ship and as to which transaction the interested party has no involvement. Without the characterisation of the issue as "contractual", the law of the United States or the law of Canada becomes irrelevant. And even if the issue were characterised as contractual, since the owner is not a party to the contract, Reiter Petroleum would need to prove that United States or Canadian law is the closest and most real connection to the contract without reference to the terms (to which the owner was not party). This it could not do where the contract is entered in Turkey, for the provision of bunkers to a ship registered in Hong Kong.
7. It is not necessary to determine, in this case, whether the proper law of this issue would be the law of Hong Kong, the law of Turkey, or Australian law, or to determine the terms of the choice of law rule; whether the law of the place of supply, the law of the flag, the law of the forum of the arrest or the law of the jurisdiction which has the closest and most real connection to the claim, whether using analyses of the kind in the cases discussed at [88] -[89] above. But if the laws of Canada and the United States are not the relevant law it would seem that only Turkey and Hong Kong truly suggest themselves (other than the lex fori). Since there was no evidence of the law of Hong Kong or the law of Turkey, it is "presumed" that those laws are the same as Australian law: Neilson v Overseas Projects Corporation of Victoria Ltd 223 CLR at 372 [125] (Gummow and Hayne JJ). Under Australian law no maritime lien would be recognised.

1. The second stage of the process would only arise if it were somehow possible for the foreign law issue to be characterised as one of contract so that two persons, neither of whom had an interest in the ship, could create an interest by operation of law, by purporting to choose the law of a jurisdiction which might recognise a maritime lien arising by operation of law.
2. Even if this could somehow have occurred in this case, Reiter Petroleum's claim of jurisdiction under s 15 would fail at the second stage of the test. Even if it were assumed that the law of the United States applied as the proper law, whatever rights were conferred upon Reiter Petroleum as a result of its contract for supply of bunkers to a time charterer, those rights could not be characterised in the circumstances in which they arose as being, or being analogous to, a "maritime lien" as that term is understood in Australian law. The rights might fall within the definition of a "general maritime claim" in s 4(3)(m) of the Admiralty Act. But they would not be rights that could be characterised, by Australian law, as a maritime lien. Hence, Reiter Petroleum's claim for a maritime lien also fails at the second step of the application of the proper law approach to s 15.

1. Although Reiter Petroleum initially submitted that it was sufficient for it to satisfy the requirements of s 15 if it had an arguable case of jurisdiction, counsel ultimately conceded that jurisdiction must be established and must not merely be arguable (tscpt 48). This concession was appropriately made. When jurisdiction (in the sense of authority to decide) is challenged it must be proved, including any facts upon which it rests. In The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404 at 426:

Where jurisdiction depends on particular facts or a particular state of affairs, a challenge to jurisdiction can only be resisted by establishing the facts on which it depends. And, of course, they must be established on the balance of probabilities in the light of all the evidence advanced in the proceedings held to determine whether there is jurisdiction.

1. In this case, if the lex causae of Reiter Petroleum's claim is a jurisdiction other than Australia then it could only be Hong Kong or Turkey. Since no law from either of those jurisdictions was proved, the law of Australia would be applied. No maritime lien arises.
2. Even if the law of Canada or the United States applied, then any foreign rights recognised would need to be characterised, including by reference to the circumstances in which they arose, by Australian law to determine whether they could be described as a "maritime lien". Whatever foreign rights might have arisen by the transaction, they are neither a maritime lien nor analogous to a maritime lien as that concept is understood in Australian law.
3. The appeal must be allowed. The orders that we would make are:
   1. Leave to appeal be granted.
   2. A notice of appeal in the form of the draft notice of appeal behind tab 9 of Appeal Book A be filed within seven days.
   3. The appeal be allowed.
   4. The orders of the Court made on 11 September 2015 be set aside, and in lieu thereof, it be ordered that:

(a) The writ filed on 5 November 2014 and the arrest warrant issued on 5 November 2014 in respect of the ship Sam Hawk be set aside and the proceeding be dismissed.

(b) The plaintiff return to the defendant's solicitors within seven days the letter of undertaking dated 6 November 2014 provided to it on behalf of the defendant.

(c) The plaintiff pay the costs of the application of the defendant and SPV Sam Hawk Inc.

1. The respondent pay the costs of the appeal and application for leave to appeal of the appellant and SPV Sam Hawk Inc.

I certify that the preceding one hundred and ninety-two (192) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop and Justice Edelman.

Associate:

Dated: 28 September 2016

1. The Court has heard argument on an application for leave to appeal from the interlocutory judgment of a judge of the Court made on 11 September 2015, dismissing an application that the proceedings be dismissed for want of jurisdiction, and alternatively seeking summary judgment. It has also heard argument on the appeal supposing leave were granted. We have had the considerable advantage of reading the reasons for judgment prepared by Allsop CJ and Edelman J, and by Rares J. We agree with the orders proposed by the other members of the Court and, as will be seen below, we do so substantially for the reasons stated by Allsop CJ and Edelman J.
2. The Sam Hawk is a bulk carrier, flagged and registered in Hong Kong. On 7 December 2013 the vessel was supplied with bunkers in Istanbul. The supply was procured by a Canadian company, Reiter Petroleum Inc (Reiter Petroleum). That company has not been paid for the supply. The company filed an in rem writ in this Court on 5 November 2014 in respect of the unpaid invoice, which was for USD$122,675, and subsequently procured the arrest of the Sam Hawk in Albany in Western Australia. The owner, named on the writ as the relevant person, entered a conditional appearance. The Sam Hawk was released from arrest after the owner provided as security a P & I Club letter of undertaking reserving the owner's right to challenge jurisdiction.
3. The Sam Hawk is owned by SPV Sam Hawk Inc, a company incorporated in Hong Kong. The vessel is operated by a Swiss-based company and managed by Greek interests. An Egyptian company, Egyptian Bulk Carriers (EBC), time chartered the Sam Hawk from the owner in October 2013. The time charter was on foot at the time of the supply. The time charter required EBC to bunker the Sam Hawk and to pay for bunkers during the charterparty. It did not authorise EBC to contract for the bunkers on behalf of the owner. Nor did it authorise EBC to bind the Sam Hawk with a maritime lien for necessaries, including bunkers.
4. Reiter Petroleum first issued the invoice for the supply of the bunkers in Istanbul on 12 December 2013 to EBC. The owners did not become aware of Reiter Petroleum's position until May 2014, when Reiter Petroleum wrote to the operator of the Sam Hawk about the unpaid invoice. Sometime afterwards, with the invoice still unpaid, Reiter Petroleum unsuccessfully sought payment from the owner, leading to the institution of the in rem proceeding and the arrest of the Sam Hawk.
5. By its statement of claim Reiter Petroleum pleaded breach of contract, the existence of a maritime lien under s 15 of the Admiralty Act 1988 (Cth) (Admiralty Act) and a claim for repayment under s 17 of that Act. In particular, Reiter Petroleum pleaded a contract made on or about 2 December 2013 for the supply of bunkers at Istanbul by it to the Sam Hawk (Bunker Supply Contract), which had been breached by the non-payment of the agreed price by the agreed date. The terms of the Bunker Supply Contract were said to be set out in Reiter Petroleum's "Amended Confirmation re ETA and Price", which incorporated Reiter Petroleum's "Terms and Conditions of Sale" (Terms and Conditions).
6. Clause 15(a) of the Terms and Conditions provided that, subject to cl 7, the any contract was to be construed in accordance with the law of Canada. Relevantly for Reiter Petroleum's pleading, cl 7(e) further provided that the seller was entitled to assert a lien " in any country where it finds the vessel" and that :

... Each transaction shall be governed by the laws of the United States and the State of Florida without reference to any conflict of laws rules. The laws of the United States shall apply with respect to the existence of a maritime lien, regardless of the courts in which the seller institutes legal proceedings. ...

1. On the basis of this clause, Reiter Petroleum pleaded that by virtue of the Bunker Supply Contract, and in accordance with the laws of the United States and the State of Florida, it had a maritime lien for the supply of necessaries, including bunkers, attaching to the Sam Hawk and enforceable in this Court. Reiter Petroleum further pleaded that under the laws of the United States and the State of Florida: (a) there was a rebuttable presumption that the bunkers were supplied to the credit of the ship, and that the supplier had no duty to enquire as to the authority of the person requesting the supply; (b) the supplier had a maritime lien over the vessel enforceable by an action in rem against the vessel and that it was not necessary to prove that credit was given to the vessel; and (c) the maritime lien arose and attached to the ship at the time the bunkers were supplied and was indelible.
2. Reiter Petroleum pleaded further and in the alternative that it had a maritime lien under Canadian law because it carried on business in Canada in respect of goods, materials or services for the operation or maintenance of a foreign vessel.
3. Lastly, Reiter Petroleum pleaded a claim under s 17 of the Admiralty Act. In this connection, Reiter Petroleum pleaded that EBC entered into the Bunker Supply Contract as agent for the owner of the Sam Hawk and that, accordingly, the owner was indebted to Reiter Petroleum under the Bunker Supply Contract for the cost of the bunkers supplied to the Sam Hawk.
4. On 19 December 2014, application was made against Reiter Petroleum to have the writ set aside for want of jurisdiction and, alternatively, if there was jurisdiction, summary judgment. Summary judgment was sought under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and r 26.01(1)(a) of the Federal Court Rules 2011 (Cth) on the basis that Reiter Petroleum had no reasonable prospect of successfully prosecuting the action. The parties adduced expert evidence, which was summarised by the primary judge in his reasons: see Reiter Petroleum Inc v The Ship "Sam Hawk" [2015] FCA 1005 (PJ) at [33]-[64]. On 11 September 2015, the learned primary judge dismissed the application.
5. In order to understand the main arguments before the primary judge and his decision, it is, we think, useful to refer at the outset to ss 10, 14, 15 and 17 of the Admiralty Act. The parties' submissions depend on these provisions.
6. Section 10 provides:

Jurisdiction is conferred on the Federal Court and on the Supreme Courts of the Territories, and the Supreme Courts of the States are invested with federal jurisdiction, in respect of proceedings that may, under this Act, be commenced as actions in rem.

In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act.

(1) A proceeding on a maritime lien or other charge in respect of a ship or other property subject to the lien or charge may be commenced as an action in rem against the ship or property.

(2) A reference in subsection (1) to a maritime lien includes a reference to a lien for:

(a) salvage;

(b) damage done by a ship;

(c) wages of the master, or of a member of the crew, of a ship; or

(d) master's disbursements.

Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:

(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and

(b) is, when the proceeding is commenced, the owner of the ship or property;

a proceeding on the claim may be commenced as an action in rem against the ship or property.

1. The primary judge accepted that under the charterparty, EBC, not the owner, was responsible for arranging and paying for the bunkers and that the charterparty did not authorise EBC to contract for necessaries on behalf of the owner or to bind the vessel with a maritime lien for necessaries (PJ at [9]).
2. It was common ground before the primary judge that, to be entitled to proceed against the Sam Hawk in rem under s 15, Reiter Petroleum had to establish that what was involved was "a proceeding on a maritime lien ... in respect of a ship" and that, under Australian law, a maritime lien did not arise from the supply of necessaries, including bunkers. As indicated above, Reiter Petroleum's case was that, by virtue of the Bunker Supply Contract, United States or Canadian law applied to determine the existence of its asserted maritime lien and that, under those systems of law, a maritime lien arose as a consequence of the bunker supply to the Sam Hawk in December 2013.
3. So far as the jurisdictional challenge in respect of s 15 was concerned, the primary judge opined that "the only question for consideration is whether Australian rules of private international law would recognise a maritime lien in the circumstances of this case" (PJ at [77]). This formulation adopted the language of Allsop J (as his Honour was then) in Elbe Shipping SA v The Ship 'Global Peace' [2006] FCA 954; 154 FCR 439 at [133]. His Honour there said:

[T]here must be room at this level of decision-making, as to whether the court has authority to entertain the in rem action, for the court to work on the legitimate assertion of the plaintiff. .... [O]ne does not undertake the task at the jurisdictional level of deciding whether the lien exists. That degree of permissible assertion comes from the use of the word "proceeding", which contemplates justiciable contested assertions. The importance of the phrase "on a maritime lien" is that it requires the proceeding to be on a maritime lien of a character recognised by Australian law, including Australian rules of private international law.

1. In this context, the primary judge considered the opinion of the majority of the Judicial Committee of the Privy Council in Bankers Trust International Ltd v Todd Shipyards Corporation (The 'Halcyon Isle') [1981] AC 221. As put by the parties and understood by the primary judge, the majority's opinion was that the existence of an asserted maritime lien was to be determined according to the law of the forum, in that case the law of Singapore (PJ at [78]). His Honour noted the owner's acknowledgement that this analysis had been criticised in the scholarly literature, especially in Australia since the "reformulation of the distinction between procedural and substantive matters" in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; 203 CLR 503 (PJ at [80]).
2. The primary judge concluded, after detailed consideration, that the minority dissenting opinion in The 'Halcyon Isle' was to be preferred to that of the majority "as it accords with the substantive nature of a maritime lien as identified by the High Court of Australia in John Pfeiffer" (PJ at [119]). As put by the parties and understood by his Honour, the dissenting view was that a maritime lien was a substantive right of property, which if validly conferred by the lex loci contractus (in that case, the law of the United States), was to be recognised by a court of Admiralty and to be accorded the priority of a maritime lien under the law of the forum.
3. It will be recalled that Reiter Petroleum's argument was that the Court should apply either the law of the United States or of Canada "as such law governs the Bunker Supply Contract" and that, under United States and Canadian law, Reiter Petroleum had a maritime lien (PJ at [89]). For this reason, so Reiter Petroleum said, its proceeding was a proceeding on a maritime lien, within the meaning of s 15 of the Admiralty Act. The primary judge effectively accepted that this was "a legitimate assertion" (cf. The Ship 'Global Peace' [2006] FCA 954; 154 FCR 439 at [133]) and sufficient to establish that there was indeed "a proceeding on a maritime lien" for the purpose of s 15, over which the Court had jurisdiction (PJ at [74], [120]).
4. The primary judge adopted a relevantly identical approach in rejecting the jurisdictional challenge under s 17 of the Admiralty Act, holding that Reiter Petroleum's pleaded claim asserted a general maritime claim within the meaning of s 4(3)(m) of the Admiralty Act against the relevant person and owner (PJ at [122]).
5. The primary judge also accepted Reiter Petroleum's submissions in opposition to summary judgment (PJ at [140]). It will be recalled that Reiter Petroleum claimed an entitlement to a maritime lien under United States law based on cl 7(e) of the Terms and Conditions forming part of the Bunker Supply Contract. The primary judge referred in summary form to the competing expert evidence as to whether United States law would recognise a maritime lien in the circumstances of the case. His Honour rejected the submission in support of summary judgment that, on the available evidence as to United States law, there was no reasonable prospect that a court could find a maritime lien arose in the circumstances of the case (PJ at [128]). His Honour also rejected an alternative submission that the evidence displaced the statutory presumption arising under United States law that a charterer has the owner's authority to bind the vessel with a maritime lien (PJ at [133], [140]). The primary judge accepted the submissions made by Reiter Petroleum, to the effect that the disagreements between the experts as to the United States law were to be determined at the final hearing; and so too were the possibilities that the laws of Canada, or perhaps Hong Kong or Turkey, might apply (PJ at [137]-[139]). The primary judge accepted, in substance, that the determination of the applicable choice of law rule and the content of any applicable foreign law were matters for final hearing and rejected the application for summary judgment in relation to the claim under s 15 of the Admiralty Act.
6. In relation to summary judgment on the claim under s 17, the primary judge recognised that the bar had been lowered in summary judgment applications under s 31A of the Federal Court Act but held nonetheless that it was premature "to shut out Reiter Petroleum and its claim", noting that the hearing of the application was not a "mini-trial", the pleadings were not closed and discovery had not yet been given (PJ at [144]-[146]).
7. The primary judge therefore dismissed the application to have the writ set aside for want of jurisdiction and, alternatively, for summary judgment, with costs reserved.

1. Pursuant to s 24(1A) of the Federal Court Act, an appeal can only be brought from an interlocutory judgment, such as that of the primary judge, with leave. The principles governing the grant of leave are well settled: see [222] below.
2. As the primary judge observed, The 'Halcyon Isle' is not binding on this Court, although decisions of the Privy Council may still be highly persuasive: see Cole v Cunningham (1983) 81 FLR 158 at 166 (Bowen CJ, Sheppard and Morling JJ); and compare Viro v The Queen (1978) 141 CLR 88 at 93-94 (Barwick CJ), 120 (Gibbs J), 132 (Stephen J), 135 (Mason J), 151-152 (Jacobs J), 166 (Murphy J) and 173-174 (Aickin J). As the reasons of the other members of the present Court show, however, Australian maritime law is to a very significant extent derived from English maritime law. Its history and case law have a particular importance for this aspect of Australian law that is qualitatively different from the significance of English legal history for diverse other areas of Australian law.
3. Nonetheless, there remains uncertainty about whether or not an Australian court will adopt the approach of the majority in The 'Halcyon Isle'. This uncertainty is partly the result of an aspect of the history of the Admiralty Act. The Admiralty Act in substance follows the draft legislation recommended by the Australian Law Reform Commission in The Civil Admiralty Jurisdiction, Report No 33 (1986) (ALRC Report No 33). In this report, the Commission expressed an unresolved doubt about the majority view in The 'Halcyon Isle', commenting (at [123]):

A separate issue that remains uncertain in Australia concerns maritime liens arising outside the forum. Where an act or event that gives rise to a maritime lien under the relevant foreign law would not have given rise to a maritime lien under Australian law, should an Australian court nonetheless treat it as a maritime lien and thereby acquire jurisdiction over the matter? This question, so far as it concerns the law of Singapore, was answered in the negative by the Privy Council in The Halcyon Isle. But the decision was by a bare majority and the position in other common law countries is different. ... As the majority and dissenting judgments in The Halcyon Isle reveal, the arguments supporting the alternative positions are fairly evenly balanced. On the one hand, the minority view is more consistent with general conflicts of law principles, assuming that maritime liens are properly classified as substantive rather than procedural rights for this purpose. On the other hand, the consequences of recognising a foreign maritime lien (for example for goods supplied to a ship) where the equivalent local claim does not give rise to a lien is to give the foreign claimant priority over the local one, even where the foreign law's classification of the claim as a lien is out of line with any international consensus on the scope of liens. ... In the absence of formal international agreement ... the question is best left to the courts to resolve, taking into account developments in other jurisdictions.

(Footnotes omitted. Emphasis added.)

1. As the reasons of the other members of the Court show, the matter has not been resolved by formal international agreement. Nor has it been authoritatively resolved by the courts. Although in Morlines Maritime Agency Ltd & Ors v Ship "Skulptor Vuchetich" [1997] FCA 432, Sheppard J held that, under Australian law, the existence of an asserted maritime lien was to be determined in accordance with Australian law, being the law of the forum, his Honour in that case acknowledged that the question was not "easy of resolution and ... yielded a deal of both judicial and academic disagreement". Further, as the primary judge illustrates (PJ at [106]-[112]), the decisions of the High Court in John Pfeiffer [2000] HCA 36; 203 CLR 503 and in subsequent cases have been thought by some to justify a different analysis to the majority's in The 'Halcyon Isle'.
2. It is clear that the application for leave to appeal seeks to raise, on appeal, important and unresolved questions concerning the application of s 15 of the Admiralty Act. For this reason, we consider that the judgment of the primary judge, although supported by careful analysis, is attended by sufficient doubt to warrant reconsideration by an appellate court; and, plainly enough, substantial injustice would result if leave were refused, supposing the decision to be wrong: Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCAFC 844; (1991) 33 FCR 397 at 398-400; and Re CSR Ltd [2010] FCAFC 34; 183 FCR 358 at [5]. Leave should therefore be granted to appeal.
3. The appellant identified the following issues for determination on the appeal:

(1) whether the primary judge erred in finding that the action was a proceeding on a maritime lien within the meaning of s 15 of the Admiralty Act and that the Court had jurisdiction to entertain Reiter Petroleum's claim as a lien, including on the basis:

(a) that the minority view in The 'Halcyon Isle' should be the law in Australia and that "whether the asserted claim amounted to a maritime lien should not be determined solely by reference to the concept of a maritime lien under the law of the forum";

(b) "that the consequence of the application of the minority view was that [Reiter Petroleum's] claim amounted to a maritime lien, especially absent any finding by the primary judge as to the foreign law to be applied in determining the ... question or the choice of law rules to be applied in ascertaining the applicable foreign law";

(c) of the allegations made in Reiter Petroleum's pleaded claim and without determining whether those allegations gave rise to a maritime lien, including any applicable foreign law;

(2) whether the primary judge erred in dismissing the owner's application for summary dismissal of the respondent's claim under ss 15 and 17 of the Admiralty Act, in particular where:

(a) "the owner had adduced evidence that critical elements of [Reiter Petroleum's] claim could not be sustained and thereby established a prima facie case that [Reiter Petroleum's] claim had no reasonable prospects of success";

(b) Reiter Petroleum "failed to point to any specific factual or evidential dispute on those elements that would make a trial necessary";

(c) the primary judge failed to apply correctly the principle in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; 167 FCR 372 at [22] and [127].

1. On appeal, the appellant did not challenge the primary judge's finding that the Court had jurisdiction to entertain the respondent's claim under s 17.
2. The respondent also sought to rely on a notice of contention (so far as it was necessary to do so) to the effect that the judgment of the primary judge should be upheld on the further grounds that:

(i) The choice of law rule which applied to the Respondent's claim on a maritime lien was the lex loci contractus; and

(ii) The putative proper law was the law of the United States including USC s31341 and 31342 of the United States Commercial Instruments and Maritime Lien Act.

1. The appellant did not oppose the grant of leave to rely on the notice of contention.

1. The appellant submitted that if the respondent was to pursue its claim under s 15 of the Admiralty Act, the respondent must establish that there was some basis on which Australian law recognises the claim as a maritime lien. As there was no maritime lien arising under Australian law, that claim must be recognised on some other basis. The appellant argued that the Court had to be satisfied on a jurisdictional challenge that it was appropriate to apply the foreign law proposed by the respondent and that the alleged facts gave rise to a maritime lien under that foreign law. The appellant submitted that if there was "on the evidence a dispute as to the content of that foreign law and / or as to its application to the alleged facts", then, in the deciding the jurisdictional challenge, the Court was obliged to determine the dispute. The appellant submitted that the primary judge erred by failing: (a) to identify the Australian choice of law rule by which an applicable foreign system of law was to be identified and the foreign system of law to be applied; (b) to consider whether the foreign law upon which the respondent relied coincided with that yielded by the applicable choice of law rule and in failing to find that it did not do so; (c) to consider whether the facts asserted in the respondent's pleaded case were sufficient to give rise to the maritime lien it claimed under the foreign law ascertained by the applicable choice of law rule; and (d) to find that the asserted facts did not have that legal effect under that foreign law.
2. Referring to Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (ex Freya) [2005] FCAFC 68; 143 FCR 43 at [131] and John Pfeiffer [2000] HCA 36; 203 CLR 503 at [99], the appellant submitted that since questions of jurisdiction were procedural in nature and governed by the law of the forum, then whether the asserted claim was a maritime lien and the requirements of s 15 thereby met was a procedural question to be answered by Australian law. The appellant relied on the majority opinion in The 'Halcyon Isle' (esp at 234-35) and submitted that the dicta in John Pfeiffer compelled "neither rejection of the majority view nor acceptance of the minority view".
3. The appellant contended further and alternatively that, even if the minority view in The 'Halcyon Isle' was to be applied, nonetheless characterisation of the respondent's pleaded claim for the purposes of establishing jurisdiction was to be determined by the law of the forum, including its rules of private international law. The appellant submitted that "in those circumstances ... whether the asserted claim is a maritime lien is not left solely to the applicable foreign law" and that the Court:

... may have regard to the foreign law that is said to apply to the asserted claim in considering the nature of the rights said to be connected with that claim. But having identified those rights, the Australian Court must then consider whether those rights, properly understood, fall within or beyond the scope of the statutory provisions that confer jurisdiction, namely s 15.

Applying this approach, the appellant contended that the Court could not be satisfied that the respondent's claim gave rise to a maritime lien because: (1) "a maritime lien under Australian law is a composite concept comprising both the underlying circumstances in which the lien arises and the legal effect of those circumstances"; (2) the primary judge made no finding that "the qualities of the maritime lien claimed ... pursuant to either the foreign law applicable to that claim under the relevant choice of law rule ... or any finding that those qualities are the same as those of a maritime lien under Australian law"; and (3) it was not open to the respondent to rely on either United States or Canadian law on the basis of a choice of law clause in its contract with EBC because it "can no more render its claim a maritime lien by that clause than by expressly agreeing that it is to be treated as a maritime lien".

1. For the purposes of identifying the applicable choice of law rule, the appellant further submitted that it was not appropriate to classify the respondent's claim as contractual or by reference to a contractual nexus. The appellant submitted that the appropriate choice of law rule was: (a) the lex situs of the ship at the time the bunkers were supplied, in which case Turkish law would apply; or (b) the law of the ship's flag or registration, in which case Hong Kong law would apply; or (c) the law of the place of supply, in which case Turkish law would apply. The appellant relied on the fact that the respondent had not alleged, and there was no evidence, that a maritime lien arose under Turkish or Hong Kong law. Further, the appellant submitted that, even if the claim was characterised as contractual, the determination of whether the claim gave rise to a maritime lien should not be determined by reference to the lex loci contractus but by reference to the putative proper law, being the system of law with which the contract had its closest and most real connection, which was the law of Turkey where the bunkers were supplied.
2. As to summary judgment, the appellant contended that the primary judge had erred in declining summarily to dismiss the respondent's claim under s 17 of the Admiralty Act on the basis that that claim had no reasonable prospects of success because the respondent could not establish that the relevant person named in the writ in rem - the appellant owner - was liable in personam for the claim. The appellant submitted that the primary judge erred in failing to apply the accepted principles for summary judgment, that the judgment should be set aside, and that the discretion re-exercised in the appellant's favour.
3. In the event the appellant's challenge to jurisdiction over the s 15 claim failed, the appellant contended that the primary judge also erred in declining to dismiss that claim summarily on the basis that it had no reasonable prospects of success. The appellant submitted that the primary judge erred in failing to accept that no maritime lien could arise under the United States Commercial Instruments and Maritime Liens Act 2012 46 USC s 31341-31343 (CIMLA) on the basis of the evidence (including the decision of the Eleventh Circuit Court of Appeals in Trinidad Foundry and Fabricating Ltd v MV KAS Camilla [1992] USCA11 1129; 966 F 2d 613 (1992)) that the CIMLA would not apply to circumstances having no relevant connection with the United States. The appellant also relied on expert evidence that, under Canadian law, the effect of clause 7(e) of the Terms and Conditions was that Canadian maritime lien legislation would not apply.
4. As to the respondent's notice of contention, the appellant submitted that none of the cases to which the respondent referred supported the contention that the applicable choice of law was the lex loci contractus and that, even if it were, that would not result in characterisation of the respondent's claim as a maritime lien by the application of United States law.

1. The respondent contended that in deciding the jurisdictional challenge to its s 15 claim the Court did not need to determine whether the lien in fact existed. The respondent submitted that:

To determine whether the claim advanced was "a proceeding on a maritime lien" ... required no more than the identification of the allegations in the statement of claim where the contractual lien was identified, the US statute and to conclude that Australian law permits the enforcement of a foreign maritime lien claim.

1. The respondent further submitted that the primary judge was correct "in following the minority view in the Halcyon Isle"; that the starting point was the categorisation of a maritime lien as either substantive or procedural; and that the nature of a maritime lien was substantive because it was an inchoate right attaching to the vessel and travelling with the vessel independent of changes in ownership. Referring to s 15(2) and s 5(1)(b), the respondent submitted that the Admiralty Act contemplated "a range of liens; and liens being enforced which arise outside the jurisdiction"; and that s 6 was not "an impediment to the recognition of foreign maritime liens".
2. The respondent contended that the proposition that all jurisdictional questions were procedural was overly simplistic and inconsistent with The Ship MV 'Cape Moreton' [2005] FCAFC 68; 143 FCR 43 at [140]. The respondent submitted that the primary judge correctly determined that it had made a permissible assertion (according to the rules of Australian private international law) that there was "a proceeding on a maritime lien" for the purpose of s 15 and that the jurisdictional challenge therefore failed, without the need to determine what choice of law rule would apply.
3. If it were necessary to determine the applicable choice of law rule, then the respondent sought leave to rely on its notice of contention to argue that the applicable choice of law rule for necessaries is the lex loci contractus, citing the minority opinion in The 'Halcyon Isle' [1981] AC 221 at 246; Liverpool & London SS Protection & Indemnity Association v Queen of Leman, [2002] USCA5 247; 296 F 3d 350 (2002) (5th CCA); Kirgan Holding SA v Ship Panamax Leader [2002] FC 1235, 2002 AMC 2917; Todd Shipyards Corp v Altema Compania Maritima (The 'Ioannis Daskalelis') [1974] SCR 1248; 1 Lloyds Rep 174 at 178; and Marlex Petroleum Inc v The Ship 'Har Rai' (1984) 4 DLR (4th) 739 at 744. The respondent also submitted that, in so far as Australian rules of private international law did not have a choice of law rule for maritime liens, then the nearest rule should be adopted and that this was the lex loci contractus. The respondent submitted that a choice of law rule fixed by the situs of a ship when the necessaries were provided, or by reference to the flag or place of registration of the ship, lacked commercial predictability.
4. The respondent further contended that the appellant's argument that "a maritime lien cannot be created by contract was not put below and should not be permitted to be advanced on appeal", referring to Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 at 438. We interpolate that in reply to this argument, the appellant maintained, and we accept, that the respondent had misapprehended the appellant's submission, which was that "the parties to a contract cannot by agreement cloak or characterize their claim as a maritime lien, if that claim is of a type that is not otherwise recognized as giving rise to a lien".
5. As to the appellant's summary judgment application on the s 15 claim, the respondent submitted that the primary judge accepted correctly that there was a conflict between the two experts on the current state of United States law and, in consequence, there were a number of triable issues for determination at the final hearing. The respondent's position with respect to the s 17 claim is mentioned below.
6. In support of its notice of contention, the respondent submitted that its claim ought to be characterised as a claim on a maritime lien arising under United States law consistently with the approach in The 'Colorado' [1923] P 102; and that the choice of law rule ought not be the "closest and most substantial connection" test because this was inconsistent with the choice of law rule applied in The 'Colorado' and suggested by the minority in The 'Halcyon Isle' and would lack commercial certainty. In the alternative, the respondent submitted that it had a maritime lien under the law of Canada, as the lex loci contractus, because the Amended Confirmation email was sent in Canada on 2 December 2013 and this was the final contractual step.
7. On 2 March 2016, the appellant filed further submissions, with leave, on the provisions of the Personal Property Securities Act 2009 (Cth) (PPSA). The respondent did not file further submissions on the PPSA.

1. The actual disposition of this appeal can be dealt with relatively briefly. Although, as we have seen, the parties raised difficult questions, the outcome of the appeal does not in fact turn on them.

What are the principles governing the challenge to jurisdiction in respect of the claim under s 15?

1. The character of the judgment under appeal is to be borne in mind. This was an interlocutory judgment dismissing the appellant's challenge to the jurisdiction of the Court and its application for summary dismissal of the proceeding. Different principles govern a challenge to jurisdiction and an application for summary dismissal. A challenge to jurisdiction turns on the nature of the claim that the Court is being asked to entertain. The outcome is not affected by the strength or weakness of that claim: The Owners of the Motor Vessel 'Iran Amanat' v KMP Coastal Oil Pte Limited [1999] HCA 11; 196 CLR 130 at [18]- [20]. The strength of the claim is, however, relevant on an application for summary dismissal.
2. Where jurisdiction depends on a particular state of affairs (as it does in this case with respect to ss 15 and 17) a challenge to jurisdiction can only be resisted by establishing the state of affairs on which jurisdiction depends: see The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404 at 426.
3. The respondent asserted jurisdiction on the basis of ss 15 and 17 of the Admiralty Act. Subject to presently immaterial exceptions, the Admiralty Act applies in relation to "all ships, irrespective of the places of residence or domicile of their owners; and ... all maritime claims, wherever arising": see s 5(1). As noted above, s 10 of the Admiralty Act confers jurisdiction on this Court in respect of proceedings that may under that Act be commenced as actions in rem. (The jurisdiction conferred by s 10 is subject to the qualification in s 13 that the Admiralty Act does not confer jurisdiction "in a matter that is not of a kind mentioned in paragraph 76(ii) [matters 'arising under any laws made by the Parliament'] or (iii) [matters '[o]f Admiralty and maritime jurisdiction'] of the Constitution". It is not suggested that the qualification is relevant to the outcome of the present case.)
4. An action in rem against a ship or other property cannot be brought other than in accordance with the Admiralty Act (s 14). Sections 15 to 19 authorise proceedings asserting different types of claims, including different types of "maritime claim" (ss 16 to 19). Section 16 deals with a "proprietary maritime claim" (as defined in s 4(2)); ss 17 and 19, a "general maritime claim" (as defined in s 4(3)); and s 18, with both proprietary and general maritime claims. The respondent relied, as we have seen, on s 17, discussed below, in connection with the appellant's summary judgment application.
5. Before the primary judge, the appellant's challenge to jurisdiction in respect of the s 17 claim was limited. There was no dispute as to the ownership of the Sam Hawk at the time the cause of action under s 17 was said to arise and when the proceeding was commenced. The claim here was clearly a general maritime claim as defined in s 4(3) of the Admiralty Act. It was a claim in respect of goods, materials or services supplied to the ship for its operation or maintenance (s 4(3)(m)). Before the primary judge, the focus was on whether the owner was "a relevant person" within the meaning of s 17. Section 3(1) defined a "relevant person" to be "in relation to a maritime claim ... a person who would be liable on the claim in a proceeding commenced as an action in personam". In a jurisdictional contest, however, an inquiry as to "whether someone is a relevant person ... raises a question as to putative, not actual, liability": The Owners of the Motor Vessel 'Iran Amanat' [1999] HCA 11; 196 CLR 130 at [18]. Here too, the outcome of inquiry depends on the nature of the claim and not on its factual strength. We have already noted that the respondent pleaded in this connection that EBC entered into the Bunker Supply Contract as agent for the owner of the Sam Hawk and it is therefore unsurprising that the appellant did not argue before us that the primary judge's decision as to jurisdiction on the s 17 claim was in error. As Rares J put it in The Ship 'Hako Endeavour' v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; at , in considering whether on a jurisdictional challenge an alleged relevant person would be liable on the claim in a proceeding commenced as an action , the question is "not whether the alleged relevant person , or is likely to be found, liable. Rather, the question is whether that person has the necessary nexus with the ship against which the proceedings are brought ... that the person could be found liable on the plaintiff's claim as it is put forward against that person".
6. Section 15 is different from s 17 and the other maritime claim provisions since it provides for an action in rem in the case of a proceeding on a maritime lien or other charge in respect of a ship or other property. The term "maritime lien" is defined inclusively in s 15(2) to include a lien for salvage, damage done by a ship, wages of the ship's master or crew member, or master's disbursements. Section 6 further provides that the provisions of the Admiralty Act "(other than section 34) do not have effect to create ... a new maritime lien or other charge; or ... a cause of action that would not have existed if this Act had not been passed".
7. Some of the language of s 15 has a counterpart in ss 16 to 19, however, since they too refer to a "proceeding on", variously, "a proprietary maritime claim" (s 16), "a general maritime claim" (s 19) or "the claim" (ss 17 and 18). In consequence, an action in rem can only be commenced where the proceeding is on a maritime lien or a charge, or alternatively, on a maritime claim. An action in rem cannot be commenced, and the Court will not have jurisdiction over it, unless the proceeding meets this description (cf. s 10).
8. Whether or not this Court has jurisdiction to entertain the claim that the respondent seeks to make in reliance on s 15 depends therefore on whether the action in rem that it has begun in this Court fits the description of a "proceeding on a maritime lien ... in respect of a ship ... subject to the lien": cf. Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1; 204 CLR 559 at [2] (Gleeson CJ, Gaudron and Gummow JJ). The question whether the proceeding fits this description is one of mixed fact and law, including whether the alleged facts could give rise to the asserted maritime lien in respect of the arrested ship under Australian law respecting maritime liens or, perhaps, under an asserted foreign law the effect of which would be recognised under Australian private international law. We say "perhaps" only because the application of Australian private international law principles in this context is disputed by the parties. We discuss this issue below.
9. Clearly enough, however, the proceeding will not be on a maritime lien in respect of a ship if the asserted adjudicative facts could not, even if proven, give rise to a maritime lien in respect of the arrested ship under Australian law, including on the application of Australian private international law principles. Jurisdiction to entertain a claim under s 15 will arise where a proceeding is brought to enforce a maritime lien that would, on the facts as alleged, arise under Australian law, or under a foreign law the effect of which is recognised by Australian law. Jurisdiction does not, however, depend on proving on the balance of probabilities that that a maritime lien exists and that the arrested ship is subject to it: cf. The Ship 'Global Peace' [2006] FCA 954; 154 FCR 439 at [128], [133].

What is the outcome of the jurisdictional challenge to the s 15 claim?

1. As explained above, the respondent's pleaded case under s 15 was that it had acquired a maritime lien over the Sam Hawk under United States (or Canadian) law when the bunkers were supplied to the ship at Istanbul on 7 December 2013. The foundation for this claim, in both its aspects, was the Bunker Supply Contract between the respondent and the time charterer (EBC). In relation to United States law, it relied on cl 7(e) of Terms and Conditions (which it said were incorporated into the Bunker Supply Contract). Under this clause the parties agreed that the transaction was governed by "the laws of the United States and the State of Florida" and that the laws of the United States applied "with respect to the existence of a maritime lien". In relation to Canadian law, it again relied on the Bunker Supply Contract as creating a relevant nexus with the law of Canada, on the basis either that it was a party to the contract and carried on a relevant business in Canada or Canada was the country from which the confirmation email was sent on 2 December 2013.
2. No party to the present action disputed the existence of a contract between the respondent and EBC for the supply of bunkers at Istanbul in December 2013. This is, therefore, not the occasion to determine whether the existence of the contract should be determined by the law of the forum or the law of the place where the contract was made (the lex loci contractus): cf. Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32; 165 CLR 197 at 225 (Brennan J), 255 (Deane J) and 261 (Gaudron J).
3. Nonetheless, the difficulties with the claim under s 15 are clear. First, under Australian law, a maritime lien does not arise from the supply of necessaries (including bunkers) to a ship. This was recognised by Menzies J in Shell Oil Company v The Ship 'Lastrigoni' [1974] HCA 27; 131 CLR 1 and was not contested by the parties. In The Ship 'Lastrigoni', the plaintiff commenced an action in rem in the Admiralty jurisdiction of the High Court for the non-payment for bunkers supplied to the ship on time charter. Application was made to have the proceeding set aside on the ground that the plaintiff's claim was not within the Admiralty jurisdiction of the Court. There was no dispute that the shipowner was under no contractual liability to pay. Menzies J rejected the plaintiff's contention that the supply of fuel created a maritime lien enforceable by an action in rem as contrary to the decision of the Privy Council in Laws v Smith; The 'Rio Tinto' (1884) 9 App Cas 356. Neither the appellant nor the respondent challenged Menzies J's statement of the law in this regard.
4. If, therefore, the respondent acquired a maritime lien when it supplied the bunkers to the Sam Hawk, it could only have done so under foreign law recognised by this Court according to principles of Australian private international law. For present purposes, we shall assume that the reference to a maritime lien in s 15 includes a lien under foreign law recognised by Australian private international law. We return to this below.
5. We turn to Australian law as the law of the forum to ascertain the applicable choice of law rule. Generally speaking, Australian private international law accords the parties to a contract a wide discretion to choose the law that governs their contract or a particular part of the contract: cf. Akai Pty Ltd v People's Insurance Company Ltd [1996] HCA 39; 188 CLR 418 at 441-442, 443-45; BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VicRp 71; [1985] VR 725 at 747; Vita Food Products v Unus Shipping Co Ltd (In Liq) [1939] AC 277 at 290; and Davies M, Bell, AS and Brereton, PLG, Nygh's Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, 2014) at [19.21]. On the respondent's s 15 claim, however, the appellant was not alleged to be a party to the Bunker Supply Contract. It was not alleged that the appellant knew of that contract when it was made. Nor did the respondent rely on any other act or omission by the appellant in support of its claim that it had a lien over the ship.
6. In the circumstances as pleaded, the Bunker Supply Contract could not supply a basis for identifying the lex causae as either the law of the United States or of Canada. Since the appellant was not a party to the contractual bargain, there was no foundation to give effect to a contractual choice of law which it had never made. The respondent's contention that the express choice of law in cl 7(e) should be given effect, to support its contention that it had acquired a maritime lien at the time of the bunker supply under the laws of the United States was fundamentally misconceived. In the pleaded circumstances, cl 7(e) cannot assist in identifying the law to be applied in determining the existence of a maritime lien.
7. Absent contractual choice, where a dispute arises under a contract between the contracting parties, private international law would identify the proper law of the contract so far as the parties are concerned as that to be inferred or that "with which the transaction has its closest and most real connection": see Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 at [64]- [71]; and Bonython v Commonwealth of Australia [1951] AC 201 at 219. Again, however, a choice of law rule with respect to contract has no application here, because the appellant was not a contracting party and had no involvement in the transaction the subject of the contract. As the other members of the Court note, the time charterer had no interest in the ship; and nor, of course, did the respondent. In these circumstances, there is no tenable basis to select a contractual choice of law rule to identify the applicable lex causae by reference to which the existence of the claimed lien might be ascertained. The respondent's submissions about the lex loci contractus can also be put aside for the same reason. The question whether a maritime lien attached to the Sam Hawk cannot be resolved by reference to an agreement between parties having no interest in the ship.
8. We agree with the other members of the Court that, having regard to its pleaded case, the bases relied on by the respondent for the proposition that it acquired a maritime lien by virtue of the law of the United States or the law of Canada could not support that proposition.
9. Assuming a maritime lien in s 15 includes a maritime lien arising under foreign law, the effect of which is recognised by Australian law, there remains the question what, according to Australian private international law, is the applicable choice of law rule to apply in order to identify the foreign law (or lex causae) governing the existence of an asserted maritime lien. The question is not apparently settled by authority binding on this Court.
10. As the primary judge and the other members of the Court observe, there are a number of possibilities: the lex causae governing the existence of a maritime lien might be the lex situs of the ship at the time the bunkers were supplied to it. This would be the law of Turkey. Alternatively, the lex causae might be the law of the country of the ship's flag or registration. This would be Hong Kong. It might also be the law of the forum of the arrest (Australia) or even the law of the jurisdiction having the closest and most real connection to the claim.
11. This is not the occasion to determine the applicable choice of law rule. This is because the respondent pleaded only that the relevant law was either that of the United States or the law of Canada. None of the possible approaches to identifying the lex causae would identify the law of the United States or of Canada as the law to be applied in the circumstances of this case, to identify the existence of the claimed maritime lien.
12. There was furthermore no evidence of the law of Turkey, Hong Kong or other possibly relevant foreign law. Absent evidence, these foreign laws would be presumed to be the same as Australian law: Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; 223 CLR 331 at [125] (Gummow and Hayne JJ). As stated above, under Australian law, no maritime lien would attach to the Sam Hawk on the supply of fuel.
13. It follows that, on any view, the respondent did not establish that the Court had jurisdiction over its s 15 claim since it did not show that a maritime lien could arise on the case it sought to make. Accordingly, the appellant's challenge to jurisdiction over the s 15 claim should be upheld.
14. In this event, it is unnecessary to consider the appellant's submissions regarding the summary dismissal of the respondent's claim under s 15 of the Admiralty Act. It is, however, necessary to refer to the principles governing summary dismissal so far as they apply to the respondent's claim under s 17 of that Act.

What are the principles governing an application for summary dismissal?

1. Under s 31A(2) of the Federal Court Act, the Court may give judgment for a respondent in relation to the whole or any part of a proceeding if the Court is satisfied that the party bringing the proceeding has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. For the purposes of this section, a proceeding or part of a proceeding need not be "hopeless" or "bound to fail" for it to have no reasonable prospect of success: s 31A(3). Section 31A does not limit any other powers that the Court may have: see s 31A(4).
2. The principles that govern the exercise of discretion on an application for summary dismissal under s 31A are well-recognised: see, for example, in relation to a proceeding on a general maritime claim under s 19(a) of the Admiralty Act, Virtu Fast Ferries Ltd v The Ship Cape Leveque [2015] FCAFC 58; 232 FCR 22 at [48], [53]-[54]. In their joint judgment in Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 at [53], Hayne, Crennan, Kiefel and Bell JJ emphasised that "s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered", adding (at [60]):

The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly.

1. Agreeing with the joint judgment that it was inappropriate for the Court in that case to dismiss the proceeding summarily, French CJ and Gummow J stated (at [25]) that "[s]ection 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a 'fanciful' prospect of success. That may be a judgment of law or of fact, or of mixed law and fact."
2. Although no hard and fast rule can be laid down as to when summary dismissal is appropriate, the critical question under s 31A(2) will always be whether the Court is persuaded by the applicant for summary judgment that the proceeding has no reasonable prospect of success. The Court may be so persuaded by reference to the pleadings where a defect cannot be cured; by reference to the evidence relied in support of the summary judgment application, where that reasonably excludes the possibility that the facts on which the claim depends will be able to be established; and/or by reference to the evidence relied on in opposition (including that indicated by an outline of the evidence to be relied on to sustain the claim): see Jefferson Ford [2008] FCAFC 60; 167 FCR 372 at [22] (Finkelstein J) and [127] (Gordon J); and Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [20]- [21] (French J). General assertions of a claim or fact on which the claim depends will ordinarily be insufficient to defeat an application for summary dismissal of the claim under s 31A.

What is the outcome of the summary dismissal application with respect to the s 17 claim?

1. As noted above, before the primary judge, the respondent submitted, on its s 17 claim, that the owner's personal liability arose because the Amended Confirmation evidenced a contract between it and EBC as agent for the owner.
2. Before the primary judge, the appellant relied on the evidence of Ms Hunt, the relevant operations manager, to refute the alleged agency. Ms Hunt's evidence referred to the time charter between the appellant and EBC, which showed that EBC was responsible for paying for bunkers during the charterparty. Her evidence was that the operator issued standing orders to all of its vessels to issue a 'no lien' notice to bunker suppliers; and that neither the operator nor owner authorised EBC to contract on the owner's behalf for the supply of bunkers to the ship whilst under charter.
3. The appellant submitted, and we accept, that her evidence was more than a bare denial and that there was corroborative evidence that, prior to the bunkers being delivered to the ship, the master notified both the physical supplier and the master of the re-fuelling barge that the owner accepted no liability to pay for bunkers and payment was the responsibility of EBC. There was also evidence that, following receipt of the bunkers, the bunker receipt was stamped by the chief engineer of the ship to similar effect. The appellant argued, and we accept, that the respondent's only response, which depended on statements in its own documents, was entirely inadequate to establish the alleged agency. This was in substance accepted by counsel for the respondent on the appeal. It is clear that the evidence relied on in support of the application for summary dismissal of the s 17 claim reasonably excluded the possibility that the facts on which the claim depended would be able to be established at trial.
4. We agree with Allsop CJ and Edelman J, for these reasons and the reasons stated by their Honours, that there was no reasonable prospect of success of the s 17 claim. Since we consider that the respondent failed to show that the Court had jurisdiction over the s 15 claim, the discretionary considerations that led the primary judge to refuse summary judgment on the s 17 claim disappear.
5. For all these reasons, we agree with the orders proposed by Allsop CJ and Edelman J.

In what circumstances, can, if at all, there be a proceeding on a maritime lien under s 15 where the claimed lien is said to arise under foreign law?

1. In light of our conclusions above, it is strictly speaking unnecessary to resolve whether there can be "a proceeding on a maritime lien" within the meaning of s 15 of the Admiralty Act where the plaintiff seeks to enforce, by an action in rem, a maritime lien arising under foreign law and, if so, in what circumstances. These questions have, however, been argued by the parties. They have also been thoroughly considered by the other members of the Court. We shall not traverse the very same ground as they have done. In the following pages, however, we would indicate in a summary way why we are in agreement with Allsop CJ and Edelman J, substantially for the reasons they have stated, that some rights arising under foreign law and to which foreign law attaches certain priority consequences may amount to a maritime lien within the meaning of s 15. In order to do so, the foreign law under which a maritime lien is claimed must be the governing law, or lex causae, according to Australian choice of law rules; and the rights arising under that foreign law must fit the description of a maritime lien in Australian law, a description which includes its priority consequences and the circumstances in which it can arise. This involves first considering those foreign rights and their priority consequences according to the governing foreign law, including the circumstances in which they arose under that foreign law; and second, determining whether the foreign rights (identified in this way) are the same, or analogous to, rights constituting a maritime lien in Australia and, as such, attracting the priority of a maritime lien under Australian law.
2. The general, overarching questions involve the proper construction of s 15 of the Admiralty Act and the application of well-accepted principles of statutory construction. Many of these principles have been re-stated in recent decades: see, for example, Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69] (McHugh, Gummow, Kirby and Hayne JJ); Certain Lloyd's Underwriters v Cross [2012] HCA 56; 248 CLR 378 at [24]- [25] (French CJ and Hayne J); Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47] (Hayne, Heydon, Crennan and Kiefel JJ); Lacey v Attorney-General for Queensland [2011] HCA 10; 242 CLR 573 at [43] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ); and Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; 253 CLR 531 at [35]- [40] (French CJ, Crennan and Bell JJ).
3. The statements of principle in the reasons of French CJ and Hayne J in Certain Lloyd's Underwriters [2012] HCA 56; 248 CLR 378 at [24]- [25] (also referring to Dixon CJ's statement in Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; 92 CLR 390 at 397) are particularly pertinent in the present context. French CJ and Hayne J there said:

The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority, "[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute" (emphasis added). That is, statutory construction requires deciding what is the legal meaning of the relevant provision "by reference to the language of the instrument viewed as a whole", and "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed".

Determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose of a statute resides in its text and structure.

(Citations omitted.)

1. The focus is on the statutory text. The operation of s 15 must be considered, having regard to all the provisions of the Admiralty Act. Having regard to all its provisions, it is clear that the Act has an international or global reach. This is illustrated by s 5(1), which provides that:

Subject to the succeeding provisions of this section, this Act applies in relation to:

(a) all ships, irrespective of the places of residence or domicile of their owners; and

(b) all maritime claims, wherever arising.

1. Given the evident reach of the Admiralty Act, it is significant that, in its natural and ordinary meaning, s 15 applies to a proceeding "on a maritime lien" as that concept is understood in Australian law, wheresoever arising. In terms, therefore, the language of s 15 is broad enough to cover both a maritime lien arising in Australia under the Australian law of maritime liens and a maritime lien arising under a foreign law where that foreign law is the governing law according to Australian choice of law rules. There is no indication in the Admiralty Act that s 15 is not intended to have this operation. Further, as Allsop CJ and Edelman J point out, reference to [123] of the ALRC Report No 33 (see [220] above) confirms that the ALRC recommended that the status of maritime liens arising "outside the forum" was to be left to the courts and, by implication, Australian private international law, and that this recommendation was given effect in the Admiralty Act.
2. A consequence of this construction of s 15 is to press the task of identifying a "maritime lien" within the meaning of s 15 to another level. At this level, the focus is on the identification of how private international law provides for the recognition of a maritime lien arising under foreign law. First, as we have seen, that foreign law must be identified as the governing law, or lex causae, by the Australian choice of law rules. Secondly, the rights arising under that foreign law must fit the description of "maritime lien" in s 15. Sections 6 and 15 show that this must match the description of a maritime lien in Australian law. Section 6 provides that the Admiralty Act (other than s 34, which is not presently material) does not create a new maritime lien or other charge. Whilst mere recognition of a foreign right cannot create a new maritime lien, to accord foreign law rights the status of a "maritime lien" for the purpose of s 15, in circumstances where no lien would arise in Australia, would be in substance to create a maritime lien for the purpose of s 15. Section 6 indicates that this was not the intended operation of s 15.
3. Section 15(1) and (2) also indicate that a foreign right is to be characterised consistently with Australian law. Paragraph [122] of the ALRC Report No 33 (quoted in the reasons of Allsop CJ and Edelman J) makes it clear that the words "or other charge" in the expression "maritime lien or other charge" in s 15(1) is a reference to charges that arise by virtue of Australian legislation. As their Honours observe, this indicates that foreign law rights are to be recognised as maritime liens, only where they are the same as, or analogous to, maritime liens arising in Australia. Further, we agree with their Honours that although s 15(2) is an inclusive provision, it nonetheless requires any foreign law right that is equivalent to a lien in the four identified categories ((a) salvage; (b) damage done by a ship; (c) wages of the master, or of a member of the crew, of a ship; or (d) master's disbursements) to be characterised as a "maritime lien" as it would be under Australian law. We agree with their Honours that this tends to confirm that, to the extent foreign law rights are recognised as maritime liens for the purpose of s 15, they are to be characterised and prioritised as Australian law would recognise them.
4. For the reasons elegantly explained by Allsop CJ and Edelman J in their joint reasons, we agree that the status of a maritime lien in the priority system for maritime creditors is an integral feature of a maritime lien in Australian law. In this regard, it is important to bear in mind that a maritime lien is a commercially significant set of maritime rights because it not only survives a change in ownership of the ship but also because of the high ranking in priority that it confers on the lien-holder in any distribution of funds to satisfy the claims of maritime creditors. The priority that is afforded the maritime lien in Australian law is an expression of the circumstances (see s 15(2)) in which a maritime lien arises by operation of Australian law and a product of the policy considerations that lead Australian law to safeguard the interests of the people the lien protects in those circumstances. We agree, for the reasons stated by their Honours, that the concept or description of a maritime lien in Australian law ought not be separated from the priority consequences of the lien and the circumstances in which the lien arises by operation of law.
5. These considerations support the two-step characterisation process outlined in the reasons of Allsop CJ and Edelman J and referred to at the commencement of this part of our reasons (at [275]).
6. These are not the only considerations, however, that support this characterisation process. The ALRC Report No 33 demonstrates, and the legal history set forth in the reasons of the other members of the Court confirms, that in interpreting s 15 of the Admiralty Act it is important to acknowledge that the Admiralty Act and s 15 were enacted against the background of English legislation and English authority: see also Owners of the 'Iran Amanat' [1999] HCA 11; 196 CLR 130 at [20]. We are therefore grateful for the scholarly historical analysis undertaken by the other members of the Court.
7. We observe that both the historical analyses of the other members of the Court agree that the decision of the House of Lords in C & CJ Northcote v Owners of the 'Henrich Björn' (1886) 11 App Cas 270 HL was a critical point in the history of English law with respect to the maritime lien. Whether or not the significance of that case has been misunderstood, it seems that thereafter English law distinguished between a limited class of claims giving rise to maritime liens enforceable by an action in rem and unsecured claims that could nonetheless be enforced by an action in rem. Further, by the late nineteenth century, whatever may have been the position before, it was widely accepted that a maritime lien arose under English law only for claims for damage done by a ship; salvage; seamen's wages; master's wages and disbursements; and bottomry and respondentia. It is clear that the position was otherwise in the United States, where maritime law adopted a different policy and theory to that of English law, with the result that in the United States virtually all maritime claims were regarded as capable of giving rise to a maritime lien.
8. To the extent that it now matters, we consider that the decision of the majority in T_he 'Halcyon Isle'_ [1981] AC 221 was consistent with the evolution of English law following the Owners of the 'Henrich Björn'. The reasons of Allsop CJ and Edelman J analyse the decision in The 'Halcyon Isle' and discuss its application. We agree and respectfully adopt their Honours' analysis and discussion of that case, and in The 'Colorado' [1923] P 102. For the reasons their Honours advance, we agree that under Australian law today the priority rules are matters of substance, rather than procedure: see John Pfeiffer [2000] HCA 36; 203 CLR 503 at [99]. We also agree with their Honours that this does not relevantly affect the force of the majority's analysis in The 'Halcyon Isle'. This is because it was conceded in that case, as in this, that the law of the forum determines the order of priorities in any event; and, in light of this, the fact that the majority in The 'Halcyon Isle' classified the priority rules as matters of procedure instead of substance is immaterial. As Allsop CJ and Edelman J note, before a court can put a foreign law right in its place according to the priority rules of the law of the forum, it must ascertain the nature of that foreign law right and, having done so, determine if it is the same, or analogous to, a right in the law of the forum and its place in the priority rules. As the reasons of Allsop CJ and Edelman J show, The 'Colorado' is best understood as a case in which the English Court of Appeal examined the rights under the foreign lex causae and, having done so, accorded those rights the priority that the closely analogous rights in the law of the forum enjoyed under English law.
9. We therefore agree with Allsop CJ and Edelman J that the two-step process to which they and we refer is consistent with the approach of the majority in The 'Halcyon Isle' and of the Court of Appeal in The 'Colorado'. It is also consistent, speaking broadly, with the evolution of English maritime law and Australian principles of private international law.
10. The need for predictability, stability, clarity and fairness, particularly in the law touching maritime trade, further supports the two-step process. It involves no alteration in the priority rules of the forum yet allows for the recognition of foreign rights that under their lex causae are the same, or analogous to, rights in the forum and can be given effect according to the forum's priority rules without altering those rules.
11. Lastly, we would add that we can discern no good reason to depart from the law set forth by Menzies J in The Ship 'Lastrigoni' [1974] HCA 27; 131 CLR 1 and also by the majority in The 'Halcyon Isle' so as to accord to a supplier of necessaries a maritime lien for non-payment. There is no demonstrated commercial need for such a departure, even if this were a matter for this Court, particularly having regard to the fact that there is now facility to transfer funds electronically across the world.

1. For the reasons we have stated, we agree with the orders proposed by the other members of the Court.

I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kenny and Besanko.

Associate:

Dated: 28 September 2016

Are foreign maritime liens capable of recognition and enforcement in Australia?

The recognition of maritime liens in English law prior to the mid-19th Century

The 19th Century statutory expansions of the Admiralty Court's jurisdiction

Some aspects of the law affecting bottomry bonds

The reasoning in The Colorado [1923] P 102

The problem with the majority decision in The Halcyon Isle [1981] AC 221

The role of the forum's allocation of priorities

Conclusion on recognition and enforcement of foreign maritime liens

1. I have had the privilege of reading the reasons of the Chief Justice and Edelman J (the joint reasons) that has examined a number of questions in scholarly depth. I agree with their proposed orders. But, I do not agree with their conclusion that the lex fori is the proper law for the classification of a foreign maritime lien.
2. In any event, I do not consider that this is a case in which it is desirable or necessary to express a final view as to whether s 15 of the Admiralty Act 1988 (Cth) can extend to recognition of a maritime lien created by or arising under a foreign law such as the United States of America's Commercial Instruments and Maritime Liens Act 46 U.S.C. s31341-31343 (2012) (the US Liens Act).
3. That is because the only basis on which the respondent, Reiter Petroleum Inc, a Canadian international bunker broker and trader, asserted that it had a maritime lien over Sam Hawk was that the lien arose in Turkey in circumstances without any connection to the laws of the United States and under a contract with a time charterer that did not bind or involve the owners of Sam Hawk, SPV Sam Hawk Inc, a company incorporated in Panama and registered in Hong Kong. I will explain briefly how I have arrived at this view below, before considering in greater depth some aspects of law relating to maritime liens and the decision in Bankers Trust International Ltd v Todd Shipyards Corporation (The Halcyon Isle) [1981] AC 221.

1. Sam Hawk was a bulk carrier of 190m l.o.a., built in 2013 and flagged in Hong Kong. On 31 October 2013 the owners entered into a time charter for Sam Hawk with a charterer, Egyptian Bulk Carriers. The broker's recap for the charterparty provided for London arbitration with English law to apply, together with some bespoke terms and "otherwise as per owners BTB [back to back] CP [charterparty] herewith attached logically amended as per M/T agreed".
2. In addition to the background in the joint reasons I would only add to [18] the details of Reiter's general conditions. The charterer and Reiter had had a commercial relationship from about 2008 involving a small number of transactions that appear to have been conducted on the basis of Reiter's standard terms and conditions of sale (bunker supply contract), that the charterers had signed in September 2008. Those terms included cl 7(d) and (e) that provided:

(d) Buyer warrants that it has the consent of the owner of the vessel to the deliveries contracted for. All sales are on the credit of the receiving vessel as well as on the buyer's promise to pay. Seller shall have a right to place a lien on such vessel for all amounts including interest and cost which may, from to time, be due.

(e) Seller shall be entitled to assert its lien or attachment in any country where it finds the vessel. Each transaction shall be governed by the laws of the United States and the State of Florida without reference to any conflict of laws rules. The laws of the United States shall apply with respect to the existence of a maritime lien, regardless of the courts in which the seller institutes legal proceedings. The present U.S. choice of law clause is a term of the present terms and conditions of sale which is enforceable and is to be given effect under any law and court jurisdiction where the seller may invoke it. (emphasis added)

1. I agree with the conclusion in the joint reasons at [181]-[186] that under the lex causae applicable to determining whether the supply of bunkers to Sam Hawk in Istanbul created a maritime lien, the lex causae is presumed to be Australian law, and so no maritime lien could have arisen.
2. In essence, Reiter's case was that it acquired a maritime lien over Sam Hawk in Istanbul when the bunkers were stemmed pursuant to the contract between Reiter and the charterer. Reiter contended that the lien arose without any act or omission by the owners, but the lien somehow came into existence merely because the bunker supply contract contained a clause that purported to create such a lien.
3. Critically, apart from the bunker supply contract, nothing about the bunker supply connected Sam Hawk or her owners, first, to the United States or its laws and, secondly, to Reiter. The substance of what Reiter seeks to do is to claim that a ship owner willingly allowed a time charterer to create a maritime lien over his ship, even though all persons involved (owner, time charterer and necessaries men) knew, both at the time that the bunker supply contract was made and at the place of supply, that the charterer had no proprietary rights over the ship but only had the obligation to bunker her for the duration of the charterparty.
4. The provisions of the US Liens Act did not apply in Turkey. In the absence of evidence that Turkish law gave rise to a maritime lien for necessaries, Turkish law may be presumed not to differ from the law of Australia, which does not recognise such a lien, in particular for the supply of bunkers to a ship: Shell Oil Company v Ship "Lastrigoni" [1974] HCA 27; (1974) 131 CLR 1 at 4 per Menzies J.
5. It is one thing for the law of the place where necessaries are supplied, such as the United States, to create a rebuttable presumption that a charterer has a shipowner's authority to create a maritime lien over the ship for the supply of necessaries to her in that jurisdiction. It is another to use a contract, that makes the US Liens Act its proper law, and to which the shipowner is not a party, to appropriate the owner's property (his ship) as security for the necessaries man who supplies necessaries, in a foreign State, the law of which does not create such a lien.
6. The essence of a maritime lien is that it is a security that is imposed on a ship, by operation of law, by reason of some act or omission of the ship or her owners or as an incident of a contract, such as a bottomry bond or, in the civil law, an hypothecation, and is carried into effect by legal process.
7. A time charterer has no interest in, and does not have possession of, a ship. The US Liens Act creates a statutory fiction, as an expression of the public policy adopted by the Congress to promote maritime commerce. One aspect of the fiction is that a time charterer has a rebuttable authority to bind the owners so as to create a security in the form of a maritime lien, under the US Liens Act, over a ship in respect of the charterer's commercial transaction of a purchase of necessaries for her. That statutory fiction operates as part of the general maritime law operating in the jurisdiction of the United States and, possibly, in respect of ships flagged in that country. But it cannot effectually create, or give effect to, such a fictitious authority of a charterer to create a maritime lien over the owner's property in respect of the charterer's dealings on his own account outside the jurisdiction of the United States.
8. Clause 7 of Reiter's standard terms and conditions that form part of its contract with the charterer cannot create or expand the territorial jurisdiction and effect of the US Liens Act to bind or affect a ship or her owners to the consequences of a time charterer's acts beyond the territorial jurisdiction of the United States. And, when the ship is within that jurisdiction, it is not Reiter's contractual terms, but the force of that polity's laws, namely the US Liens Act, that creates the rebuttable authority of a time charterer to impose a lien on a ship to secure payment of the charterer's liability for the supply of necessaries to her.

Are foreign maritime liens capable of recognition and enforcement in Australia?

1. It follows that it is not necessary to decide whether a maritime lien, created by a foreign lex causae, could be recognised and enforced by an action in rem on a maritime lien under s 15 of the Admiralty Act 1988 (Cth). But because of the careful decision of the primary judge, arguments on the appeal and the considerations canvassed in depth in the joint reasons, I should explain why I am unable to agree with the conclusions of the Chief Justice and Edelman J on this point.
2. I have begun by focusing on the early history of English law and the jurisdictional divide between the common law courts and the Court of Admiralty, that applied the civil law, before the English law was reformed in the mid-19th Century. This places in perspective what the few cases in the succeeding century decided as their ratio decidendi in respect of maritime liens. I considered that this was necessary because of, first, the dearth of authority on this point, after the mid-19th Century, apart from The Colorado [1923] P 102 (which did recognise and enforce a French hypothèque as a maritime lien) prior to the decision in The Halcyon Isle [1981] AC 221, and, secondly, what Lord Tenterden (and later editors) had written about the earlier precedents in successive editions of the work known initially as Abbott's, and later (under his peerage name) Tenterden's, Law of Merchant Ships.

The recognition of maritime liens in English law prior to the mid-19th Century

1. English law only excluded recognition of foreign maritime liens for necessaries from sometime around the middle of the 19th Century. Prior to that time, although there was no domestic lien for necessaries, English common law and the Admiralty Court recognised and enforced foreign liens for necessaries. This position arose because of the jurisdictional differences between the Court of Admiralty and the common law Courts, including the King's (or Queen's) Bench which could grant a writ of prohibition restraining the Court of Admiralty from exceeding its jurisdiction.
2. Early in the 17th Century, Hobart CJ, in the Court of Common Pleas, held that the jurisdiction of the Admiralty Court was limited to causes of action, including "impawning" or hypothecation of a ship that arose on the high seas: Bridgeman's Case (1613-1614) Hob 11 at 11-12 [1792] EngR 362; [80 ER 162 at 162-163]. He held that the Admiralty Court "hath no power over any cause at land", but that:

... if a ship be at sea and take leake, or otherwise want victual, or other necessaries, whereby either herself be in danger or the voyage defeated, that in such case of necessity the master may impawn [her] for money or other things to relieve such extremities, by imploying the money so.

1. However, over the course of succeeding years of the 17th Century, the common law courts came to accept that the Admiralty Court also had jurisdiction where the hypothecation or pawning of a ship for necessaries occurred on land outside the realm. In 1688 or 1689 Holt LCJ, for the Court of King's Bench, refused a writ of prohibition holding that, in cases of necessaries, the master, on land, could "pawn" the ship in the course of a voyage and "as the pawnee has no remedy at common law, it is a matter of properly triable in the admiralty court": Cossart v Lawdley (1688) 3 Mod 244 at 245 [87 ER 159 at 160-161]. It seems that this is the same case Lord Raymond referred to [1792] EngR 2604; (1 Ld Raym 152; 91 ER 999) as "Costard v Lewslie, 2 Will & Mar BR Comb 135; Holt 48". The case is also reported under the name "Corset v Husley" Comb 135 (in Trinity Term 1 W&M) [1724] EngR 122; [90 ER 389]; see too Johnson v Shippen (1703) 2 Ld Raym 982 at 983-984; [1790] EngR 991; [92 ER 154 at 155] where Holt LCJ referred to "Cossart v Lawdsley [sic]". The report in 3 Mod 244 has the case occurring in Michaelmas Term 4 Jac 2 (i.e. at the very end of James II's reign). The report of Corset v Husley [1738] EngR 249; (1689) Holt 48 [90 ER 924]; Comb 135 at 135-136 [1724] EngR 122; [90 ER 389 at 389], stated that Holt LCJ, Dolben, Eyres and Gregory JJ held that the Admiralty Court had jurisdiction to hear a claim based on the master's hypothecation of a ship for necessaries, being her repair at Rotterdam - a result that three centuries later the majority in the Halcyon Isle [1981] AC 221 held to be contrary to English law.
2. Importantly, in Benzen v Jeffries [1792] EngR 2604; (1696) 1 Ld Raym 152 [91 ER 999] Holt LCJ explained the reason for this extension. In that case, the Court of King's Bench refused to grant a writ of prohibition to restrain the Court of Admiralty from hearing a claim "against a ship, which the master had hypothecated for necessaries, being upon the sea in stress of weather". Lord Raymond reported that Holt LCJ gave two reasons for recognising that such a claim was properly within the in rem jurisdiction of the Admiralty Court to arrest and sell a ship; first, the only remedy available to the plaintiff in a court of common law was:

... by way of contract. Therefore since the King's Bench cannot do right to the parties, it will not hinder the Admiralty [Court] from doing them right. For if the King's Bench allows the hypothecation, and yet denies the remedy, it will be a manifest contradiction. (emphasis added)

1. Holt LCJ's second reason was that although the contract of hypothecation for necessaries had to be made on land (in that case because the ship had to be refitted after being damaged in a storm at sea) "since the cause of the pledging arises upon the sea, the suit may well be in the Admiralty Court": see also E Edwards: A Treatise on the Jurisdiction of the High Court of Admiralty of England (William Benning & Co, London, 1847) at 57-58, 93-94 and De Lovio v Boit 7 F. Cas 418 at 433-434, 440-441 (1815) per Story J.
2. The Court of King's Bench reiterated this jurisdictional principle in Johnson v Shippen (1703) 2 Ld Raym 982 at 983 [1790] EngR 991; [92 ER 154 at 155] where Holt LCJ for the Court said:

When an hypothecation is made either for money to buy necessaries, or for necessaries for the ship, in a voyage, the Court of Admiralty have a jurisdiction, for the party has no other remedy; we cannot give him any remedy against the ship; and if the suit there should not be allowed, the master will have no credit to take up necessaries for the use of the ship.

...

No master of a ship can have credit abroad but upon the security by hypothecation, and shall we hinder the Court of Admiralty from giving remedy, when we can give none ourselves? It will be the greatest prejudice to trade that can be, to grant a prohibition in this case. Indeed if a ship be hypothecated here in England before the voyage begin, that is not a matter within the jurisdiction of the Court of Admiralty, for it is a contract made here, and the owners can give security to perform the contract. (emphasis added; footnotes omitted)

1. By the beginning of the 18th Century, English law recognised foreign maritime liens for necessaries as a matter of principle because that gave commercial certainty to persons involved in international shipping. Holt LCJ realised the importance to trade that foreign necessaries men should know that the English Admiralty Court would enforce the hypothecation that a ship's master gave in a foreign port, just as would have occurred in a civil law jurisdiction in respect of the same dealings. The Court realised that if English trade were to flourish, the English Admiralty Court had to be able to exercise jurisdiction in rem, against a ship as a defendant, to enforce the ordinary incidents of international maritime commerce, including hypothecations of ships for supply of necessaries imposed by foreign (usually civil) law in the place of the dealing.
2. Likewise, by this time the common law courts had exclusive jurisdiction in claims for the supply of necessaries in England. The jurisdictional divide can be seen in Justin v Ballam [1790] EngR 2218; (1702) 2 Ld Raym 805 at 806; [92 ER 38]; see too the same case reported in [1795] EngR 3716; 1 Salk 34 [91 ER 36]. There, the English supplier of an anchor and cable to a ship in distress in the River Thames sued the ship in the Admiralty Court. The Court of King's Bench granted a writ of prohibition to stop that action. Lord Raymond reported that the ship, when supplied, was not "in her voyage" and there had been no hypothecation in favour of the supplier. His report stated the ruling (consistently with Salkeld's report) as follows:

Now it is true, that by the maratime [sic] law every contract with the master of a ship implies an hypothecation; but it is otherwise by the law of England. Therefore this being a contract made with the master upon the land, it is the common case. The Admiralty cannot have cognisance of such a suit. And therefore a prohibition was granted. (emphasis added)

1. This is the same result as that which the Privy Council reached in the Johnson v Black (The Two Ellens) [1872] EngR 13; (1872) LR 4 PC 161 at 166-167, 170 in respect of a claim by a London necessaries man for work done on a ship in England: see too E Edwards op cit at 54-55.
2. In the meantime, the common law developed to what Lord Mansfield CJ held in giving the judgment of himself, Aston, Willes and Ashurst JJ in Rich v Coe [1777] EngR 14; (1777) 2 Cowp 636 at 639-640 [93 ER 1281 at 1283], in a claim on an action for necessaries ordered by the master who was also the "lessee" of the ship and a co-owner (semble, on what today would be a bareboat charter, see at 636) against the co-owners, namely:

Whoever supplies a ship with necessaries, has a treble security. 1. The person of the master. 2. The specific ship. 3. The personal security of the owners, whether they know of the supply or not. 1. The master is personally liable, as making the contract. 2. The owners are liable in consequence of the master's act, because they choose him : they run the risk, and they say, whom they will trust with the appointment and office of master. Suppose, the owners in this case had delivered the value of the goods in question in specie to the master, with directions for him to pay it over to the creditors, and the master had embezzled the money; it would have been no concern of the creditors: for they trust specifically to the ship, and generally to the owners.

...

Suppose the ship bad been impounded in the Admiralty Court, and that had happened at the end of the term ; or, suppose the captain had then broken a covenant which had put an end to the agreement, the defendants could never have taken the ship out of the Court, without paying the debt for which the ship was impounded. We are all of opinion therefore, that under these circumstances there is no colour to say that the creditors should be stript of the general security they are by law entitled to against the owners. (emphasis added)

1. In a sense what Lord Mansfield CJ said about the ship being part of the "treble security" was obiter dicta because the owners were found to be personally liable. However, there is no question but that the Court of King's Bench was expressly acknowledging that the ship could be "impounded", or in modern parlance, arrested, by the Admiralty Court as security for supply of necessaries. His Lordship reiterated this in giving the judgment of the Court in Farmer v Davies (1786) 1 Term Rep 108 at 109 [1786] EngR 41; [99 ER 1000 at 1001]. The Court held there that where a master was the servant of the owners that they, and not their servant, were liable for the supply of necessaries because:

Where a captain contracts for the use of the ship, the credit is given to him in respect of his contract; it is given to the owners, because the contract is on their account; and the tradesman has likewise a specific lien on the ship itself. Therefore in general the tradesman, who gives that credit, debits both the captain and the owners. (emphasis added)

1. Soon after, however, in Westerdell v Dale (1797) 7 Term Rep 306 at 312 [1797] EngR 477; [101 ER 989 at 992-993] Lord Kenyon CJ, in obiter dicta, expressed a doubt about what Lord Mansfield CJ had said in Rich 2 Cowp at 639 about the availability of the treble security in cases where the necessaries had been ordered in England. In support of his doubt, Lord Kenyon CJ referred to decisions (that had been cited in argument) of Jeykll MR (Watkinson v Bernadiston [1726] EngR 519; (1726) 2 P. Wms 368 [24 ER 769]) and Lord Hardwicke LC (Ex parte Shank (1754) 1 Atk 234 at 235 [1754] EngR 205; [26 ER 151]). Those decisions supported what Lord Kenyon CJ said about the ship not being security for supplies of necessaries in England, but Jekyll MR, however acknowledged that (2 P. Wms at 368-369; 24 ER at 769):

... if at sea where no treaty or contract can be made with the owner, the master employs any person to do work on the ship, or to new rig or repair the same, this, for necessity and encouragement of trade, is a lien upon the ship, and in such case the master by the maritime law is allowed to hypothecate the ship. (emphasis added)

1. Lord Hardwicke LC also held that there was no lien for necessaries supplied in England but that (1 Atk at 235; 26 ER at 151):

[i]f the ship had been repaired in a foreign port, while out on a voyage it would have been otherwise.

1. And, in Hussey v Christie [1808] EngR 182; (1808) 9 East 426 at 432-433 [103 ER 636 at 638-639] Lord Ellenborough CJ, Le Blanc, Grose and Bayley JJ held that:

How then does the law stand in this respect? If the repairs be done here, the owners are liable; though the master may also become liable, on his own contract, if he do not stipulate against his personal liability, and confine the credit to his owners. If the necessary repairs be done abroad, the master may hypothecate the ship for them, and it is his own fault if he subject himself to any personal liability, which he may renounce. It is said, however, that because he may hypothecate, he may acquire a lien by taking upon himself the payment of the repairs: for that the persons to whom he hypothecates acquire an inchoate lien on the ship, inasmuch as they are entitled by suit in the Admiralty Court to acquire possession of the ship itself. But it does not follow, because others, through the master, and through his hypothecation, may acquire a lien on the ship, that therefore he himself has such a lien. Liens may be derived through the acts of servants or agents, acting within the scope of their employment, which they themselves had not. (emphasis added)

1. The Court of King's Bench recognised, in this passage, both the inchoate nature of a maritime lien and the fact that, in 1808, English law (no doubt by action in the Admiralty Court) would enforce a maritime lien for necessaries, including repairs supplied to a ship abroad, a result subsequently denied by the majority in The Halcyon Isle [1981] AC 221.
2. Lord Stowell explained in The Zodiac (1825) 1 Hagg 320 at 325-326 [1825] EngR 351; [166 ER 114 at 116] that the inchoate lien for necessaries that the civil law recognised was distinct from the security created by a bottomry bond. He said that during the mid-17th Century, the House of Lords had held that English law did not recognise an inchoate lien for supply, in England, of necessaries. But, he held that it did recognise bottomry bonds for such supplies wherever they were granted. Indeed, over 20 years earlier, Lord Stowell (then Sir William Scott) had held, after an extensive examination of the authorities and principles, in The Gratitudine [1801] EngR 525; (1801) 3 C Rob 240 at 271 [165 ER 450 at 461] that the master had power under the lex mercatoria to bind, by hypothecation abroad, the cargo, as well as a ship, for repairs to that ship. Sir William Scott held that, when the proceeds of sale of the ship in England were insufficient to pay the Portuguese repairer, the hypothecated cargo could also be sold by the court to discharge the lien (see 3 C Rob at 275-276 [165 ER at 462-463]). That case seems still to have been good law in 1847: see Edwards op cit at 92-93.
3. Lord Stowell explained the reason why a maritime lien (including one recognised in the civil law) for necessaries was characterised as inchoate, in The Altas (1827) 2 Hagg 48 at 57-58 [1827] EngR 328; [166 ER 162 at 165-166] as follows:

The hypothecation or bottomry bond known to the civil law, and acted upon with an undoubted authority by this Court, is a bond whereby the captain of a vessel, not having any credit in the port, is enabled to obtain money for the repair of the ship, and its equipment for the voyage, upon what is called maritime interest. In the Roman law, in which it was familiarly known, it was called usura maritima, or foenus [sic: scil foedus] nauticum. The extent or value of this security for repayment was not limited, for it was not certain, but only eventual, dependent upon the safe accomplishment of the intended voyage. If the ship arrived safe, the title to repayment became vested ; but if the ship perished in itinere, the loss fell entirely upon the lender. Upon that account, the lender was entitled to demand a much higher interest than the current interest of money in ordinary transactions. It partook of the nature of a wager, and therefore was not limited to the ordinary interest ; the danger lay not upon the borrower, as in ordinary cases, but upon the lender, who was therefore entitled to charge his pretium periculi, his valuation of the danger to which he was exposed. A contract similar to this, upon the cargo of the ship, is called a respondentia, but is of rarer occurrence. (emphasis added)

1. He continued: "Such hypothecation bonds upon the ship are frequent in this Court". That indicates that the Admiralty Court in the early 19th Century regularly enforced bottomry bonds and other similar civil law hypothecations given or made in foreign parts: see too Prof Theophilus Parsons, Dane Professor of Law at Harvard, on Shipping and Admiralty (A Treatise on the Law of Shipping and the Law and Law and Practice of Admiralty) (Little, Brown & Co, Boston, 1869) Vol 1 at 134-135 (who was treated as an authority by the Privy Council in Droege & Co v Suart and Simpson (The Karnak) (1869) LR 2 PC 505 at 514-515).
2. The distinction between a bottomry bond and an hypothecation giving rise to a maritime lien appears to be that the bond operated as an hypothecation for a specific voyage, whereas the hypothecation (like a maritime lien) travelled with the ship and was enforceable wherever and whenever she may arrive in a port. An hypothecation allowed the debtor to retain ownership and possession of the thing (relevantly for this discussion, the ship) hypothecated, while the creditor had a right or interest in it that Roman law called a privilegium and French law a privilège, or as Prof Parsons wrote "as we call it, a lien, which could be enforced for the payment of his debt [The Tobago [1804] EngR 241; 5 C. Rob. 218, 222 [1804] EngR 241; [165 ER 754 at 755]; Johnson v Shippen [1790] EngR 991; 2 Ld Raym 982 [92 ER 154] ...]": Parsons op cit Vol 1 at 133.
3. However, as I have noted above, by the late 17th Century, the common law courts recognised that they could not give a remedy based on the hypothecation inherent in securities, such as a foreign bottomry bond, which required a process against the ship herself, not a person: Benzen [1792] EngR 2604; 1 Ld Raym 152 [91 ER 999]. This feature of the proceeding in rem marked a jurisdictional divide between the in personam remedies that were available in England to a creditor at common law and the remedy of a maritime lien, being a claim upon a ship to be carried into effect by legal process, that could only be effected in the Court of Admiralty, against the res itself.
4. In 1835, the Privy Council reversed a decision of the Court of Admiralty and held that necessaries men, who did not have the ship in their possession had, first, no lien upon a ship for supplies furnished to her in England, secondly, no right to proceed against the ship in specie (i.e. in rem) and, thirdly, no right to the proceeds of sale of the ship in priority to other creditors: Hodges v Sims (The Neptune) (1835) 3 Knapp PC 94 at 114, 116-117; 12 ER 584 at 592-593 (C Abbott, A Treatise of the Law relative to Merchant Ships and Seaman, 4th ed, Reed & Hunter, Butterworth & Sons, London, 1812). Their Lordships accepted that Abbott on Shipping (4th ed) (Pt 2 Ch 3 at 134) correctly stated the law in respect of the rights of necessaries men for supplying a ship in England. In later editions of that work, such as Tenterden's Law of Merchant Ships and Seamen (11th ed, Shaw and Sons, 1867) edited by Mr Justice Shee, the same passage appears at 117-118 (but now in Pt 3 Ch 3), as it did in the 5th edition (the last for which Lord Tenterden was responsible; Butterworth & Sons, 1827, at 109) and in the 14th edition at 177-178 (Shaw & Sons, Butterworth & Sons, 1901), according to Newcombe J giving the judgment of himself, Anglin CJC, Duff, Mignault and Rinfert JJ in The Ship "Strandhill" v Walter W Hodder Company [1926] SCR 680 at 687. Newcombe J drew on Tenterden's statement that (with his emphasis): "... the law of England has not adopted this rule of the civil law with regard to repairs and necessaries furnished here in England". He then said ([1926] SCR at 687):

The words which I have emphasized suggest, if they do not invite, the inference that necessaries, furnished in a country where the rule of the civil law prevails, may nevertheless be regarded in England as entitled to the lien conferred by the law of the contract, and, if so, it follows that the liability of the ship would be adjudged by a court of competent jurisdiction.

Indeed it is difficult to perceive any reason why an American citizen, the owner of a ship which is by American law subject to a maritime lien for the price of necessaries purchased by him in an American port, could avoid the enforcement of the lien by sending his ship to Canada, if there be a Canadian tribunal having jurisdiction to enforce it.

The 19th Century statutory expansions of the Admiralty Court's jurisdiction

1. In 1840 the Jurisdiction of the High Court of Admiralty of England Act (3 & 4 Vict c 65) (1840 Act), also referred to as the Admiralty Court Act 1840 (UK), expanded the jurisdiction of the Admiralty Court and made it concurrent with what had been the exclusive jurisdiction of the courts of common law and equity in respect of claims for, among others, necessaries supplied to a ship in England (see the long title and ss 4, 6, 23). (This Act is in the appendix to Tenterden (11th ed) at cccvii-ccxii.): cf The Tolten [1946] P 135 at 158-159 per Scott LJ.
2. When the United Kingdom Parliament enacted the 1840 Act, Dr Lushington initially confused the Admiralty Court's existing power, to recognise and enforce maritime liens that had arisen or been created outside the realm, with the new Act's conferral of jurisdiction on the Admiralty Court to hear and determine common law actions that arose from, among others, supplies of necessaries to ships in the realm. Hence, as The Two Ellens LR 4 PC at 166 and the cases discussed in the joint reasons (at [54]-[55]) demonstrate, Dr Lushington began by conceiving that the Admiralty Court's expanded jurisdiction to deal with matters that previously had been in the exclusive, and in personam jurisdiction of the common law courts, now authorised him to give additional civil law rights and remedies for common law claims over which the Admiralty Court had concurrent jurisdiction in a proceeding in rem against a ship. Dr Lushington eventually recognised that the new jurisdiction only enabled the Admiralty Court to give common law remedies in proceedings in which it had concurrent jurisdiction with the common law courts, including for the supply of necessaries to ships within the realm.
3. Jervis CJ explained, in giving the judgment of the Court of Common Pleas, the nature of an hypothecation creating a maritime lien in Stainbank v Fenning [1851] EngR 532; (1851) 11 CB 51 at 88-89 [138 ER 389 at 403]. His judgment was endorsed by the Court (Parke and Alderson BB, Coleridge, Erle, Wrightman and Crompton JJ, Platt and Martin BB (see at 431) delivered by Parke B in Stainbank v Shepard [1853] EngR 258; (1853) 13 CB 418 at 441 [138 ER 1262 at 1271]. Parke B said that "hypothecation gives only a right, to be enforced against the subject of it through the medium of process" (13 CB at 442). It does not transfer or create any property in the ship, unlike a mortgage, pledge or pawn at common law. Jervis CJ said that (11 CB at 88):

By the Roman law, and still in those nations which have adopted the civil law, every person who had repaired or fitted out a vessel, or had lent money for those purposes, had a claim upon the value of the ship, without a formal instrument of hypothecation. (emphasis added)

1. However, the Chief Justice observed, that such a right could only be acquired under English law by an express agreement, i.e. a bottomry bond, within the master's scope of authority. He held that the master could only raise money to repair or victual his vessel or for other necessaries by granting a bottomry bond if he had first exhausted attempts to raise money on her owner's credit, but (11 CB at 88-89):

... if he cannot otherwise obtain the money, he may hypothecate the ship, -- not transferring the property in the ship, but giving the creditor a privilege or claim upon it, to be carried into effect by legal process, upon the termination of the voyage. ... the advance is made upon the credit of the ship, not upon the credit of the owner; and the owner is never personally responsible. (emphasis added)

1. Subsequently, Jervis CJ gave his classic advice for the Privy Council on appeal from the Admiralty Court in Harmer v Bell (The Bold Buccleugh) [1851] EngR 985; (1851) 7 Moo PC 267 [13 ER 884] in which he expounded (at 284-285 [13 ER at 890-891]) the nature of a maritime lien in similar terms to those he had used in Stainbank 11 CB at 88-89.
2. In giving the advice of himself and Bramwell B, Mellor J, Cleasby B and Brett J that Lord Hatherley LC (at 442), Lord Chelmsford and Lord Colonsay (at 448) all applied, Blackburn J said in Castrique v Imrie (1870) LR 4 HL 414 at 431:

We know, however, that both in our own country and in every other, persons who supply necessaries to a ship in a foreign port may, under some circumstances, acquire a right over the ship. In England such a right was required to be by a written contract or hypothecation, which, says Lord Tenterden , in his last edition of Abbott on Shipping [5th Ed. p. 122, pt. 2, ch. 3, art. 23], "does not transfer the property in the ship, but only gives the creditor a privilege or claim upon it to be carried into effect by legal process." The mode in England of carrying this privilege into effect has been instituting a suit in the Court of Admiralty against the ship, causing it to be arrested by warrant, and ultimately, if no one successfully intervenes to prevent it, selling the ship.

As in England the Court of Admiralty was liable to a prohibition if it attempted to institute a suit against the owners: Johnson v. Shippen [2 Ld. Raym. 983]; there never could be any doubt in England that such proceedings were against the ship. (emphasis added)

1. Thus, Blackburn J understood that, as recognised in 1704 in Johnson 2 Ld Raym at 983 [92 ER at 155], the English Admiralty Court had no in personam jurisdiction against a shipowner on a claim for necessaries supplied abroad because such an action could only be brought in a court of common law. However, as he advised the House of Lords, the English Admiralty Court had jurisdiction in rem against the ship based on the privilege that arose under foreign law for the supply abroad of necessaries to the ship which could be created by an hypothecation or written contract (i.e. bottomry bond).
2. The House of Lords held, as the judges had advised, that proceedings in the French courts leading to the judicial sale of a ship were proceedings against the ship herself, akin to an action in rem, and that the plaintiff in the French proceedings had a "privilège" or, as it is now called, maritime lien. Lord Hatherley LC held that the "privilège" entitled that plaintiff to realise or satisfy the "privilège" by sale of the ship (LR 4 HL at 444). Interestingly, the "privilège" recognised by the French courts was for necessaries supplied to the ship at Melbourne.
3. The genesis of Blackburn J's observation that in England the hypothecation had to be in writing appeared in a contemporaneous text: D Maclachlan: A Treatise on the Law of Merchant Shipping (William Maxwell, London, 1862) at 54. Maclachlan stated that, as at 1860, the civil law of "European Commercial Countries", for the most, recognised and enforced an implied lien on ships for the supply of necessaries or the execution of repairs, by way of hypothecation, "notwithstanding the absence of any written contract between parties and of any possession of the ship by the claimant"; op cit at 59 citing, among others, The Alexander [1812] EngR 244; (1812) 1 Dods 278 at 280-281 [165 ER 1310 at 1311] per Sir William Scott; The Vibilia [1838] EngR 1045; (1838) 1 W Rob 1 at 13 [166 ER 474 at 478] per Dr Lushington. In the former case, Sir William Scott had observed that in civil law States, when money was advanced on the credit of a ship, it was not necessary for there to be an instrument in nature of a bottomry bond for the creditor to enforce his privilege or claim:

... for the general maritime law, the vessel is ipso facto liable for repairs. There was no necessity, therefore, for having recourse to a bond till the ship was coming to this country, where, from peculiar motives of policy, a special hypothecation is required. (emphasis added)

1. The turning point for English law in its attitude to the recognition of foreign maritime liens for supply of necessaries appears to be the definitive construction given by the House of Lords to the 1840 statute (3 & 4 Vict c 65) that extended the jurisdiction of the High Court of Admiralty: C & CJ Northcote v The Owners of the Henrich Björn (The Henrich Björn) (1886) 11 App Cas 270. Lord Watson set out the terms of s 6 of that statute (at 277-278) that provided that the High Court of Admiralty would have jurisdiction to decide all cases involving claims for salvage, damage received by a ship, towage or "for necessaries supplied to any foreign ship or seagoing vessel" wherever, including within England, the services were rendered, damage was received, towage or necessaries furnished.
2. Their Lordships held that the effect of the new Act was simply to confer on the Admiralty Court the existing common law and equitable jurisdiction to decide cases based on a cause of action that arose locally and not to create new liens in favour of, among others, necessaries men (11 App Cas at 278 per Lord Watson, 282-283 per Lord Bramwell, and Lord Fitzgerald at 285). They affirmed the result of the then recent decision of the Privy Council in Laws v Smith (The Rio Tinto) (1884) 9 App Cas 356 which had held that the 1840 Act had not created any new jurisdiction to enforce a maritime lien over the ship, and held that a necessaries man who supplied a ship in England or an English colony had no right to such a lien (9 App Cas at 364 per Sir James Hannan).
3. Williams & Bruce's Admiralty Practice (2nd ed, W. Maxwell & Son London, 1886) at 183184, in commenting on the Court of Appeal's decision in The Heinrich Bjorn (1885) 10 PD 44 (that the House of Lords subsequently affirmed) said that the decision appeared to proceed on the assumption that before the 1840 Act no such lien was recognised by the law of England. The learned authors, who included Gainsford Bruce QC, later an Admiralty judge himself, observed that the authorities on which Brett MR, Bowen and Fry LJJ relied (being the same as in the House of Lords) dealt only with the supply of necessaries in England. Indeed, in giving the judgment of the Court of Appeal, Fry LJ said of the position before the 1840 Act (10 PD at 52):

Shortly that law was as follows: that ever since the 15 Rich. 2, c. 5, the Judges of the Admiralty Court were restrained from "meddling of anything done within the realm" and were confined to things done upon the high sea; so that whilst in respect of salvage services and damage done by collision on the high seas, it recognised a maritime lien in favour of the person rendering the services or sustaining the damage, it had no jurisdiction whatever where the services were rendered or damage done within the body of a county; that as regards towage, which was only then coming into use, the Court had no jurisdiction whatever (per Dr. Lushington, The Wataga Sw. 165); that as regards necessaries supplied to a foreign ship the Court had no jurisdiction at all, and that in no case had the English law recognised the supply of necessaries or the doing of repairs as constituting a maritime lien. (emphasis added)

1. As the authorities to which I have referred above demonstrate, their Lordships' apparently unqualified assertion that English law did not recognise the supply of necessaries as ever conferring a maritime lien appears to have been intended as a more limited observation about the jurisdiction of the Admiralty Court and, perhaps the Courts exercising domestic common law and equitable jurisdiction, to recognise such a lien in respect only of the supply of necessaries "within the realm". The Court of Appeal cited, to demonstrate that neither the 1840 Act or the subsequent Vice Admiralty Court Act 1861 (24 Vict c 10) (1861 Act) created a new maritime lien for matters that occurred within the realm, (10 PD at 59-60), what Mellish LJ had said in giving the Judicial Committee's advice in The Two Ellens (LR 4 PC at 167 namely:

In the construction of this section it has been held in several cases in the Court of Admiralty that there is a maritime lien in the case of supplies and necessaries furnished to a foreign ship, and their Lordships do not mean to intimate any doubts as to the validity of those decisions; but they are of opinion that those decisions may be supported upon the ground that, though it is perfectly true that the only words used in the section are 'that the High Court of Admiralty shall have jurisdiction,' which words seem hardly sufficient in themselves to create a maritime lien, yet, looking at the subject-matter to which that section relates, it appears designed to enlarge the jurisdiction which the Court of Admiralty already had in matters forming the subject of a maritime lien. These are strong grounds for holding that, as respects salvage and as respects collision, which already gave a maritime lien when they occurred on the high seas, it was intended that they should also, when they occurred in the body of a county, equally give a maritime lien; and that being so as to salvage and collision, it might be well said that 'necessaries' immediately following, it was intended that the same rule should apply in the case of necessaries. (emphasis added)

1. Indeed, as I have said, The Two Ellens LR 4 PC at 168-170 decided, as its ratio decidendi that the 1840 and 1861 Acts did not create a maritime lien for necessaries supplied to a ship in England: see too Abbott and Story: A Treatise on the Law Relative to Merchant Ships and Seamen (3rd American ed, George Lamson, 1822) at 160, 174-175, being Tenterden with Mr Justice Story's annotations. In the first edition of E S Roscoe's Admiralty Law and Practice (London, Stevens & Sons, 1878) at 47, the author said that a supplier of necessaries to a foreign ship had a maritime lien on her from the moment the work was done or articles were supplied, citing The Ella A Clark [1863] EngR 287; (1863) Br & Lush 32 [167 ER 283] and The Two Ellens [1872] EngR 13; LR 4 PC 161, although both those cases dealt with claims for a maritime lien for necessaries supplied in England.

Some aspects of the law affecting bottomry bonds

1. In The Karnak (1869) LR 2 PC 505 at 512, Sir William Erle, giving the advice of the Judicial Committee, said that, relevantly, the necessity under which a master may hypothecate his ship or her cargo was "a high degree of need - a need which arises when choice [sic] is to be made of one of several alternatives under the peril of severe loss if a wrong choice should be made": see too R Thomas: Maritime Liens (Stevens & Sons, London, 1980) at [381]; The James W Elwell [1921] P 351 at 366-367 per Hill J.
2. The rationale for the requirement of necessity before a bottomry bond will be valid was that, ordinarily, the master should have financial and other resources at hand to meet the ordinary incidents of a voyage, including the benefit of local ships' agents appointed by the owners in ports of call. The principle was that the master should not be able to create security over the vessel or her cargo unless, in the circumstances, it was necessary for him to do so. Thus, it is essential to the validity of a bottomry bond that there be an absence of any feasible alternative source of finance.
3. A bottomry bond will also be valid if the master had no alternative but to grant it in order to raise funds to discharge a specific lien on the ship granted by the law of the place of the grant, even though that law is different to the law of the forum as to the existence of such a lien: Smith v Gould (The Prince George) [1842] EngR 313; (1842) 4 Moo PC 21 at 25, [13 ER 208 at 209-210] per Lord Campbell giving the opinion of himself, Lords Wynford and Brougham and Erskine J; see too Thomas op cit at [377]; 26 Halsbury's Laws of England (1st ed, 1914) at 70 [126]. The Privy Council also held that a bottomry bond "may be good pro tanto, and void for the residue" (4 Moo PC at 28 [13 ER at 211]). They severed the amount of the bond given to discharge a lien on the ship that the bondholder asserted existed under the law of New York, but which their Lordships held could have been, but was not, proved.
4. A bottomry bond could not be created by the shipowner in his own place of residence. That was because he could have executed a ship's mortgage over his own property there or sold it, as Chase J held in the Supreme Court of the United States in affirming the decision of Marshall CJ (who had sat as one of the circuit court judges) in Blaine v The Ship "Charles Carter" [1808] USSC 3; 4 Cranch 328 (1808) at 332; [1808] USSC 3; 8 US 328. The grant of a bottomry bond did not create an indefeasible or indelible interest in a ship. Moreover, the principle of bottomry was that the bond was given by the master as an hypothecation of the ship, a claim or privilege over her for the particular voyage and ought to be enforced promptly at the conclusion of that voyage. That was why, ordinarily, the bond was enforced in priority to all other claims on the ship, other than the lien for seaman's wages: Blaine 8 US at 332.
5. Thus, delay in the enforcement of a bottomry bond, ordinarily, could prevent its enforcement as a privilege or claim on the ship. That was because of the consequent potential for injustice if the bond holder delayed in enforcing the bond from the subsequent creation of new interests in the ship, such as its sale, mortgage or the advance of further money by a third party on a new bottomry bond or hypothecation. Once the ship safely arrived in the port of destination on the voyage for which the bottomry bond had been given, third parties would be entitled to assume that the ship was not burdened by a security that was specific to her completion of a prior voyage.
6. In The Royal Arch (1857) Swab 269 at 283-285 [166 ER 1131 at 1139-1140] Dr Lushington, applied Blaine [1808] USSC 3; 8 US 328, and held that a bottomry bond secured a debt that was contingent upon the risk of the voyage for which the bond was created since, if the ship sank on the voyage, the creditor was not entitled to recover any money. He held that (Swab at 285; 166 ER at 1140):

...a bottomry bond ought to be enforced within a reasonable time, it is a lien on the vessel only for a reasonable time: and if not enforced within such time creditors or other claimants may be entitled to precedence.

1. Dr Lushington stated that the policy of the law of all maritime countries, including England, was that, as far as was practicable, a purchaser or mortgagee of a vessel should know how far he can safely purchase or lend his money. He said (Swab at 284; 166 ER at 1140):

If he purchases it is possible that certain liens may attach upon the ship, as wages,-salvage claims,-and against these he requires a warranty. If the ship is on a voyage when bought the purchaser must take his chance of the liens which may be lawfully created ; but I apprehend that no one purchases or lends money on mortgage on a ship with any conception that a bottomry bond due on a former voyage is outstanding ; the continued existence of such a bond is contrary to all ordinary usage. (emphasis added)

1. Dr Lushington reasoned that the then provisions of the Merchant Shipping Act 1854 (UK) (17 & 18 Vict c 104) dealing with transfers and mortgages were "framed especially to guard against latent claims": cf Maclachlan op cit at 54; Thomas op cit at [381].
2. In The St George [1926] P 217 at 227, Lord Merrivale P explained that the validity of a bottomry bond depended on the master taking all reasonable steps to give notice to the person or persons whose rights it will postpone or impair, including the owners.
3. In essence, the reason for giving bottomry bonds priority over existing securities is that it was necessary to grant the bond in order for the ship to undertake the voyage concerned, and that the bond would be met on her safe arrival at the port of destination by those whose property (ship and or cargo) was safely delivered: see too Thomas op cit at [392].

The reasoning in The Colorado [1923] P 102

1. In The Colorado [1923] P 102, each of the Lord Justices held that the nature of the right claimed by a bank had to be ascertained by reference to the lex loci contractus (the law of the contract) or of the place where the right arose, but the lex fori (the law of the forum) determined the remedy that the identified right attracted, including its priority. The report recorded Atkin LJ as saying that "in determining whether there exists a maritime lien the Court will apply the lex fori and will give effect to the lien as it exists by English law: see The Milford [Swab 362], and The Tagus [[1903] P 44]" ([1923] P at 110-111).
2. However, like each of Bankes LJ (at 106) and Scrutton LJ (at 108 and 109), Atkin LJ analysed the issue by saying that the Court had to examine the lex loci contractus "to see whether any right of property is given and the nature of it" (at 110) and concluded that, under French law, "the only right given was the right to have the ship seized and the proceeds applied to payment of the hypothèque, notwithstanding a change of ownership - a right closely resembling a maritime lien" (at 112 per Atkin LJ; see too at 107 per Bankes LJ, 109 per Scrutton LJ where each made a similar finding). Atkin LJ concluded by finding that the English necessaries men had to show that their right to bring a proceeding in rem on a maritime claim was superior to that conferred by the hypothèque in order to obtain a remedy in priority to the holder of the hypothèque, and he held that they had not done so.
3. In my opinion, the analysis of Bankes, Scrutton and Atkin LJJ in The Colorado [1923] P 102 proceeded first by determining as a matter of substance, the nature of the bank's rights conferred by the hypothèque under the lex loci contractus, being its proper law. Their Lordships found that those rights had conferred on the bank, in effect, a maritime lien that it was entitled to enforce in England. That is, the hypothèque gave the bank a substantive claim on the ship for the money owed to be carried into effect by legal process. The remedy that the law of the forum gave was that the bank was entitled to be paid in priority to the Welsh necessaries men. As Scrutton LJ said ([1923] P at 108):

The nature of the right may have to be determined by some other law, but the nature of the remedy which enforces the right is a matter for the law of the tribunal which is asked to enforce the right. (emphasis added)

1. Each Lord Justice expressly found that the bank's right to arrest the ship and have her sold arose under the hypothèque in accordance with the law of France (at 106-107 per Bankes LJ, 109 per Scrutton LJ, 111 per Atkin LJ). However, the bank's right to priority to receive the proceeds of sale was determined by the lex fori, because that was a remedy. The maritime lien for the debt was the right, whereas the right to a distribution in the order of priorities for such a right was a remedy. As Atkin LJ said ([1923] P at 112):

... the only right given was the right to have the ship seized and the proceeds applied to payment of the hypothèque, notwithstanding a change of ownership - a right closely resembling a maritime lien - and that the order of priorities was a provision as to the remedy that would be given by French law, and therefore would not be followed in an English Court.

It is plain that the appellants can only succeed by showing that the respondents have no right to which the English Court could award a prior remedy, and on the judge's finding the appellants fail. (emphasis added)

1. That approach involved the Court ascertaining what rights existed under the lex loci and then characterising those, as best could be done, in relation to the same or similar rights that arose for persons in a similar position in the forum. Once that characterisation was done, the forum would give the creditor its remedies in its order of priority for rights of that nature. That appears to have been the position in English law since at least 1689: Corset Holt 48 [1738] EngR 249; [90 ER 924]; Benzen [1792] EngR 2604; 1 Ld Raym 152 [91 ER 999].

The problem with the majority decision in The Halcyon Isle [1981] AC 221

1. With great respect, Lord Diplock's reasoning in the Halcyon Isle [1981] AC at 238B, 238H239A, 241C, that a maritime lien is procedural or remedial, is difficult to reconcile with his acknowledgment of its potent and substantive impact on third parties' rights. As he said, a maritime lien continues to be enforceable by an action in rem against the ship, notwithstanding a change in ownership to a purchaser for value without notice of the existence of the lien and with no personal liability on the claim under which it arose ([1981] AC at 234C-D).
2. I am of opinion that such a right is not "procedural or remedial" - it is so substantive that it transcends a change of ownership. A new owner of a ship who discovers that it carried a maritime lien of which he knew nothing until she was arrested would be bemused to be informed that the interposition of an enforceable right of property between his ownership and beneficial interest in the res was not substantive but rather merely procedural. Nor are the statutory maritime liens procedural. In Australian law, they are matters of statutory entitlement, under s 15(2) of the Admiralty Act, to proceed against a ship so as to enforce a remedy in respect of matters such as collision, salvage, master's and seafarers' wages and disbursements.
3. Lord Diplock asserted that the reasoning in the three judgments in The Colorado [1923] P 102 was "consistent only with the characterisation of a maritime lien in English law as involving rights that are procedural or remedial only": The Halcyon Isle [1981] AC at 238B. With respect, that is not what the Court of Appeal's reasoning was. They identified the right created under the foreign law and eschewed considering the remedies that the foreign law accorded to such a right. The relevant right conferred by the hypothèque was a right to have a court carry into effect the realisation of the res by its legal process - i.e. to sell it - and then apply the law of the forum to decide the priority that such a right gives to the maritime creditor in relation to other claims. That right was, or was relevantly analogous to, a maritime lien.
4. The right to enforce a maritime lien is not the same as the remedy that the Court of the forum will award the maritime creditor. Indeed, in a case like the present, Reiter, as the putative creditor, has either a maritime lien or nothing. If a maritime lien is only a procedural or remedial right, as Lord Diplock held, how could it be a "privilege" or claim upon the res that can survive a change in ownership? A mortgage also carries with it a right of the mortgagee to seek a remedy in the court of the forum. But, that does not entail that the rights created by a ship's mortgage are procedural or remedial only because the mortgagee might need the aid of curial remedies to enforce them: The Colorado [1923] P at 108 per Scrutton LJ.
5. The inchoate nature of a maritime lien, as a "privilege", once created, or a civil law hypothecation, lies in its capacity to be enforced in subsequent legal proceedings only against the res or ship, not her owners from time to time. A maritime lien for collision damage is a right to have the ship, not her owner or master, dealt with in the court of any forum that gives effect to the principles of the lex maritima. However, no maritime lien can attach to a ship that is the property of a sovereign State in respect of any conduct, act or omission for which the State is entitled to sovereign immunity: The Parlement Belge (1880) 5 PD 197; The Tervaete [1922] P 259; The Tolten [1946] P 135 at 151. The lien does not, however, survive the capture of the ship as prize in time of war: The Tobago [1804] EngR 241; (1804) 5 C. Rob 218 [165 ER 754] at 222-223 [at 755-756] per Sir William Scott.
6. This result is not because of a procedural incident of the law relating to the maritime liens. It is because the principle of sovereign immunity in public international law makes the foreign sovereign's conduct, acts or omissions, or that of the sovereign's servants, agents or property acting within the scope of the immunity, not justiciable, even though it would have been had it been the conduct, act or omission of any person or thing other than the sovereign or his, her or its servants, agents or things. A maritime lien cannot attach to a ship that is immune from liability because the status of the ship is derived from its relationship to a sovereign State. Thus, a maritime lien could not arise on a warship of a national navy that collided with a civilian vessel because no claim could ever attach to the naval vessel.
7. Lord Diplock asserted that, in The Tolten [1946] P 135, "Scott LJ was treating English law as the only proper law to determine what kind of transaction or event gave rise to [a] maritime lien that an English Court had jurisdiction to enforce as such": The Halcyon Isle [1981] AC at 238G-H. However, Scott LJ did not say that and, indeed, he said ([1946] P at 150):

There is no difference of meaning so far as anything in the present appeal is concerned, between the "privilege" of Continental law and our "maritime lien" ... The essence of the "privilege" was and still is, whether in Continental or in English law, that it comes into existence automatically without any antecedent formality, and simultaneously with the cause of action, and confers a true charge on the ship and freight of a proprietary kind in favour of the "privileged" creditor. The charge goes with the ship everywhere, even in the hands of a purchaser for value without notice, and has a certain ranking with other maritime liens, all of which take precedence of mortgages. Our admiralty judges used the phrases "the general law of the sea", or "the general maritime law", or "the ordinary maritime law" to describe the body of law which our admiralty court recognized as administered in all maritime countries and applied in England. (emphasis added)

1. It is remarkable that, despite centuries of existing authorities, Lord Diplock did not refer to any English case that had refused to recognise and enforce a maritime lien that arose under a foreign law and that was not a lien that could arise under English law. No doubt the decisions in The Halley (1886) LR 2 PC 193 (which I discuss below) and the wide and unreasoned obiter dicta in The Henrich Björn 11 App Cas 270 had a chilling effect on the assertion in England of maritime liens arising under a foreign law that did not fit into a complementary English category of maritime lien. Nonetheless, as I have explained, the "hypothèque" granted under French law the subject of The Colorado [1923] P 102 was not an interest that could have been granted to a creditor under English law, yet was enforceable, under the English law, as the lex fori, as a maritime lien. Indeed, based on the authorities to which I have referred, Lord Diplock asserted inaccurately that ([1981] AC at 232H):

During the period that the English Court of Admiralty regarded itself as applying the "general law of the sea" four classes of claims only were treated as giving rise to maritime liens on ships, viz: (1) salvage; (2) collision damage; (3) seaman's wages; and (4) bottomry. Bottomry is now obsolete, but historically it provided a normal means of providing security for the price of goods and services supplied to a ship by necessaries men outside its home port. (emphasis added)

1. Moreover, Lord Diplock's analysis of the English cases over the preceding 150 years (see [1981] AC at 235E-236E) was not comprehensive. He did not refer to the distinction drawn between the common law courts' and the Admiralty Court's treatment of claims for necessaries depending on whether the supply occurred within or outside the realm. In the former case, English law did not recognise any maritime lien, because the cause of action was in assumpsit or contract and, until the 1840 Act, within the exclusive jurisdiction of the common law courts. In contrast, in the case of supplies of necessaries outside the realm, the Admiralty Court had jurisdiction and recognised the necessaries men's maritime lien or right to enforce the foreign hypothecation in England. Once again, that suggests that the right to proceed on the maritime lien was substantive - no such lien existed in English law, yet the common law had for over a century and a half allowed the Admiralty Court to enforce against the ship liens created abroad, for the reasons given by Holt LCJ in Benzen [1792] EngR 2604; 1 Ld Raym 152 [91 ER 999].
2. The significance of Holt LCJ's reasoning explains how English law came to accept a settled principle that was applied in the cases in the 18th and early 19th Centuries that I have cited above, largely drawn from the authoritative distillation of the principles in Tenterden's Law of Merchant Ships and Seaman (11th ed, Shaw and Sons, 1867) at 117-118. Holt LCJ recognised that only the Admiralty Court allowed proceedings against the ship - the action in rem - and the common law only allowed proceedings in personam and could not give a remedy directly against the hypothecated ship, being the defendant in a proceeding in rem. The distinction was not merely procedural or remedial; it was, and remains, substantive. There was no cause of action known to the common law against a ship. Nor, in the 17th, 18th or mid-19th Centuries, could a person who supplied a ship with necessaries in England, sue the ship or anyone else, in the Admiralty Court. He could only sue in the common law courts.
3. Obviously enough, if the necessaries man supplied under a bottomry bond, the maritime lien that it created would be recognised as substantive, just as would a ship's mortgage given by an owner in the forum in consideration of securing his liability, say, for repairs to his ship: cf Blaine 8 US at 332. If the lex causae or lex loci contractus, by its own force, e.g. by statute, creates a statutory hypothecation of a ship to which necessaries are supplied, on what principle can it be asserted that this is less substantive or, rather, is "procedural or remedial", when the bottomry bond is not, and when a remedy, that is given in the forum, takes precedence over a prior mortgage?
4. I do not find persuasive the authorities "spanning a century" on which Lord Diplock relied to justify his conclusion that English law applied English rules and not the lex causae as to the existence and extent of a maritime lien ([1981] AC at 235H-236A). For example, first, The Zigurds [1932] P 113 involved a claim by German necessaries men that they had a maritime lien under German law because it allowed "ship's creditors" to assert their claims in priority, inter se, to other creditors including a mortgagee, as well as against a new owner. Langton J rejected that argument on the basis of expert evidence that under the German Commercial Code the rights asserted did not exist until after a German Court had arrested a ship, and only then could the German order of priorities begin to apply ([1923] P at 123, 125). In those circumstances, Langton J used English law to determine priorities: see too Todd Shipyards Corp v Altema Compania Maritima AS (The Ship Ioannis Daskalelis) [1974] SCR 1248 at 1256.
5. Secondly, in The Acrux [1965] P 391 at 404, Hewson J held that a maritime lien that arose under an Italian statute was not enforceable in England because it in no "way approaches any category of claims under English law to which the right to proceed in rem is given, let alone one to which a maritime lien attaches". However, his Lordship arrived at this position adopting Atkin LJ's remark in The Colorado [1923] P at 110-111, that English law applied the lex fori to determine whether a maritime lien existed. As I have explained, the Court of Appeal found that the rights created by the hypothèque under French law, closely resembled a maritime lien and, so, had to recognise and enforce it as such in the forum. In my opinion, having found that the Italian plaintiff actually had a maritime lien under Italian law, Hewson J misapplied The Colorado [1923] P 102. That is because, having found the Italian right to be a maritime lien, it was unnecessary for him to search for some other feature of a maritime lien to see if it corresponded to a "category of claims" in English law on which a proceeding could be brought in rem (see [1965] P at 404). As with the hypothèque, the Italian statutory right attached to the ship and survived a change in ownership.
6. Thirdly, in The Milford (1858) Swab 362 at 367 [166 ER 1167 at 1170], Dr Lushington construed the then recently enacted s 191 of the Merchant Shipping Act 1854 (UK) that for the first time in English law, gave the master of a ship:

... the same rights, liens and remedies for the recovery of his wages which by this Act or by any law or custom, any seaman, not being a master, has for recovery of his wages.

1. Relevantly, s 181 of that Act provided that "[a] seaman's right to wages ... shall be taken to commence at" the first to occur of his commencing work or being required to be on board to do so.
2. Dr Lushington rejected the argument that an American master could not sue under s 191 because in the United States the old common law position, that a master had no lien for wages, applied to him and the ship was flagged there. Dr Lushington said that he would not apply the lex loci contractus because "the proceeding originated in this country; it is a question of remedy, not of contract at all" (Swab at 366 [166 ER at 1170]) and followed the decision of the House of Lords in Don v Lippmann [1837] EngR 286; (1837) 5 Cl & Fin 1 at 13 [7 ER 303 at 307] per Lord Bougham that the lex fori determined whatever related to the remedy to be enforced. Dr Lushington held that s 191 applied to foreign, as well as British, masters and that he was bound to apply the remedy given by it. Phillimore J followed that decision in The Tagus [1903] P 44 at 51-54 in relation to s 167 of the Merchant Shipping Act 1894 (UK) that re-enacted the previous s 191. In essence, those two cases held that s 191 and its analogue gave "a remedy for the wages of a foreign master" ([1903] P at 53).
3. In reality, the two Acts created a statutory cause of action for master's wages under English law independent of the lex loci contractus. The Act entitled a master to sue for his wages and exercise a statutory maritime lien of equal status to the customary seaman's lien (but as supplemented by s 181) for whatever, under the Acts, he was due. The description "remedy" used by Dr Lushington and adopted by Phillimore J may be a neat but inaccurate shorthand, but it cannot be used to describe the legal consequence of a newly created, general statutory cause of action for all unpaid wages applicable to all masters, whatever their contracts or the lex loci contractus may have provided. The jurisdiction that both judges exercised was to enforce that statutory right to, among others, a maritime lien for the whole of the master's unpaid wages. Indeed, Phillimore J adverted to the overriding effect of the Act and to the conflict of laws that it created with the more limited rights of the master under the law of Argentina: The Tagus [1903] P at 54.

1. The question whether a claim to have the Court recognise and enforce a right in an action in rem as a maritime lien under s 15 of the Admiralty Act is a matter "of Admiralty and maritime jurisdiction" within s 76(iii) of the Constitution. In The Owners of Ship "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404 at 424, Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ said that the word "maritime" in s 76(iii) extended jurisdiction beyond that in Admiralty which existed in 1901. They said that the word "maritime" in s 76(iii) served to "equate the jurisdiction there referred to with that of maritime nations generally" adding that "there is no basis for any qualification or limitation based on jurisdictional divisions peculiar to English law" (at 425-426).
2. There is no decision binding on this Court that identifies the choice of law rule apposite for determining whether a foreign maritime lien is capable of recognition and enforcement in an action in rem under s 15 of the Admiralty Act. The appropriate rule depends on whether a foreign maritime lien is a substantive right of the person entitled to assert it or a procedural or remedial device of this jurisdiction that can be asserted only in categories of case in which Australian law would recognise and enforce that procedure or remedy in respect of the same facts, had those facts occurred wholly within Australian territorial jurisdiction.
3. If one analyses this using a maritime lien for damage done by a ship that s 15(2)(b) recognises, the question arises about the nature of the right that the injured plaintiff is asserting when proceeding in an action in rem on the lien against the ship. If the ship has changed ownership since the damage occurred, the new owner has no in personam obligation or liability to the injured plaintiff to make good any loss or damage caused by the ship. Yet, a maritime lien entitles the plaintiff to cause the ship to be arrested and, unless the new owner enters an appearance and subjects himself to personal liability for the claimed loss, sold so that its proceeds will be used to compensate the plaintiff in priority to, in almost all cases, all other creditors of the new owner and deprive him of his property.
4. If Lord Diplock was correct to classify this right to proceed on a maritime lien as procedural or remedial, it is difficult to think what the underlying right, independent of that procedure or remedy is. As Derrington & Turner: The Law and Practice of Admiralty Matters (2nd ed, Oxford University Press, 2016) at [4.51], pithily remarked, Lord Diplock's analysis represents "the triumph of procedure over substance".
5. Procedures and remedies are incidents of a system of law that regulates the recognition and enforcement of, among others, substantive rights, duties, liabilities and obligations. The personification theory of Admiralty law treats a ship as a legal person. The maritime lien for damage done by a ship operates upon a state of facts in which the ship has caused the alleged damage. The individuals responsible for her navigation, and her then owners, may incur personal liability on a cause of action arising from that state of facts.
6. The principles of Australian maritime law, as well as those of the laws of most maritime nations recognise that the injured party can assert that a maritime lien or privilege or claim also attaches to the ship at the moment of the damage and that this lien, privilege or claim can be asserted in proceedings regardless of any subsequent change of ownership.
7. Every cause of action includes some remedy. As Holt LCJ said in Ashby v White [1790] EngR 55; (1703) 2 Ld Raym 938 at 953 [92 ER 126 at 136] if:

... the plaintiff has a right, he must of necessity have a means to vindicate and maintain it and a remedy if he is injured in the exercise or enjoyment of it, and indeed it is a vain thing to imagine a right without a remedy; for want of right and want of remedy are reciprocal. (footnotes omitted)

1. If a maritime lien is truly procedural or remedial, then the question is what is the right, independently capable of assertion and enforcement, of which the lien is one, but not the exclusive, procedure or remedy from which satisfaction of the new owner's property in the ship must be made? It is inherent in the concept of an hypothecation of a ship that the rights of the creditor in the ship, first, do not involve the creditor acquiring any immediate legal or equitable ownership or proprietary right in her, as for example, would occur in a common law mortgage, secondly, do not give the creditor any right of possession and, thirdly, nonetheless are capable of enforcement by a legal process.
2. In Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 at 517 [66] Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said that the selection of the lex loci delicti as the source of substantive law met one of the objectives of any choice of law rule, being the promotion of certainty in the law. Indeed, in its excellent report, The Civil Admiralty Jurisdiction, Report 33 (ALRC 33) at [123], the Australian Law Reform Commission said of the decision in the Halcyon Isle [1981] AC 221:

... the minority view is more consistent with general conflicts of law principles, assuming that maritime liens are properly classified as substantive rather than procedural rights for this purpose.

1. Importantly, in Zhang 210 CLR at 508 [35], 512-513 [52]-[55], 515 [60], Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ rejected the reasoning of the Privy Council in The Halley LR 2 PC 193 that had imposed a double actionability rule for a claim on a maritime lien based on damage done by the ship, Halley, in a collision with another ship, Napoleon. Halley was under compulsory pilotage in a river subject to Belgian (or Dutch law) both of which, contrary to English law, made her owners liable for the conduct of the pilot. English law, at that time, excepted the owners of a ship under compulsory pilotage, from liability for damage caused by the pilot. Their Lordships held that an English court would not enforce a foreign law that gave a remedy in damages when, according to English law, the defendant would not be liable for damages (LR 2 PC at 203-204).
2. Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said that their Lordships' decision, that they described as a "curiosity to modern eyes", appeared to have characterised the Belgian law respecting compulsory pilotage as "manifestly contrary to public justice" as represented by the then English Admiralty law on that subject (210 CLR at 512 [52]). They held that such an approach "cannot be supported today as anything more than an arbitrary rule" because the "experience" of the law, to which OW Holmes famously referred in The Common Law (1881) lecture 1, had developed in the succeeding 150 years (210 CLR at 512 [53]).
3. Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ held that the lex loci deliciti should be applied in cases of torts committed abroad, as it already did for torts committed in one Australian jurisdiction, but litigated in another, following John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503 at 542 [96]. But, they added that (210 CLR at 515 [60]):

... should a question arise as to whether public policy considerations direct that an action not be maintained in Australia, that question is appropriately resolved as a preliminary issue on an application for a permanent stay of proceedings.

1. They arrived at that position after also considering (210 CLR at 512-515 [53], [56]-[58]) how the Court had addressed public policy issues in the Australian episode of the "Spycatcher" litigation: Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd [1988] HCA 25; (1988) 165 CLR 30. The latter case involved the British Government seeking to enforce, by injunction here, principles of law and equity in relation to obligations of confidence owed to the Crown in right of the United Kingdom by a former member of its intelligence service: see too 210 CLR at 514-515 [58]; Rogerson 203 CLR at 541 [91] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ and their adoption of what Judge Cardozo had said in Loucks v Standard Oil Co of New York 120 NE 198 at 202 (1918) (with their Honours' emphasis):

The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors, unless help would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.

1. Such an approach appears to reflect what the Court of Appeal did in The Colorado [1923] P 102, namely to consider the juridical effect of a hypothèque under French law, as the lex causae, and then, after characterising it as having the character of a maritime lien (in that it was an hypothecation of the ship that had to be enforced by proceedings) giving the remedy that was available in the forum for such a right, notwithstanding that the priority of the domestic remedy differed substantively from that under French law.
2. There is no unifying principle that assists in making the sometimes elusive, but important, distinction between substantive and procedural law: Rogerson 203 CLR at 542-543 [97]. However, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Zhang 210 CLR at 520 [75] held that their reasoning and conclusion in Rogerson (203 CLR at 543-544 [99]-[100]) that the lex loci delicti was the substantive law for determining rights and liabilities in respect of intra-Australian torts should also apply to foreign torts without the addition of any "flexible exception". That reasoning and conclusion was (203 CLR at 543-544 [99]-[100]):

Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. A plaintiff cannot ask that a tribunal which does not exist in the forum (but does in the place where a wrong was committed) should be established to deal, in the forum, with the claim that the plaintiff makes. Similarly, the plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain [(1991) [1991] HCA 56; 174 CLR 1 at 26-27], "rules which are directed to governing or regulating the mode or conduct of court proceedings" are procedural and all other provisions or rules are to be classified as substantive [Stevens v Head [1993] HCA 19; (1993) 176 CLR 433 at 445, per Mason CJ].

These principles may require further elucidation in subsequent decisions but it should be noted that giving effect to them has significant consequences for the kinds of case in which the distinction between substance and procedure has previously been applied. First, the application of any limitation period, whether barring the remedy or extinguishing the right, would be taken to be a question of substance not procedure (which is the result arrived at by the statutes previously referred to). The application of any limitation period would, therefore, continue to be governed (as that legislation requires) by the lex loci delicti. Secondly, all questions about the kinds of damage, or amount of damages that may be recovered, would likewise be treated as substantive issues governed by the lex loci delicti. (emphasis added)

1. Here, Australian law (under s 15(1) of the Admiralty Act and s 76(iii) of the Constitution) allows a plaintiff to commence an action in rem against a ship or other property "on a maritime lien or other charge". That satisfies the first requirement in Rogerson 203 CLR at 543 [99] that the claim can be prosecuted here in this Court using the same procedures and seeking the same remedies as the lex loci delicti could give, assuming for the sake of the present argument that that law is the general maritime law of the United States of America.
2. Likewise, the right to enforce the hypothecation of a ship, is "a claim or privilege upon a thing to be carried into effect by legal process" (The Bold Buccleugh 7 Moo PC at 284 [13 ER at 890]) and so satisfies the second requirement in Rogerson 203 CLR at 543 [99] of being concerned with issues of substance. The right to proceed, on a maritime lien, against the ship in respect of the liability is created by her hypothecation at the moment of the collision in foreign waters, not by the discarded classification in The Halley LR 2 PC 193 of the lex fori of how such a claim, if it arose from some event or dealing in the forum, would be classified under its law.
3. That is why Scott LJ repeatedly discussed the principles for a maritime lien as "a rule of substantive law in admiralty" in The Tolten [1946] P at 145 and as "protecting maritime commerce". His invocation of those principles harks back to Holt LCJ's reasons for recognising in about 1688 or 1689 that English conflicts of law principles allowed proceedings on hypothecation of a ship outside the realm to be enforced in the English Admiralty Court because it could give the remedy against the ship that the common law courts could not: Corset Holt 48 [1738] EngR 249; [90 ER 924]; Benzen [1792] EngR 2604; 1 Ld Raym 152 [91 ER 999].
4. While The Tolten [1946] P 135 did not concern the issue of whether English conflicts of law principles would recognise a maritime lien arising in another jurisdiction that could not have arisen in England, Scott LJ went on to say that the correlation between a shipowner's right, under English statutes, to limit his liability (at 151):

...operates as a very strong, if not a compelling reason for resolving any doubtful question of law in favour of maintaining the essential character of the maritime lien wherever in the world it may arise and attach; and therefore of admitting no exception unless it amounts to a paramount rule of law like the immunity of a sovereign before the courts of any other sovereign as in the Parlement Belge (5 P. D. 197) and the Tervaete ([1922] P 259) ... (emphasis added)

1. I am of opinion that Scott LJ was speaking there of the general characteristics, in maritime law, of a maritime lien regardless of the lex fori, as is apparent from his discussion of the Limitation, as well the Mortgages and Liens, Conventions ([1946] P at 151-156). He accepted that those Conventions did not provide direct logical support for the particular principles of law that he discussed concerning English maritime liens but, he said, that the Conventions showed that those principles were consonant with the "general law of the sea" ([1946] P at 154).
2. As in Zhang [2002] HCA 10; 210 CLR 491, the principle applied by the Admiralty Court and courts of common law in England for centuries before the mid-19th Century, recognised that a maritime lien existed and was enforceable as a matter of substance when, and only when, it validly arose under foreign law.
3. I agree with the dissenting reasons of Lords Salmon and Scarman and their conclusion in the Halcyon Isle [1981] AC at 246 G-H that the lex loci contractus determines whether as a matter of substance a maritime lien exists, but the lex fori determines its priority.

1. Corbett JA, with whom Hoexter, Grosskopf, Milne JJA and Nicholas AJA agreed, giving the judgment of the South African Supreme Court of Appeal chose to follow Lord Diplock's decision in The Halcyon Isle [1981] AC 221 that the classification of a maritime lien was a matter of procedure for the lex fori and was not a matter of substance: Transol Bunker BV v MV Andrico Unity [1989] ZASCA 30; 1989 (4) SA 325 at 350B, 354F-H. Corbett JA found that the law of England relating to the exercise of Admiralty jurisdiction (which as at 1 November 1983 governed South African Admiralty jurisdiction - see at 332) applied the double actionability principle for torts alleged to have been committed in a foreign country. He said that the use of the proper law of a contract, being the lex loci contractus, for claims based on a contract governed by foreign law was problematic if used to determine whether the forum would recognise and enforce in the forum a maritime lien that the proper law recognised as arising from the contract (at 347-348). He reasoned that a foreign maritime lien based upon a tort, would not be recognised or enforced under English law if the circumstances giving rise to it were not actionable as a tort in England (348D-E). Indeed, his reasoning accorded with the decision in The Halley LR 2 PC 193, that the High Court subsequently rejected in Zhang [2002] HCA 10; 210 CLR 491.
2. In his judgment at first instance (Transol Bunker BV v MV Andrico Unity 1987 (3) SA 794 at 803), Marais J said that "it may well be the 'inarticulate major premise' of the judgment of the majority in The Halcyon Isle" that Lord Diplock had delivered a speech in September 1965 at the 27th Conference of the Comité Maritime International in New York in which he said:

The attitude of the United Kingdom towards maritime liens is on the whole one of dislike of them. We have a very small number of maritime liens existing in our national law.

1. Be this as it may, Corbett JA considered that the question whether the law of England recognised a foreign maritime lien that did not correspond with a domestic category of maritime liens was "a borderline situation" and that he had reached his conclusion with "considerable diffidence and hesitation" (at 350C-D, 354F-G). I agree that, because national courts of the highest authority have come to different views as to the correct method of classification, the choice, between characterising a maritime lien as a matter of substance and procedure, appears to be difficult and one on which reasonable minds not only may differ, but have done so.
2. Ironically, the order of priorities in South Africa under s 11 of its Admiralty Jurisdiction Regulation Act 1983 ranks a claim for necessaries that arose not later than one year before the commencement of proceedings seeking to enforce it "or before submission of a proof thereof" (s 11(4)(c)(v)) above mortgages, hypothecations and other charges (s 11(4)(d)) and claims "in respect of any maritime lien on the ship not mentioned in any of the preceding paragraphs" (s 11(4)(e)): see John Hare: Shipping Law and Admiralty Jurisdiction in South Africa (Juta & Co, 1999) at 108-109.

The role of the forum's allocation of priorities

1. Nor, should the potential difficulties in applying the forum's rules for determining priorities dictate whether Australian law should remain open to recognising and enforcing maritime liens that arise under a lex causae but that would also not arise under this forum's laws. The Colorado [1923] P 102 held that the very different (and inferior) priority accorded under French law to the hypothèque, as compared to the priority for a maritime lien in England, was no reason to deny that priority to the hypothèque. The principles that English law applied to the recognition and enforcement of a bottomry bond did not exclude the French hypothèque even though it was not given as security for a debt for necessaries within the strict rules that applied for a bottomry bond to be valid. The hypothèque secured a bona fide commercial liability of a kind that had no exact equivalent in English law.
2. Maritime creditors should be able to enforce bona fide debts and other obligations, so far as can be done, with their attendant legal characteristics that have arisen under their lex causae or lex loci contractus in foreign jurisdictions as part of the general law of the sea: Zhang 210 CLR at 520 [75]. Very often in practice, an action in rem on a maritime lien is for a sum well below the value of the ship and so no issue of priorities will arise.
3. International maritime commerce necessarily involves dealings and transactions that occur under the law of one country that the creditor may only be able to enforce once a ship is located in another country. If the law of the place where the dealing, transaction or event occurred gave the creditor a "privilege" or claim on a ship, as security, that under the lex loci would be carried into effect by legal process, in principle, that right is capable of recognition and enforcement in Australia as a maritime lien. Such a right attaches to the ship at the moment of the dealing, transaction or event. It is valuable and a familiar feature of international maritime law.
4. It is true that if a foreign maritime lien is recognised by our law, the parties involved in the circumstances giving rise to it may be subject to a different order of priorities to those of parties involved in a similar factual scenario where no maritime lien can arise under Australian law. But, I do not see that this necessarily results in injustice or the creation of an unprincipled differential between those parties. Rather, that result would recognise only that the two legal systems under which each set of parties acquired their respective substantive rights, obligations or liabilities attached different incidents to particular aspects of their legal relations. As in The Colorado [1923] P 102, the recognition of the foreign right asserted in the forum entails that the plaintiff is able to receive the remedies of the forum, which may be better or worse than those under the law whence the right originated.
5. Moreover, when parties contract or interact, they, or a reasonable person in their position would, expect and understand that the ordinary legal incidents of the dealing, transaction or event in the place in which it occurs will govern their relationship as matters of substantive rights, liabilities and obligations: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 at 52-53 [10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ and their citations of the approach of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1383-1385; L Schuler AG v Wickham Machine Tools Sales Ltd [1973] UKHL 2; [1974] AC 235 at 261 and Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995-997.
6. Unless the recognition or enforcement of the rights, liabilities or obligations imposed by the foreign law are either not possible under Australian law as the lex fori or are contrary to this nation's public policy, it is difficult to see why our law should not recognise and enforce them. No doubt there will be cases, where, as in The Colorado [1923] P 102 a foreign creditor, with a bona fide right, achieves a result that looks anomalous, such as a higher or lower priority than the creditor would have received under the law of the place where his right arose.
7. However, the remedial hierarchy of the priorities for claims on proceeds of the sale of a ship, where those proceeds will not discharge all liabilities in full claimed against her, should not be determinative of whether or not a, or a particular class of, maritime lien (namely a lien granted by one or more other nations' laws) should be recognised and enforced by Australian law, even though liens of that class are not capable of being created domestically in Australia.
8. The impact on priorities of recognising a category of foreign maritime lien that does not correspond to those categories accepted under s 15(2) of the Admiralty Act as part of Australian law is a relevant consideration. As the joint reasons explain, recognition of a category of foreign maritime lien may affect the perceived harmony and structure in Australia not only of the order of priorities in which claims are paid from the proceeds of sale of a ship but also may lead to differential treatment of maritime creditors, such as necessaries men, depending on which country they happened to engage in a commercial dealing with the ship or her owners.
9. So, on one level it may seem anomalous that an American necessaries man has a maritime lien under the US Liens Act for supply to a ship in the United States, contracted for by her present or former owners, whereas an Australian necessaries man supplying a ship in Australia has only a general maritime claim under s 4(3)(m) of the Admiralty Act, enforceable as an action in rem against the ship, only if she was in the same ownership both at the times of supply and issue of the writ under s 17. But, such a result is no more anomalous than now would be the case if a claim on a maritime lien for damage done by a ship were made under s 15 in a situation analogous to that in The Halley LR 2 PC 193.
10. There will be different consequences for persons and ships involved in international trade and commerce depending on the application of the forum's choice of law rules to any given factual situation. English law, as administered in the Court of Admiralty before the middle of the 19th Century, appears to have had no difficulty in enforcing a foreign necessaries supplier's right to a maritime lien over a ship where the supply occurred outside the United Kingdom. And, as Newcombe J observed in Strandhill [1926] SCR at 687, if an American shipowner incurred, as a result of a dealing in his country under its laws, the result that a maritime lien attached to his ship for the purchase of necessaries, he should not be able to avoid the enforcement of the lien by sending his ship to Canada, which at that time gave no corresponding lien for the supply of necessaries.
11. A similar anomaly occurred in The Colorado [1923] P 102, where the holder of the hypothèque obtained a priority in England that he would not have had if the ship had been sold in France. No doubt, the substantive differences in the laws of maritime nations as to their classification of, and allocation of priorities to, various circumstances giving rise to a mortgage, lien, limitation of liability and ordinary debtor-creditor relationships have prevented the development of international Conventions for treatment of mortgages and maritime liens that major maritime trading nations can all agree to ratify. That, however, is not a problem that is capable of being resolved by a national maritime court selecting a choice of law rule to classify a particular relationship between a creditor or claimant and a ship arising from their interactions both under a foreign law giving rise to a claim there and in the forum.
12. Indeed, the facts of The Halcyon Isle [1981] AC 221 involved a situation that replicated what the Supreme Court of Canada discussed in Strandhill [1926] SCR 680 over 50 years earlier. The owners contracted in the United States, under American law, including the US Liens Act, for repairs to Halcyon Isle but did not pay for that work before she sailed. All of the parties to that dealing knew that a maritime lien attached to the ship in the United States. Had the repairers taken a bottomry bond they would have had a lien when the ship was arrested in Singapore. But the substantive law in the United States made that unnecessary. Yet, for want of the form of a piece of paper on which the terms of the bond might have been written, the majority in the Privy Council held that the repairers lost the priority that they had at the time they did their work.
13. In any situation in which the law of a forum has to classify a claim arising under a foreign law so as to allocate it with legal consequences under the domestic law, it can be expected that there will be occasions when the result will appear to be anomalous. However, like beauty, the actual anomaly may be in the eye of the beholder, depending on whether one views the result from the perspective of a foreign or domestic observer or, in a case like The Colorado [1923] P 102, from both of their perspectives.
14. As I have written elsewhere, I have found no leading academic text writer who has supported the ratio decidendi of the majority in The Halcyon Isle [1981] AC 221 that the lex fori, and not the lex causae, should be used to determine whether a claim that a secured interest on a ship arose out of the local jurisdiction should be recognised and enforced in the forum as a maritime lien: S Rares: Maritime liens, renvoi and conflicts of law: the far from Halcyon Isle: [2013] LMCLQ 183 at 193.

1. As the joint reasons demonstrate, first, there is no international uniformity in the recognition and enforcement of claims to assert the existence of a maritime lien over a ship and, secondly, if a claimed maritime lien conferred by a foreign legal system were recognised and enforced in the courts of a forum which did not provide a maritime lien in similar circumstances, the forum, ordinarily, will give the claimed maritime lien priority over lesser ranking claims, such as the supply of bunkers or other necessaries to a ship, that the law of the forum otherwise would rank below a maritime lien. The second of those issues raises a real concern that creditors of the same class may not be treated equally in the distribution of the proceeds of a judicial sale of a ship merely because of the fortuity that the circumstances in which they became creditors differed only because of the law of the place of, or applicable to, the contract. That consideration, in turn, necessitates the law of the forum having to make and apply a choice of law rule to govern the recognition and enforcement of a maritime lien that is claimed to arise pursuant to a foreign law.
2. It is not surprising that different nations and legal systems chose different ways of giving rights to, and imposing liabilities on, persons and ships engaged in international trade and commerce. Those policy choices can also be seen as an historical perception by courts or reflection by legislatures of sovereign interests. For example, the US Liens Act represents a legislative choice to create a wider class of persons who are entitled to a maritime lien than existed in the common law at the turn of the 18th Century when Justin v Ballam [1790] EngR 2218; (1702) 2 Ld Raym 805 [92 ER 38] and Johnson v Shippen [1790] EngR 991; (1703) 2 Ld Raym 982 [92 ER 154] were decided.
3. In days past, those concerned in maritime commerce engaged in the risky enterprise of supplying foreign ships with necessaries in circumstances where the master or owners did not have money to pay for the supply immediately or where both parties agreed to deal on terms when the supplier was prepared to extend credit. The creditor could take security in form of a bottomry bond or rely on a legal remedy, including, in the civil law system, the deemed hypothecation of the ship. The creditor on a bottomry bond took the risk that, if the ship were lost on her voyage, the debt was also extinguished.
4. In today's world, it is usually much easier than in the past, for those engaged in international commerce to pay money directly from the buyer's bank to the creditor's. Such fund transfers can be instantaneous. A necessaries supplier can require immediate payment for supplies without either the need to extend credit or to rely on the ability to enforce the contract by causing the ship to be arrested and, if need be, sold in the Admiralty jurisdiction of another country. In those circumstances, if the necessaries supplier decides to make the supply of goods or services to a ship on credit rather than in exchange for immediate payment, it is readily able to do so on agreed contractual terms without the need for the common law to superadd a remedy, such as a maritime lien, that survives as a privilege on the ship after a change of ownership.
   1. Equally, however, if the law of the place where a supply of necessaries occurs gives the supplier a right, such as a maritime lien, a shipowner will be aware that his ship is in that jurisdiction and subject to its laws, including any security interests that those laws may create if the ship, he or the ship's charterer do something there that entails such a consequence. The supplier and the purchaser will have engaged in transacting with knowledge that the supplier has a lawful entitlement, at least in the country of the supply, to the right to the maritime lien.
5. Moreover, in a case such as the present, where a necessaries man seeks to rely on the rebuttable presumption of a charterer's authority to create a maritime lien attaching to a ship under the US Liens Act, a shipowner can protect his position by taking care to ensure that the presumption either cannot be made or is rebutted. Commercial persons, contracting in jurisdictions with their unique legal systems and laws, can be expected to take care of their own business interests in accordance with those laws.
6. Similarly, a mortgagee of a ship is also aware that his security sails between jurisdictions that do not have uniform priorities or maritime lien rules. The mortgagee takes the commercial risk that a maritime claimant will cause the ship to be arrested and sold under the laws of any nation to which she sails. The mortgagee can only have the commercial expectation that his mortgage will be accorded priority in the realisation process in accordance with the legal rules of whatever forum effects a sale. That is due to the well-known, if unfortunate, lack of international uniformity on recognition and enforcement of ship mortgages, maritime liens, charges and other maritime claims.
7. There is always a possibility that, when a ship must be sold by a maritime court, it will realise less than is necessary to discharge all claims on her. But, usually, the exercise of in rem jurisdiction most often leads to the creditor either being paid in full or the provision of security for the claim and the ship being released. The possible impact of the recognition and enforcement of a foreign maritime lien or the priorities of payment out of the proceeds of the judicial sale of a ship is a fortuity of the law of the jurisdiction effecting the sale.
8. Just as there is no international harmony as to which maritime liens will be recognised and enforced in any given circumstances, so too there is none as to the priority to be accorded to maritime claimants on the proceeds of a judicial sale in any given circumstances. Those involved in the international shipping industry are aware of the fact that most maritime nations have their own coherent maritime laws that operate, in general, in harmony with those of other nations but which have individual adaptations, such as those arising in these proceedings, that create their own legal and commercial consequences.
9. The potential for injustice from the recognition of a foreign maritime lien under Australian law by reference to the principles the lex causae or lex loci contractus applying to the creation and attachment of the lien, can be addressed when considering its enforcement. As the authorities I have discussed above show, a maritime lien can be lost by laches or delay. In today's world of instantaneous communication and readily available up to date information as to ships' movements, destinations and locations, a person seeking to enforce a maritime lien should be expected to act promptly and reasonably in the assertion of his, her or its claim. One important rationale for giving bottomry bonds and similar hypothecations priority, was that the goods or services supplied to the ship that these charges secured, were, as a matter of fact, necessary to enable the ship to undertake the particular voyage preceding their supply and that the creditor would be paid on her completing that voyage: see e.g. Ioannis Daskalelis [1974] SCR at 1258-1259 per Ritchie J for himself, Abbott, Martland, Hall and Spence JJ upholding the United States' maritime lien in priority to a ship's mortgage. In that case, the American shipyard made enquiries of a credit reporting agency, Dun & Bradstreet, and were assured that there was no ship's mortgage in place before relinquishing their repairer's possessory lien. I agree with the reasoning of the Supreme Court of Canada that recognised that the shipyard had a maritime lien under the US Liens Act enforceable in Canada, even though, as Ritchie J said, at that time, Canadian law did not give a supplier of necessaries in Canada a maritime lien ([1974] SCR at 1259).
10. Because a maritime lien is entitled to priority, any delay in its assertion may need to be justified so as to establish that the lien has not been lost: The Royal Arch Swab at 283-285 [166 ER at 1139-1140]; The St George [1926] P at 227; The Two Ellens LR 4 PC at 169. After all, a creditor who obtains a foreign maritime lien for the supply of necessaries to a ship cannot expect that an Australian court will allow some indefinite and unexplained time to go by before the commencement of an action in rem on that lien. The creditor will know when the person with whom it contracted, such as a charterer or ship's agent, is in default of the terms for payment of the secured debt. A shipowner who is deemed by force of the US Liens Act to have authorised a charterer to hypothecate his ship for the supply of necessaries, such as bunkers, for which the charterer is responsible, ordinarily, should be informed promptly by the creditor of any default by his debtor, lest the owner loses the ability, while the charter is on foot, to exercise what remedies he has to ensure that the charterer causes the lien to be discharged.

1. In the present case, the dealings between Reiter and the charterer of Sam Hawk did not have the character of a bottomry bond or an hypothecation. First, there was no assumption of maritime risk by Reiter; it always retained its in personam rights against the charterer and the charterer's obligation to pay for the bunkers delivered was unconnected to the success or completion of Sam Hawk's voyage from Istanbul where the stem occurred. Secondly, there was no immediate necessity for the supply affecting the ship or her cargo. Rather, the charterer, who had neither ownership nor possession of the ship and was not responsible for her, engaged in a commercial purchase in its own account, not that of the ship, to fulfil its contractual obligation under the charterparty to pay for bunkers.
2. Reiter delayed for about 12 months before seeking to enforce its claim to a maritime lien over Sam Hawk. In the meantime, she had gone off charter and sailed numerous voyages without any notice to her owners that Reiter asserted a claim to a maritime lien. It is difficult to see why the Court would have enforced Reiter's claim based on its asserted maritime lien at the distance in time from the supply. In my opinion, if I had considered (which I do not) that Reiter obtained a maritime lien at the time of supply of bunkers in Istanbul, it was no longer valid at the time that the writ in rem was filed: The Royal Arch Swab at 285.
3. Here, because of Reiter's delay, the owners have lost their ability to use rights against the charterer, during the subsistence of the charterparty, to ensure that the charterer (with which Reiter contracted for the lien and supply of bunkers) met its debt to Reiter or indemnified the owners in respect of it. For example, the owners could have exercised their rights in respect of cargoes carried for the charterers as a means of protecting themselves from the possibility of Reiter seeking to enforce its supposed maritime lien: The Two Ellens LR 4 PC at 169.

Conclusion on recognition and enforcement of foreign maritime liens

1. In Australian (and English) law, there is no "maritime law of the world" rights deriving from events occurring outside Australian waters that can be enforced in domestic courts: Blunden v The Commonwealth (2003) 218 CLR 330 at 337-338 [13] per Gleeson CJ, Gummow, Hayne and Heydon JJ adopting what Lord Diplock had said in The Tojo Maru [1972] AC 242 at 290-291. The Australian Law Reform Commission left it to the courts to decide whether to follow one or other approach in The Halcyon Isle [1981] AC 221 as to the characterisation and hence the existence, or otherwise, of a claim to assert here a foreign maritime lien: Civil Admiralty Jurisdiction (ALRC 33) at [123], as discussed in the joint reasons.
2. Having considered the history of English law prior to the 1840 and subsequent legislative reforms, and the High Court of Australia's adoption of the lex loci delicti or lex causae as the law to govern questions of substance in a proceeding arising from a foreign tort in Zhang 210 CLR at 517 [66]-[67], I am of opinion that, as Holt LCJ recognised in 1689 in Benzen [1792] EngR 2604; 1 Ld Raym 152 [91 ER 999], the Court "cannot do right to the parties" if it prevents a foreign maritime lien (or hypothecation) from being enforceable in its Admiralty jurisdiction.
3. In my opinion, given the High Court's choice of the lex loci delicti or lex causae as the substantive law governing a tort committed abroad (Zhang [2002] HCA 10; 210 CLR 491) and the fact that lex loci contractus or proper law is the substantive law governing the determination of parties' rights and obligations in contract, but subject to the forum's remedies (Bonython v The Commonwealth [1950] UKPCHCA 3; [1951] AC 201, 81 CLR 486; Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 at 434, 440-441 per Toohey, Gaudron and Gummow JJ) the coherence of Australian law (cf Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 at 581 [55] per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ) will best be served by classifying a claim to proceed in an action in rem on a maritime lien under s 15 of the Admiralty Act as a matter of substance for Australian choice of law purposes.
4. I am of opinion that Australian choice of law principles for both contract and tort claims ordinarily require the lex loci or lex causae to be used to classify the substance of the particular claim. Accordingly, a claim on a maritime lien that is properly so characterised under the law of the place where it attached, ordinarily, will be maintainable under s 15(1) of the Admiralty Act even though no such maritime lien would attach if the same events had occurred in Australia.
5. This would not result, on the facts of this case, in an enforceable maritime lien on Sam Hawk because, first, nothing occurred in the jurisdiction of the United States in which any lien could have attached, secondly, neither the ship nor the owners did, or were affected by, anything to cause a lien to attach, and, thirdly, the lex causae and lex loci affecting the ship (as opposed to any contractual relationship between Reiter and the charterer) on the facts had nothing to do with the laws or jurisdiction of the United States or the US Liens Act.
6. For the reasons above, I would grant leave to appeal and allow the appeal with costs.

I certify that the preceding one hundred and forty-two (142) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate:

Dated: 28 September 2016