Fifth Circuit Issues Significant Decision Concerning Meaning of “Necessaries” Under Maritime Lien Statute

June 19, 2020

On June 17, 2020, the U.S. Court of Appeals for the Fifth Circuit issued a significant decision concerning the meaning of the word “necessaries” under the Commercial Instruments & Maritime Lien Act, 46 U.S.C. § 31342 (“CIMLA“), in Martin Energy Servs., L.L.C. v. Bourbon Petrel M/V, No. 19-30612, 2020 U.S. App. LEXIS 19005 (5th Cir. June 17, 2020). In another round of O.W. Bunker-related litigation, the Fifth Circuit reversed a decision from the Eastern District of Louisiana which had awarded a maritime lien to the physical supplier, and instead entered judgment for the vessel owner. A Seward & Kissel litigation team including Bruce Paulsen, Brian Maloney, and Laura Miller submitted an amicus curiae brief in support of reversal on behalf of its client, ING Bank N.V.

In Bourbon Petrel, the vessel owner had ordered fuel from O.W. Bunker USA, Inc. (“O.W. USA“) to be delivered to three support vessels, which were tasked with transporting fuel and other supplies to certain other vessels conducting seismic surveys off the coast of Louisiana. O.W. USA subcontracted with physical supplier Martin Energy Services, L.L.C. (“Martin“) to deliver the fuel to the support vessels. After O.W. USA entered bankruptcy, Martin brought maritime lien claims directly against the support vessels for the fuel delivered. At issue was whether the fuel delivered to those support vessels was a “necessary” under CIMLA, because the fuel was not consumed by the arrested vessels, but was instead transported for consumption by the offshore seismic vessels.

The Fifth Circuit reversed the district court’s ruling for the physical supplier and held that although ordinarily fuel supplied to a vessel can support imposition of a maritime lien, the fuel in this case was merely cargo to be used for other vessels, and therefore the fuel at issue was not a “necessary” under CIMLA. See Op. at 6-7. Applying a strict interpretation of CIMLA, the Fifth Circuit suggested that a contrary finding would “represent an unprecedented expansion of the CIMLA by extending the concept of “necessaries” to cargo transported by a vessel” (Id. at 7) and accordingly entered judgment for the vessel owner.

If you have any questions about the foregoing, please contact Bruce G. Paulsen (212-574-1533), Brian P. Maloney (212-574-1448), or Laura Miller (212-574-1481) at Seward & Kissel, or your primary attorney in Seward & Kissel’s Litigation Group.

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