The re-appellant, who ran a shipping agency company in Korea, entered into a shipping agency contract with the time charterer of the relevant ship. The shipping agency provided that the re-appellant was to pay certain charges such as port charges on the charterer’s behalf in advance when entering and departing ports. During the period 28 February to 30 July 2006, the re-appellant paid numerous kinds of charges on behalf of the charterer to Busan Port Authority which was in total of KRW 19,905,497.

The re-appellant filed an application for an auction of the relevant ship, alleging that the charges and other claims in this case are guaranteed by a maritime lien. Since the relevant ship was registered in Russia, and Russia is a Member State of the International Convention on Maritime Lien and Mortgages 1993 (MLM Convention 1993), the question before the Court was whether, by application of the MLM Convention 1993, the re-appellant’s maritime lien claim against the time charterer of the relevant ship could succeed.

Held: Re-appeal dismissed.

According to art 7.1 of the  International Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages 1967 (MLM Convention 1967), maritime lien claims can be brought against the owner, demise or other charterer, manager or operator of the vessel. However, the words 'other charterer' were removed from the MLM Convention 1993. The reason for removing the maritime lien on the claim against charterers other than demise charterers in the MLM Convention 1993 appears to have been to strengthen the status of the ship mortgagee and encourage ship financing by reasonably reducing and controlling the claims secured by maritime liens.

On a proper interpretation of art 4.1 of the MLM Convention 1993, the Convention excludes claims against time charterers and voyage charterers. The reason is that, unlike demise charterers, the time charterer does not share the same responsibilities as the shipowner so as to justify a maritime lien.

Additionally, in light of the fact that the MLM Convention 1993 lists only operators and demise charterers out of the different categories of charterers as the secured obligors of the maritime lien, based on the premise that the ship operator and charterer are separate concepts, it is reasonable to conclude that a time charterer who charters and uses the ship for a certain period does not constitute an operator as prescribed by art 4.1 of the MLM Convention 1993.