## Facts

- A British-registered vessel, *Halcyon Isle*, was subject to a registered ship mortgage held by Bankers Trust International Ltd.
- Todd Shipyards Corp., a New York ship repairer, performed repairs in New York under a New York contract.
- Under U.S. maritime law, Todd’s repair claim carried a statutory maritime lien; under English and Singapore law, ship repairers do not have a maritime lien for repairs.
- Bankers Trust arrested the vessel in Singapore in an admiralty action in rem; the Singapore High Court ordered the ship sold.
- The sale proceeds were insufficient to pay all creditors; both Bankers Trust (mortgage debt) and Todd (repair debt) held in rem judgments and sought payment from the limited fund.
- The Singapore High Court ranked the mortgage ahead of Todd’s claim; the Singapore Court of Appeal reversed and gave effect to Todd’s U.S. lien.
- On further appeal, the Judicial Committee of the Privy Council reviewed the priority dispute.

## Issues

1. Whether priorities in distributing proceeds of a judicial sale in an admiralty action in rem are governed by the lex fori (forum law) or the law creating the underlying claim (foreign law).
2. Whether a foreign maritime lien for ship repairs must be recognized and given lien priority in a forum that would not treat such a claim as a maritime lien.
3. Whether, on the forum’s classification, a registered ship mortgage ranks ahead of a ship repairer’s claim arising abroad.

## Decision

- The Privy Council allowed the mortgagee’s appeal and restored the Singapore High Court’s priority order.
- The majority held that distribution priorities to a limited sale fund in an in rem proceeding are governed by the lex fori as a matter of procedure and practice.
- The forum classifies claims for ranking purposes using its own categories; it does not import a foreign system’s lien classifications and internal priority scheme.
- Because the forum did not recognize ship-repair claims as maritime liens, Todd’s U.S. lien was treated as a non-lien “necessaries” claim.
- Under the forum’s hierarchy, the registered mortgage had priority over Todd’s repair claim.
- In dissent, two members would have treated the foreign maritime lien as a substantive proprietary right that should be recognized and given its foreign priority.

## Legal Principles

- In an admiralty action in rem, questions concerning the right to proceed in rem and the priority of competing claims to a judicial sale fund are governed by the lex fori.
- A foreign maritime lien is given effect in the forum’s distribution only if it corresponds to a type of maritime lien recognized by the forum’s law.
- The proper law of the underlying transaction may govern the existence of the underlying debt, but the forum governs classification and ranking for distribution of a limited fund.
- The forum is not required to apply a foreign priority regime or engage in partial renvoi to determine distribution priorities.

## Conclusion

The Privy Council held that the forum’s law controls classification and priorities in distributing proceeds of a ship sold in an admiralty in rem action; therefore, a foreign statutory repairer’s maritime lien that the forum would not recognize as a maritime lien could not outrank a registered ship mortgage.


Bankers Tr. Int’l Ltd. v. Todd Shipyards Corp., [1981] A.C. 221 (P.C. 1980)