## Facts

- Liverpool and London S.S. Protection & Indemnity Association Ltd. (Liverpool), an English P&I association, provided P&I insurance to the owners/operators of the M/V *Queen of Leman*.
- Liverpool claimed the vessel’s interests failed to pay P&I premiums and related sums due under the insurance contract.
- Liverpool filed an admiralty action in federal court to arrest and seize the *Queen of Leman* in rem for the unpaid premiums; the vessel was later judicially sold, and the sale proceeds were deposited into the district court registry.
- Liverpool asserted a maritime lien against the sale proceeds based on the unpaid premiums.
- Cargo interests and their insurer, Tokio Marine and Fire Insurance Company, Ltd. (Tokio), also asserted claims to the sale proceeds and disputed Liverpool’s asserted lien priority.
- Tokio (and related cargo interests) moved for summary judgment arguing Liverpool had no maritime lien because the insurance contract selected English law, and English law did not provide a maritime lien for unpaid P&I premiums.
- The insurance contract included (1) a general clause subjecting the insurance to English law and practice and (2) lien language stating the association “shall have a lien on the Ship in any jurisdiction in accordance with local law in such jurisdiction,” and “in addition shall have a lien on the Ship” for sums due, including unpaid premiums.
- The Eastern District of Louisiana accepted Tokio’s position, concluded English law governed the existence of the lien, and granted summary judgment against Liverpool in the *Queen of Leman* matter.
- A related dispute involving the M/V *Abra* (with materially similar policy language and the same insurer) produced the opposite result in a different district court; the Fifth Circuit consolidated the appeals to resolve the contract and choice-of-law question.

## Issues

1. Whether, under a P&I policy that is generally “subject to English law and practice” but also grants the insurer “a lien on the Ship in any jurisdiction in accordance with local law,” U.S. law or English law governs the existence of a maritime lien for unpaid P&I premiums in a U.S. in rem action.
2. Whether the policy’s lien language requires a construction that permits a lien where the arrest forum’s law recognizes one, rather than a construction that eliminates liens whenever English law would not provide them.

## Decision

- The Fifth Circuit held that United States law governs the existence of the asserted maritime lien in these U.S. proceedings.
- The court reasoned that the policy’s express grant of a lien “in any jurisdiction in accordance with local law in such jurisdiction,” along with its additional lien language for sums due, contemplated the availability of a lien where local law supplies one; reading the English-law clause to negate liens everywhere would conflict with that text.
- Applying U.S. maritime law, Liverpool could assert a maritime lien for unpaid P&I premiums (treated as “necessaries” for lien purposes under U.S. law when the statutory requirements are satisfied).
- In the *Queen of Leman* appeal, the Fifth Circuit reversed the summary judgment entered for Tokio and the cargo interests and remanded for further proceedings consistent with its interpretation.
- In the consolidated *Abra* appeal, the Fifth Circuit affirmed the judgment that recognized Liverpool’s lien under U.S. law.

## Legal Principles

- When a maritime contract contains both a general foreign-law clause and specific language authorizing a lien “in any jurisdiction in accordance with local law,” courts construe the provisions together so that the lien clause has operative effect in the arrest forum.
- Contract text that expressly provides for liens in multiple jurisdictions can function as an agreement that the forum’s lien-creating law will determine whether a maritime lien exists in that forum, even if other parts of the contract select foreign law for other matters.
- Under U.S. maritime law, the Federal Maritime Lien Act can recognize a maritime lien for “necessaries” supplied to a vessel on the order of authorized persons; P&I insurance premiums may qualify as necessaries in this context.
- In rem arrest procedure and lien priority disputes turn on whether a valid maritime lien exists; choice-of-law clauses are enforced according to their terms, but they are not read to nullify express lien provisions within the same contract.
- Appellate review of summary judgment is de novo; where the district court’s grant of summary judgment rests on an erroneous choice-of-law and contract interpretation, reversal and remand are appropriate.

## Conclusion

The Fifth Circuit resolved conflicting district court outcomes by holding that, under the P&I policy’s lien-in-any-jurisdiction language, U.S. law governs whether Liverpool has a maritime lien when the vessel is arrested in the United States; it reversed the summary judgment denying Liverpool’s lien in the *Queen of Leman* matter and affirmed the decision recognizing Liverpool’s lien in the consolidated *Abra* matter.


Liverpool and London S.S. Protection & Indemnity Association Ltd. v. Queen of Leman M/V, 296 F.3d 350 (2002)