The classification of the proper law of maritime liens is a source of the uncertainty that bedevils their disparate treatment in private international law disputes. In his 1980 work Maritime Liens60that predated the Privy Council’s decision, D Rhidian Thomas said that the general approach of English law was to treat the existence of a maritime lien as governed by the lex fori. He said that this occurred because English law regarded a maritime lien as a matter of procedure not substance, that is, the lien was merely to be seen as a means by which a substantive right was enforced. He recognized that the difference between “substance” and “procedure” was one of “notorious difficulty”. Prof Thomas, as he later became, argued that while, in The Tolten61, Scott LJ was not considering the question in the context of conflicts of law, his characterization of a maritime lien as a substantive right had much to commend it, noting that it had been adopted in the choice of law context by the Canadian courts, the Singapore Court of Appeal’s then unreversed decision in The Halcyon Isle62 and seemingly in the “ambiguous and perplexing” decision of the English Court of Appeal63 in The Colorado64.
Professor DC Jackson in his work, Enforcement of Maritime Claims65,said the view of the majority in The Halcyon Isle66that a maritime lien is a matter of procedure “ignores its substantive characteristics, and the very rationale of a lien”. He said that it was difficult to see how an action in rem could be used to enforce a maritime lien unless it implemented a substantive interest that pre-existed the commencement of the proceedings. He argued that it may be preferable, in ascertaining whether the maritime lien exists, to utilize as a choice of law rule a law other than that of the forum, namely the putative proper law67. He contended that prior to The Halcyon Isle68the preferred doctrine of English law was to examine the foreign law that a person claimed gave rise to a right so as to ascertain the characteristics of the right under that law69. Even if a foreign maritime lien were treated by domestic Australian law as a substantive right, the issue of priorities would then arise. The forum must determine the ranking of claims. That exercise may involve classifying and ordering claims that arise under more than one legal system each of which treats the other claims differently. Prof Jackson suggested that the law of the forum should treat a substantive foreign claim, including a lien, as a matter of substance and apply the lex fori to “adjudicate” only where those rights compete with claims governed by different laws70.
The learned authors of the current edition of Cheshire, North and Fawcett: Private International Law71 said that the majority had failed to draw the crucial distinction between the substance of the right, which, they said, was an issue for the governing law and the question of priorities which was a matter for the law of the forum. They said that the minority’s analysis was much to be preferred. In contrast to Prof Thomas’ view, they described the approach in The Colorado72 as “clear and … correct”.
Professor Sarah Derrington and James Turner QC in their work, The Law and Practice of Admiralty Matters73line up with the critics of the majority’s decision in The Halcyon Isle74 saying that it had weaknesses, “its most objectionable feature being the triumph of procedure over substance”. They contended that a better approach was to use the lex causae to resolve whether a particular claim attracts the protection of a maritime lien, while leaving priorities to be ascertained, as a matter of procedure by the law of the forum, as in Canada.
The latest editors of Dicey, Morris & Collins on The Conflict of Laws75 treat the majority view that “any question as to who is entitled to bring a particular kind of proceeding in an English Court … is a question of jurisdiction … to be decided by English law as the lex fori” as a statement that “cannot be supported, and must be confined to the special context of maritime liens”76. Those learned authors also accepted that the law of the forum determined priorities77.
Professor William Tetley QC is another critic78. He suggested that the majority decision also invited forum shopping. He said:
“The lex fori rule of The Halcyon Isle rather thinly veils an exaggerated solicitude for protecting mortgagees (usually large banks) from the claims of ship suppliers79. New conflicts rules should not, however, be crafted so as to favour banks at the expense of other claimants against the proceeds of the "forced sale" of an arrested vessel. Nor should the lex fori be permitted to displace the law of the jurisdiction most closely connected with the parties and their transaction, which in this case was quite clearly American law80.”
And M Davies, AS Bell and PLG Brereton in Nygh’s Conflict of Laws in Australia81 say that the lex causae should be used to determine whether a claim has a secured status and that the law of the forum should govern the question of priorities. They observed that in the only Australian decision on the point, Morlines Maritime Agency Ltd v MV Skulptor Vuchetich82, Sheppard J had followed the majority in The Halcyon Isle83. But they said that it was questionable whether the principle on which the majority decision stood was consistent with the subsequent decision of the High Court in John Pfeiffer Pty Ltd v Rogerson84. I will return to this issue later.
I have not discovered any leading text that supports the majority ratio decidendi in The Halcyon Isle85. However, the late leading United states maritime lawyer and commentator, Michael Marks Cohen did so in an article entitled In Defense of the Halcyon Isle86. He argued that it was aberrational for a court applying the law of its forum to give foreign creditors greater rights than it gave to its local creditors. He argued that, contrary to Prof Tetley’s view, the protection of ship’s mortgages held by financial institutions makes the forum attractive to those institutions and so promotes the availability of finance on more favourable terms. He contended that a policy rule, such as that in the United States, favouring creation of maritime liens for smaller claimants was Benthamite: i.e. it adopted Bentham’s thesis of the greatest happiness of the greatest number. However, Mr Cohen reasoned that the expansive remedy of a maritime lien available in the United States had had a consequence of broadening the availability of the remedy of arrest87.
I would observe that the latter argument, of course, is fallacious, since general maritime claims in common law Admiralty jurisdictions such as Australia, New Zealand, England and Canada support the exercise of the arrest power in actions in rem.