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The shipyard's right of retention - an analytical study of the extent it provides security for the repair shipyard

Tiderman, Farah (2009)
Department of Law
Abstract
A shipyards' right of retention is somewhat of a phenomenon, enabling the shipyard to retain property and secure credit accordingly. The right of retention has a character that is similar to a so-called legal lien. The current regulation in the MC governing retention has its roots in the 1967 Convention on Maritime Liens and Mortgages. There are several kinds of retention rights. The one primarily discussed in this thesis is the right of retention presented in the Swedish Maritime Code (MC) chapter 3, section 39. The MC states the principle of lex fori should apply to the rules governing maritime liens and the right of retention. Maritime liens constitute a distinctive and historic feature of modern maritime law. The right of a maritime... (More)
A shipyards' right of retention is somewhat of a phenomenon, enabling the shipyard to retain property and secure credit accordingly. The right of retention has a character that is similar to a so-called legal lien. The current regulation in the MC governing retention has its roots in the 1967 Convention on Maritime Liens and Mortgages. There are several kinds of retention rights. The one primarily discussed in this thesis is the right of retention presented in the Swedish Maritime Code (MC) chapter 3, section 39. The MC states the principle of lex fori should apply to the rules governing maritime liens and the right of retention. Maritime liens constitute a distinctive and historic feature of modern maritime law. The right of a maritime lien constitutes a full lien and is referred to as a quiet title. It ranks ahead of all other claims in the order of priority governed by the Priorities Act. The MC acknowledges the principal maritime liens, but the 1967 Convention considers other maritime liens that also are recognised by Swedish law. cf. MC 3:51 section 2. According to the Swedish MC chapter 3, all vessels as well as vessels under construction are enforced under a maritime lien from being launched MC 42 §. A maritime lien must be connected to a certain maritime claim MC 38 § and cannot be established if the claim is not of a maritime character. In general possessory liens have a lower priority than maritime liens and mortgages. There is however one exception to a ship construction or repairyard's possessory lien being of a lower priority than a maritime lien but higher in priority than mortgages and enforcement liens - this is the right of retention. MC 3:39 Retention is a right of property in the ship and the main purpose of the right is to secure a claim. The person claiming the right has a beneficial position in the priority order. The right to bring forward a claim must be persistent and is a condition for the right of retention to exist. Apart from the prerequisite of connexity, there is a condition that the claim is related to the specific object for which the right is being invoked. See Rodhe p.402 In terms of a ship, this means that all the ship's components and appurtenances can be retained. A prerequisite however is that the claim concerns work done at the time when retention was being exercised - therefore the ship cannot be retained for recovery of earlier debts. A temporary release of the vessel usually extinguishes the right of retention. At a shipping company's bankruptcy, the shipyard can claim the right of retention if the subject vessel is accessible. The Swedish Priorities Act places the right of retention after all regular maritime claims in the order of priority. On the other hand, the right of retention holds advantages in relation to other maritime security privileges and competes in particular with maritime liens in certain specific situations. From a credit security perspective, there are vast inequities in respect of ship mortgages and maritime liens without any uniform international law on the subject as guidance. The right of retention in a ship only provides security for credit to a certain extent. In contrast, the right of retention despite its rare invocation better serves the purpose as being an exclusive right in respect of a shipyard's security for repair costs. (Less)
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author
Tiderman, Farah
supervisor
organization
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Sjörätt
language
English
id
1562594
date added to LUP
2010-03-08 15:55:30
date last changed
2010-03-08 15:55:30
@misc{1562594,
  abstract     = {A shipyards' right of retention is somewhat of a phenomenon, enabling the shipyard to retain property and secure credit accordingly. The right of retention has a character that is similar to a so-called legal lien. The current regulation in the MC governing retention has its roots in the 1967 Convention on Maritime Liens and Mortgages. There are several kinds of retention rights. The one primarily discussed in this thesis is the right of retention presented in the Swedish Maritime Code (MC) chapter 3, section 39. The MC states the principle of lex fori should apply to the rules governing maritime liens and the right of retention. Maritime liens constitute a distinctive and historic feature of modern maritime law. The right of a maritime lien constitutes a full lien and is referred to as a quiet title. It ranks ahead of all other claims in the order of priority governed by the Priorities Act. The MC acknowledges the principal maritime liens, but the 1967 Convention considers other maritime liens that also are recognised by Swedish law. cf. MC 3:51 section 2. According to the Swedish MC chapter 3, all vessels as well as vessels under construction are enforced under a maritime lien from being launched MC 42 §. A maritime lien must be connected to a certain maritime claim MC 38 § and cannot be established if the claim is not of a maritime character. In general possessory liens have a lower priority than maritime liens and mortgages. There is however one exception to a ship construction or repairyard's possessory lien being of a lower priority than a maritime lien but higher in priority than mortgages and enforcement liens - this is the right of retention. MC 3:39 Retention is a right of property in the ship and the main purpose of the right is to secure a claim. The person claiming the right has a beneficial position in the priority order. The right to bring forward a claim must be persistent and is a condition for the right of retention to exist. Apart from the prerequisite of connexity, there is a condition that the claim is related to the specific object for which the right is being invoked. See Rodhe p.402 In terms of a ship, this means that all the ship's components and appurtenances can be retained. A prerequisite however is that the claim concerns work done at the time when retention was being exercised - therefore the ship cannot be retained for recovery of earlier debts. A temporary release of the vessel usually extinguishes the right of retention. At a shipping company's bankruptcy, the shipyard can claim the right of retention if the subject vessel is accessible. The Swedish Priorities Act places the right of retention after all regular maritime claims in the order of priority. On the other hand, the right of retention holds advantages in relation to other maritime security privileges and competes in particular with maritime liens in certain specific situations. From a credit security perspective, there are vast inequities in respect of ship mortgages and maritime liens without any uniform international law on the subject as guidance. The right of retention in a ship only provides security for credit to a certain extent. In contrast, the right of retention despite its rare invocation better serves the purpose as being an exclusive right in respect of a shipyard's security for repair costs.},
  author       = {Tiderman, Farah},
  keyword      = {Sjörätt},
  language     = {eng},
  note         = {Student Paper},
  title        = {The shipyard's right of retention - an analytical study of the extent it provides security for the repair shipyard},
  year         = {2009},
}