Insurer Entitled to Lien for Value of Insurance Provided

Thursday, September 28, 2006
The U.S. Court of Appeals for the Eleventh Circuit ruled that an insurer that provides marine insurance for a vessel is entitled to a maritime lien for the value of the insurance provided. In the instant case, claimant provided marine insurance for a cruise ship. Arrangements were that the premium was to be billed in six installments spread over several years. The ship owner went bankrupt and claimant filed its claim in the subsequent admiralty proceeding. The district court ruled that the insurer was only entitled to a lien in the amount of the premiums for which it had sent invoices prior to the bankruptcy. The appellate court reversed, holding that the maritime lien arises automatically upon the furnishing of the necessary, without regard to when an invoice may have been issued. On a related issue, the court held that the insurer is not entitled to a maritime lien for having insured the vessel while it was under arrest, because the insurer did not obtain prior approval from the court for providing such insurance. Dresdner Bank AG v. M/V Olympia Voyager, No. 05-12220 Source: HK Law

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