iUnder the Commercial Instruments and Maritime Liens Act (CIMLA), 46 U.S.C. §§ 31301–31343, a party may obtain a maritime lien against a vessel by providing the vessel with “necessaries.” In Martin Energy Services, LLC v. Bourbon Petrel M/V, the US Court of Appeals for the Fifth Circuit held that a fuel supplier did not have a maritime lien for necessaries on a vessel owner’s three offshore supply vessels where the supply vessels carried the fuel as cargo in their cargo tanks to refuel other vessels. Considering the foregoing, the Fifth Circuit explained that the fuel transported by the supply vessels was not necessary to those support vessels, and thus no lien attached.[1] The decision clarifies the scope of “necessaries” under the CIMLA and provides clarity to both vessel owners and suppliers.
In Martin, a fuel supplier delivered fuel to three supply vessels for carriage to fuel seismic vessels offshore. The owner of the seismic vessels had purchased the fuel for those vessels through a trader. Each of the three supply vessels had cargo tanks specifically used for carrying fuel, as opposed to “day tanks” that held fuel to run the supply vessels themselves. It was undisputed that the supplier’s fuel was placed into the cargo tanks of the supply vessels and the supply vessels then refueled the seismic vessels.
Shortly after delivering the fuel, the trader went bankrupt and never provided payment to the fuel supplier. In response, the fuel supplier filed suit asserting maritime lien claims against the supply vessels for the supply of fuel as necessaries.[2] The in rem claims were tried to the district court, and the district court concluded that the supplier had a maritime lien against the supply vessels as a result of the aforementioned delivery of fuel to them. Specifically, the court found that the fuel supplied to the supply vessels constituted “necessaries” under the CIMLA and that the fuel had been provided “on the order” of the vessel owner as required by the CIMLA.[3] The district court reasoned that two of the supply vessels served as “floating gas stations” for the seismic vessels, and thus the fuel was necessary for the supply vessels to perform this function. The vessel owner appealed.
On appeal, the Fifth Circuit first turned to the plain language of the CIMLA. The CIMLA provides that “a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner . . . has a maritime lien on the vessel [and] may bring a civil action in rem to enforce the lien.” 46 U.S.C. §§ 31342(a)(1), (2) (emphasis added). Although the CIMLA did not define the term “necessaries,” the Fifth Circuit noted that courts broadly construe the term to include goods or services that are useful to vessel operations and “necessary to keep the ship going.”[4]
In reversing the district court, the Fifth Circuit noted that fuel may qualify as a "necessary" under the CIMLA “when it is supplied to refuel that vessel.” However, the fuel supplied to the supply vessels presented a different scenario. It was undisputed that the supplier’s fuel was placed into the supply vessels’ cargo tanks and the entire amount of fuel was transported to the seismic vessels for refueling. In fact, the district court specifically found that no part of the fuel was used to operate the supply vessels.[5] Given these undisputed facts, the Fifth Circuit concluded that there existed no basis for finding the supplied fuel was a “necessary” to the supply vessels. The court explained that to do so would impermissibly expand the concept of “necessaries” to encapsulate cargo transported by a vessel. Accordingly, the Fifth Circuit reversed the district court’s ruling and held that the fuel supplier had no maritime lien over the fuel carried as cargo to refuel other vessels.
The Fifth Circuit’s decision is an important one for both vessel owners and suppliers regarding the scope of what is a “necessary.” Jones Walker routinely advises clients on maritime lien issues and claims arising under the CIMLA.
[1] Martin Energy Servs., LLC v. Bourbon Petrel M/V, 962 F.3d 827 (5th Cir. 2020).
[2] The supplier also asserted in personam claims against the vessel owner, but those claims were dismissed via summary judgment and not addressed on appeal.
[3] See 46 U.S.C. § 31342(a).
[4] Silver Star Enterprises, Inc. v. Saramacca M/V, 82 F.3d 666, 668 (5th Cir. 1996).
[5] It is worth noting that two of the support vessels were designed in such a way that the cargo tanks were physically separated from the vessels’ “day tanks” or running tanks, which are used to supply operate the vessel. That said, the third vessel was configured differently. The third vessel’s cargo tanks and day tanks shared piping that allowed the vessel to transfer fuel between the tanks. The district court found that some amount of fuel had been transferred between these tanks, but considering the amount transferred, it was immaterial to the court’s decision. As such, the Fifth Circuit did not fully address this issue. It is important to note, however, that this case may have been decided differently had the third vessel consumed the fuel for its own use by transferring fuel from the cargo tanks to the day tanks.
