## Facts

- Atlanttrafik Express Service Ltd. (AES) operated a container-shipping line and ran a service using vessels it chartered from multiple owners.
- Itel Containers International Corp. and other container suppliers leased cargo containers and related equipment to AES under fleet-wide arrangements.
- The containers were delivered to AES in large quantities and were not identified for use on any particular vessel when the leases were made or when the containers were delivered.
- AES controlled the pool of containers and decided which containers would be loaded on which chartered vessel at any time.
- AES later failed financially, ceased operations, and defaulted on the container leases, leaving unpaid rental obligations to the container suppliers.
- The container suppliers sued AES for breach of the leases and also asserted in rem claims against the chartered vessels, arguing that unpaid container rentals were secured by maritime liens because the containers were “necessaries” used in the vessels’ operations.
- The district court initially rejected the suppliers’ lien claims; after an earlier appeal, the case was remanded for findings and legal conclusions on the maritime-lien issues.
- On remand, the district court upheld maritime liens against the vessels; the vessel owners intervened and appealed.

## Issues

1. Whether containers leased and delivered in bulk to a charterer/operator, without designation to specific vessels at the time of contracting or delivery, are “necessaries” “furnished to a vessel” so as to create maritime liens against the vessels on which the containers were later used.
2. Whether later vessel use of fungible, fleet-wide container equipment is enough to satisfy the statutory requirement that necessaries be furnished to a particular vessel on the order of a person authorized to bind the vessel.
3. Whether treating these fleet-wide container leases as lien-generating transactions would be consistent with the strict construction applied to maritime liens.

## Decision

- The Second Circuit held that the container suppliers did not have valid maritime liens against the vessels based on the bulk container leases.
- The court reversed the district court’s ruling upholding maritime liens and rejected the in rem lien claims against the chartered vessels.
- The court reasoned that the suppliers’ transactions were with AES as an operating enterprise, not with particular vessels at the time the containers were furnished, and the statutory lien standard was not met.

## Legal Principles

- Maritime liens are strictly construed because they arise by operation of law and can affect third parties without notice.
- Under the Federal Maritime Lien Act, a supplier must furnish “necessaries” to a vessel, meaning the supply must be tied to an identified vessel when the goods or services are provided, not merely traced to later use.
- Delivering equipment in bulk to a charterer for unrestricted, fleet-wide allocation is too remote from any particular vessel to constitute furnishing necessaries “to a vessel,” even if the equipment is later carried on specific ships.
- The fact that goods contribute to a vessel’s commercial operations does not by itself create a lien; the statute requires a vessel-linked supply transaction, not a generalized extension of credit to a fleet operator.
- Where the supplier’s arrangement leaves vessel selection and deployment entirely to the operator after delivery, the supplier is treated as relying on the operator’s credit rather than on the credit of any particular vessel for lien purposes.

## Conclusion

The Second Circuit reversed the district court’s recognition of maritime liens because the containers were leased and delivered to AES as a fungible pool for fleet-wide use, without any vessel-specific furnishing at the time of delivery, and later allocation to particular ships did not satisfy the statutory requirement for a maritime lien against those vessels.


Itel Containers International Corp. v. Atlanttrafik Express Service Ltd., 982 F.2d 765, 1993 AMC 609 (1992)