In a judgment of remarkable length, erudition and temporal scope handed down on 28 September 2016, the Full Court of the Australian Federal Court allowed the shipowners’ appeal in Ship “Sam Hawk” v Reiter Petroleum Inc [2016] FCAFC 26. 

The Claimant, Reiter, had claimed that its contract with the vessel’s time charterer for the supply of bunkers had bestowed a maritime lien over the vessel in its favour.  That was because, it said, the terms of the bunker supply contract provided for US law to determine the existence of such a lien.

Overturning the first instance judge, the Full Court held unanimously that, on any view, the governing law of the contract could not determine that question, not least because the shipowner was not a party to it.  It could only be governed by the law of the place of supply (Turkey), the law of the flag (Hong Kong) or the law of the forum (Australia).  There was no evidence that the laws of Turkey or Hong Kong differed from that of Australia, which did not recognise a maritime lien for bunkers. 

A majority of the Court (Rares J dissenting) also held that the majority in the well-known (though much-criticised) Privy Council decision in The Halcyon Isle [1981] AC 221 was correct, so that the characterisation of the claim as giving rise to a maritime lien (or not) was a matter for the law of the forum, not of the lex causae. 

This is a potentially important decision for bunker suppliers and shipowners in particular.  It is also questionable whether it represents the law of England & Wales, which may well have been altered by the Rome I and II Regulations on Contractual and Non-Contractual Obligations, under which remedies are to be governed by the lex causae and not the law of the forum.

Both the leading and dissenting judgments of the Full Court made reference (among myriad other authority) to the recently-published second edition of The Law & Practice of Admiralty Matters (OUP, 2016), by Professor Sarah C. Derrington of the University of Queensland (an associate member of Quadrant Chambers), and James M. Turner QC.