Crescent Towing & Salvage Co (Crescent) filed a suit in rem against the vessel M/V Anax (formerly known as Komin) asserting a maritime lien for tug services. Anax Navigation Co SA (Anax, the nominal owner of the vessel) moved for summary judgment dismissing the in rem action on the basis that any lien had been extinguished by a judicial sale of the vessel in Greece pursuant to foreclosure on an alleged vessel mortgage held by Norges Hypotekinstitutt A/S (Norges). Notably, Anax, the party claiming the benefit of the judicial sale, purchased the vessel for only USD 10 the day after Norges, the mortgagee who precipitated the foreclosure, bought the vessel at auction.

Held: Summary judgment denied. Anax had not (to that point) presented sufficient evidence of the Greek proceedings to show that the Greek judicial sale was pursuant to a valid in rem proceeding that extinguished Crescent’s lien.

In its analysis, the Court noted that Greece is a party to the Arrest Convention 1952, such that the Fifth Circuit’s prior holding in Perez & Compania (Cataluna) SA v M/V Mexico, 826 F 2d 1449, 1451 (5th Cir 1987) would ostensibly apply. The Perez case involved a lien for provision of fuel, and had held that 'the attachment of a vessel in a nation signatory to the [Arrest Convention 1952 for a fuel lien] cannot be equated to an in rem Rule C seizure in the United States', and thus cannot necessarily lead to the extinguishment of in rem lien claims in the event of a judicial sale. However, the Court noted that it was unclear whether Perez was on point, because that holding only related to vessel attachments under the Arrest Convention 1952, which allows for ​attachment of either the receiving vessel or any other vessel owned by the same shipowner. However, for mortgage/hypothecation claims, the Arrest Convention 1952 provides that 'no ship other than the particular ship in respect of which the claim arose, may be arrested'.

Thus, even though Greece is a signatory to the Arrest Convention 1952, the Convention does not authorise the arrest of any vessel other than the M/V Komin to foreclose on the mortgage. Because of the suspicious circumstances, and because there was insufficient direct evidence of the nature and conduct of the Greek foreclosure proceeding to definitively confirm that the foreclosure was conducted as an in rem foreclosure proceeding under the Arrest Convention 1952 sufficient to extinguish prior liens (as opposed to an indirect attachment proceeding, which would not extinguish pre-existing liens), the Court reversed and remanded for further evidence to substantiate the validity (or not) of the Greek proceedings and judicial documents. In sum, the Court held that summary judgment on the extinguishment of a maritime lien based upon the affirmative defence of a prior judicial sale of the vessel in a foreign country is inappropriate unless there are no genuine issues of fact relating to the following elements: (1) that a foreign court of competent admiralty jurisdiction ordered the sale; (2) that the court conducted fair and regular proceedings; (3) that the sale was ordered pursuant to a validly entered judgment in an in rem admiralty proceeding; and (4) that the effect of the sale, under the law of that foreign forum, would be to extinguish all pre-existing maritime liens.