The Protection Of Seafarers' Wages In Admiralty: A Critical Analysis In The Context Of Modern Shipping

• Author: Michael Wai Shing Ng
• Position: LLB(Hons) student at the University of Auckland. I owe my thanks Associate Professor Paul Myburgh for supervising this paper
• Pages: 133-176

(2008) 22 A&NZ Mar LJ

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THE PROTECTION OF SEAFARERS’ WAGES IN ADMIRALTY:

A CRITICAL ANALYSIS IN THE CONTEXT OF MODERN SHIPPING

Michael Ng∗

There is a well established line of authority in Admiralty that seafarers are entitled to unique

legal rights that are not available to land-based employees. The most important maritime

law right for seafarers is the maritime lien for wages. The admiralty courts have used colourful

rhetoric to justify the special rights afforded to seafarers: the wages lien has been called a

“sacred lien”; and seamen have been dubbed “favourites of the law”. This paper

predominantly focuses on the modern application of the wages lien, with a view to question

just how closely the law has followed the rhetoric in reality.

1. Introduction

2. Admiralty Jurisdiction

2.1 In Personam Jurisdiction

2.2 In Rem Jurisdiction

2.3 Exercise of Jurisdiction

3. Historical Development of the Wages Lien

3.1 Freight as the Mother of all Wages

3.2 Ordinary and Special Contracts

3.3 Wages Earned ‘On Board’

4. The Wages Lien

4.1 Who is a ‘Seaman’?

4.2 What are ‘Wages’?

4.2.1 Damages for breach of contract

4.2.2 Damages for wrongful dismissal

4.2.3 Damages for non-payment of wages

4.2.4 Repatriation costs/viaticum

4.2.5 Severance/redundancy compensation

4.2.6 Union fees, deductions and contributions

4.2.7 Interest and costs

4.3 Foreign Wages Liens/Privileges

4.4 Creation of the Wages Lien — Contract or Operation of

Law?

4.5 Multiple Contracts and Service on Different Ships

4.6 When does a Seaman Stop Earning Wages?

4.6.1 Frustration

4.6.2 Repudiation

4.7 Loss or Foundering of the Ship

4.8 Contracting Out of the Lien

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*LLB(Hons) student at the University of Auckland. I owe my thanks Associate Professor Paul Myburgh for supervising this paper.

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4.9 Transferability of the Lien

5. The Statutory Right of Action In Rem (SROAIR)

5.1 Application of the SROAIR for Wages

5.2 ‘Sham’ Transactions and the In Personam Link

5.3 The Effect of The Indian Grace

6. The Effect of the Fisheries Act 1996 (NZ)

6.1 Does Forfeiture extinguish Maritime Liens and/or SROAIRS?

6.2 Relief from Forfeiture

7. Priorities

7.1 In Personam Priorities

7.2 In Rem Priorities

7.2.1 Ranking of maritime liens against other interests

7.2.2 Ranking of maritime liens inter se

7.2.3 Ranking of wages liens inter se

8. Conclusion

1. Introduction

Modern lawyers dealing with the claims of seafarers often look back at the judicial treatment of seamen1 from

the nineteenth century with almost a sense of bemusement. Inevitably, writers and judges will cite famous cases

such as The Minerva with memorable descriptions of seamen as:2

[A] set of men, generally ignorant and illiterate, notoriously and proverbially reckless and improvident, ill

provided with the means of obtaining useful information, and almost ready to sign any instrument that may be

proposed to them; and on all accounts requiring protection, even against themselves.

Similar remarks can be found in US cases:3

Every court should watch with jealousy an encroachment upon the rights of seamen, because they are unprotected

and need counsel; because they are thoughtless and require indulgence; because they are credulous and complying;

and are easily overreached.

Such quotes will generally be qualified by an observation that these descriptions of seafarers may not be entirely

accurate today, followed by the assertion that the courts should nevertheless still offer special protection to

seamen.4

The seaman’s maritime lien for wages was the admiralty courts’ answer to the common mariner’s woes. Sir

William Scott said ‘[t]hese are sacred liens, and, as long as a plank remains, the sailor is entitled, against all

other persons, to the proceeds as a security for his wages.’5 In essence, there were three crucial ways in which

the admiralty courts protected seafarers’ wages: (1) the acceptance of such claims as being within the courts’

jurisdiction even though foreign ships and persons would often be involved; (2) the categorisation of the claims

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1 In this paper I will use the term ‘seaman’ interchangeably with ‘seafarer’, ‘crew member’ and ‘mariner’. Of course ‘seaman’ lacks the

gender-neutrality of the other terms, but its recurring appearance in landmark Admiralty decisions and modern legislation makes it difficult

to traverse this area of law without referring to it. Therefore, when I use the term ‘seaman’ I intend to include both male and female

mariners. For a striking example of 19th Century sexism, see The Jane and Matilda (1823) 1 Hag Adm 187, 188; 166 ER 67, where Lord

Stowell feared for the ‘moral disorder’ that would ensue from women working on ships.

2 The Minerva (1825) 1 Hag 347, 355; 166 ER 123, 126.

3 Harden v Gordon, 11 F Cas 480, 485 (1823).

4 See eg Doby Navigation Company Ltd v The Ship ‘ANL Progress’ [20 Feb 2002] HC, Auckland, AD1/02 [28]; Mobil Oil New Zealand Ltd

v The ship ‘Rangiora’ (No 2) [2000] 1 NZLR 82, 86.

5 The Madonna D’Idra (1811) 1 Dods 37, 40; 165 ER 1224, 1225.

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as being within the ambit of the wages lien; and (3) providing the wages lien with a high priority over claims

from competing creditors. These three elements are of equal import to the seafarers of the twenty-first century as

they were to the seamen of Sir William Scott’s time.

This paper will examine the seaman’s legal remedies for unpaid wages, with special regard to the wages lien. I

will question whether modern, intelligent, unionised seamen are still regarded as ‘favourites of the law’ in

admiralty proceedings.6 Are seafarers well looked after as ‘wards of admiralty’,7 or are they just sidelined by an

anachronistic jurisdiction that has failed to keep up with its surrounding developments?

As Fisher J observed in The Margaret Z, when applying an existing area of maritime law to a novel fact

scenario, one must consider two things: the rationale or policy reasons for the area of law; and the relevant legal

precedents.8 To this, I would add a third factor: the desirability of achieving some degree of international

consistency, because of the transnational nature of shipping. Thus this paper will adopt a three-pronged analysis

of how modern maritime law should treat the recovery of wages by seafarers. First of all, the overarching theme

will be whether the courts/legislators have given sufficient mind to the long-standing rationale in Admiralty to

protect seafarers’ wages. The second, and perhaps the most substantial, aspect of the analysis will be a

discussion of the applicable legal precedents in each topic. Finally, I will attempt to provide comparisons of how

different countries have responded to each area of law.

2. Admiralty Jurisdiction

There are two rights in Admiralty for wages: the maritime lien for wages and the statutory right for wages.

These rights can give rise to two different remedies: actions in rem and actions in personam. Before a seafarer

can make a claim for wages under maritime law, he or she must first establish that the ship (for a claim in rem)

or the legal person employer (for a claim in personam) is within the court’s admiralty jurisdiction.

2.1 In Personam Jurisdiction

In general, the in personam jurisdiction of the Court is established by service.9 If the employer is located in the

same country as where the in personam action is commenced, service of the claim and the subsequent

enforcement of the judgment over the employer’s assets should be unproblematic. Where the employer

defendant is located overseas, however, personal service must comply with both the procedure in the lex fori and

the rules in the defendant’s country of residence.10

In the absence of service, traditionally, a foreign defendant can also incur personal liability if he or she appears

unconditionally to defend an in rem action against the ship.11 In that event, both the defendant ship personified

and the owner personally will be liable.12 This position was challenged in The India Grace where Lord Steyn

held that for a statutory right of action in rem (but not for maritime liens), the shipowner will automatically be a

party to the proceedings as well.13 The ramifications of The Indian Grace for seafarers will be discussed in Part

5 below.

2.2 In Rem Jurisdiction

The in rem jurisdiction in Admiralty is a unique and invaluable method of proceeding for seafarers as well as

other creditors. Ships are, as described in one text, an extremely ‘elusive sort of property’.14 In practice, an

action in rem allows a maritime claimant to arrest the ship as the defendant and to proceed against her, where

the only connection the ship has with the forum is her presence in one of the country’s ports.15 In theory, a

country’s admiralty jurisdiction in rem extends even further to any ship that is within its territorial sea. 16 Service

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6 The Minerva (1825) 1 Hag 347, 358; 166 ER 123, 127.

7 Harden v Gordon, 11 F Cas 480, 485 (1823).

8 Fournier v The ship ‘Margaret Z’ [1999] 3 NZLR 111, 121.

9 The relevant provisions in New Zealand are sections 387-390 of the Companies Act 1993 (NZ) and rules 219 and 220 of the High Court

Rules (NZ).

10 Metropolitan Glass & Glazing Ltd v The Ship ‘Lydia Oldendorf’ [2000] 8 NZCLC 262.

11 Admiralty Rules (Part 14 of the High Court Rules), rule 773(6) and (7).

12 The Dictator [1892] P 304.

13 The Indian Endurance (No 2); Republic of India v India Steamship Co Ltd [1998] AC 878, 913.

14 Gaskell, Debattista and Swatton Chorley & Giles' Shipping Law (8th Ed, Pittman Publishing, London, 1988) 69.

15 The Lorena [1973] 1 NZLR 507.

16 Territorial Sea and Exclusive Economic Zone Act 1977 (NZ), section 3.

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