The Interaction between Admiralty and Insolvency law

• Author: Sarah Catherine Derrington
• Position: Professor of Admiralty Law, T C Beirne School of Law, University of Queensland. This paper is based on Part B, Chapter 8 of Derrington & Turner, The Law & Practice of Admiralty Matters (2006)
• Pages: 30-38

(2009) 23 ANZ Mar LJ

THE INTERACTION BETWEEN ADMIRALTY AND INSOLVENCY LAW

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Sarah C Derrington∗

Introduction

Insolvency law is tricky enough to navigate in the context of domestic insolvency proceedings brought against

companies registered and operating in the forum. Where foreign companies and/or windings-up are involved, they

are murky and treacherous and must be navigated with care. However, it is impossible to ignore the interaction

between the Admiralty process and insolvency proceedings, however underdeveloped that interaction may be – as to

which Thomas put the position aptly: 1

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The law of [insolvency] seems to have developed with little regard to the Admiralty proceeding in rem.

Certainly it is difficult to fit the Admiralty proceedings into the legislative language of the relevant statutes

which regulate [insolvency proceedings]. Yet the need for the latter to accommodate the action in rem and the

potential conflict between the two processes is plain. A res may concurrently be the subject of an arrest in the

Admiralty Court and an asset capable of liquidation in [insolvency proceedings]. In such a circumstance it is

important for a maritime claimant to be able to ascertain whether it is the jurisdiction of the Admiralty Court

or some other court which prevails and which mode of legal process is available for the satisfaction of the

claim. …

This paper considers the interaction between admiralty and insolvency law where both sets of proceedings are

brought within the same jurisdiction, examining the situations where in rem proceedings are commenced before as

well as after the petition for winding up. It then looks briefly at the issues raised by cross-border insolvencies,

particularly in the light of the Cross-Border Insolvency Act 2008 (Cth). Finally, it considers the effect of an owner’s

insolvency on the constitution of a limitation fund pursuant to the Limitation of Liability for Maritime Claims Act

1989 (Cth).

Admiralty & insolvency within same jurisdiction

Where both sets of proceedings are brought in the same jurisdiction, two situations need to be considered:

(1) where in rem claimants have issued proceedings in the Admiralty Court prior to the date of the

presentation of a petition for a winding up order

(2) where in rem claimants have issued proceedings in the Admiralty Court between the date of the

presentation of a petition for the winding up and the date of the winding up o rder.

Many provisions of the Corporations Act 2001(Cth) are relevant in this connection but the following warrant

highlighting:

(1) Section 440B, which provides that during the administration of a company, a person cannot

enforce a charge on property of the company without the consent of the administrator or

leave of the court;

(2) Section 440D, which provides during the administration of a company, no proceeding against

the company or its property can be begun or proceeded with except with the consent of the

administrator or leave of the court;

∗ Professor of Admiralty Law, T C Beirne School of Law, University of Queensland. This paper is based on Part B, Chapter 8 of Derrington &

Turner, The Law & Practice of Admiralty Matters (2006).

1 D R Thomas, Maritime Liens (1980), [99].

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