Newman Shipping & Agency Co NV (Newman) lodged an appeal on 12 November 2004 against the judgment of 12 October 2004 of the Third Chamber of the Commercial Court in Ghent. The captain and crew of the seagoing vessel MS Subhan Allah appealed against the same jusdgment on 15 November 2004. The Court joins the two cases.

Luc Keyzer, the liquidator of the Subhan Allah argues for the dismissal of the appeal brought by Newman and confirmation of the judgment. To the captain and crew of the Subhan Allah, he reiterates his advice of 19 January 2004 and the submissions he made before the first Court.

Banque SBA claims that the appeals brought by Newman and the captain and crew should be dismissed as unfounded.

The continuing disputes concern the settlement of the proceeds of the Subhan Allah and in particular the priority of certain amounts of the claims, which Newman and the captain and crew assert against the liquidator of the Subhan Allah.

The first Judge held as follows:

Newman claims to have paid pilotage dues up to an amount of BEF 136,710 and invokes a maritime lien under art 23(1)(1) Maritime Code [Zeewet], which corresponds to art 2.1 of the MLM Convention 1926. However, the lien is only provided for pilotage dues 'from the time of the entry of the vessel into the last port'. The pilotage dues were used precisely to pilot the ship and were therefore not made since the ship entered the last port, so these pilotage dues are not privileged.

With regard to the docking and mooring rights, which Newman was supposed to pay to Ghent Port Company GAB (GPC), the liquidator states that GPC's maritime lien has ceased to exist, because GPC did not arrest the ship within one year after the claim arose or became due and payable in application of art 37(3) Maritime Code [= art 9 of the MLM Convention 1926]. GPC argues against this that, in accordance with art 1662 Judicial Code [Gerechtelijk Wetboek], the limitation period for the maritime lien ceased to run on 23 January 2001, the day on which it sent its claim by registered mail to the registry. Article 37(2) of the Maritime Code stipulates that the liens will lapse after one year has elapsed, with the exception of the claims referred to in art 23(1)(5) for supplies for which the period may not exceed six months. For the liens in cases referred to in art 23(1)(5), the limitation period runs from the day on which the claim arose. In all other cases, the term runs from the day on which the claim is due and payable. If the plaintiff has not been able to seize the encumbered ship in the territorial waters of the State in which it is domiciled or has its principal place of residence, the above period shall be extended to a maximum of three years from the date on which the claim arose. It must be deduced from art 37 of the Maritime Code that the lien is null and void by prescription. It can in no way be deduced from art 37 that the privilege would lapse if seizure was not carried out within one year. An attachment is only required to be able to obtain an extension of the term to a maximum of three years. Article 37 is without prejudice to the ordinary or special rules on interruption or suspension of prescription. Article 37 extends the prescription in a specific case, but makes no further statements about the interruption or suspension of the prescription.

The invoices for the year 1999 expired 10 days after the invoice date, so that for all these invoices the period of limitation of the privilege started before 23 January 2000 and the privilege is therefore time-barred on 23 January 2001. It is established that Newman only paid these duties on 3 November 2003. The privilege associated with this claim was time-barred, since GPC had not interrupted (or suspended) the prescription of the privilege in time. The maritime lien existed only on the part of GPC. It alone was able to retain this privilege by interrupting or suspending the prescription in time. This lien was canceled as a result of the late enforcement of GPC, so the subrogated creditor does not have such a lien either. The precautionary attachment of Newman could only take effect to preserve the maritime lien from the moment that this creditor became the holder of this lien, that is to say from the subrogation. This receivable should therefore be included in the ordinary liabilities.

As far as supplies of drinking water are concerned the question arises whether they are in principle covered by the costs of protection and preservation of the ship, or whether they can be regarded as claims arising from contracts concluded by the master. The invoices for gas oil and drinking water relate to supplies requested by the master to protect the crew of the ship. Some parties wrongly dispute that these costs are not related to the protection and preservation of the ship. It is abundantly clear from the facts that the crew saved the ship. Providing gas oil and drinking water was a necessity in this regard, now that this crew was not paid by the parties that benefited from their presence. Therefore, those claims also fall under art 23(1)(1) of the Maritime Code, as long as the maritime lien is not time-barred. The prescription of these claims has been suspended by the declaration of a claim on 23 January 2001 by GPC. The statute of limitations starts to run from the date on which the claim arises, in principle the delivery, and is reached after one year. With regard to the first two invoices cited above, delivery is equivalent to the invoice date in the absence of further indication on the invoices, and the privilege of these claims is not time-barred on 23 January 2001. However, the privilege of the other claims, due to the supply of drinking water, is time-barred on the day on which the suspension of prescription started. Accordingly, the receivables can be included in the preferential liabilities for the sum of EUR 2,767.98 and in the ordinary liabilities for the sum of EUR 2,639.20, of which EUR 1,479.93 was paid by Newman.

With regard to food deliveries, they should be assessed in the same way as the supply of fresh water. Consequently, Newman is subrogated in the rights of this supplier (who has issued the invoices to 'the master and owners of the ship'). The file of GPC shows that the ship was detained from 11 August 1999 and that the shipowner did not look after the ship. The orders of food, necessary for the crew, could not have been otherwise than by the master. Therefore, this claim must be regarded as privileged under art 23(1)(5) Maritime Code for the sum of BEF 108,603. The remainder of the receivable must be included in the ordinary liabilities.

As for the crew, art 1661 Judicial Code stipulates that creditors must declare their claim by registered letter to the Registry within three months of the liquidator's notice, under pain of forfeiture of their rights against the fund. Banque SBA argues that the claim of the master and crew was not sent to the Registry by registered letter, so that it does not meet the conditions of art 1661 Judicial Code, and has therefore expired. It adds that failure to comply with formalities entails the forfeiture of the claim and not the nullity of a procedural act, so that arts 860 ff are not applicable. The sending of the registered letter has a special importance, since the sending itself (and not the filing of the claim with the Registry) interrupts the limitation period. The registered letter must therefore be verified with a summons, so that, in the absence thereof, the case is not brought. The claim of the master and the ship's crew must be declared void.

Held: Appeal allowed to the extent indicated below.

The disputes between the parties are governed by the provisions of the MLM Convention 1926, which seeks uniformity in the settlement of maritime liens and mortgages. Both Syria and Belgium have ratified this Convention, with regard to Syria by Decree no 584 of 21 March 1973 and with regard to Belgium by Law of 28 November 1928, which has brought it into conformity with this Convention.

On proper grounds that do not require further supplementation, the first Judge correctly determined Newman's claim to the maritime lien reserved in art 23(1)(1) of the Maritime Code - which corresponds to art 2.1 of the MLM Convention 1926 - for pilotage fees.

Newman rightly invokes the maritime lien in art 23(1)(1) of the Maritime Code - which corresponds to art 2.1 of the MLM Convention 1926 - for EUR 6,846.92 in docking and mooring dues, which GPC invoiced it for on 18 August and 11 October 1999 and on the basis of which the Subhan Allah was arrested on 29 October 1999. Article 37(2) of the Maritime Code, which corresponds to art 9 of the MLM 1926, provides for an expiry period regarding the invocation of a maritime lien for certain claims that can be recovered from the seagoing vessel. This is not a limitation period for exercising rights of which a party is the holder. A party exercises the privilege associated with the claim by impounding the seagoing vessel. The maritime lien of art 23(1)(1) Maritime Code concerns docking and mooring dues that the shipowner continues to owe. Newman exercised this maritime lien in good time by imposing a protective seizure on the seagoing vessel on 29 October 1999; an attachment that it converted into an executory attachment on 18 February 2000, after it had obtained a ruling against the ship owner before the commercial court in Ghent for, among other things, the docking rights and mooring rights. It is not disputed that the attachment and the declaration of claim of Newman relate, among other things, to the docking and mooring dues, which GPC billed on 18 August and 11 October 1999 and of which Newman also was a debtor. The mere circumstance that GPC itself did not prosecute attachment proceedings against the seagoing vessel for the docking and mooring dues that Newman left unpaid, does not detract from the finding that Newman enforced this claim - which it owed and which remained due to GPC - on 29 October 1999, when the shipowner failed to cover Newman for these costs and for which Newman also obtained a judgment against the shipowner.

Newman also enjoys a maritime lien under arts 23(1)(1) and 23(1)(5) of the Maritime Code - which correspond to arts 2.1 and 2.5 of the MLM Convention 1926 - for the delivery of fresh water and foodstuffs. Article 24(1) of the Maritime Code - which corresponds to art 5 of the MLM Convention 1926 - provides that the maritime lien under art 23(1)(1) precedes the maritime lien under art 23(1)(5) in rank. The Court must therefore investigate whether Newman enjoys a maritime lien under art 23(1)(1). The Court agrees with the first Judge that the expenditure for the supplies of drinking water and foodstuffs intended for the captain and the crew who remained on board the sea-going vessel was for both the protection and preservation of the ship. They therefore enjoy the privilege in their entirety - both under arts 23(1)(1) and 23(1)(5) of the Maritime Code.

The claim for which counsel for the master and the crew of the Subhan Allah filed a complaint with the registry of the commercial court in Ghent on 5 January 2001 is admissible. In respect of the provision of art 1661 of the Judicial Code on distribution and priority in case of seizure of sea-going vessels and inland vessels, the registered letter is not an essential part of an expiry date. This provision is only intended to provide creditors - who participate in international trade - with proof that they have made their claim within the due date and that their declaration will be taken into account 'from the date of dispatch of the registered letter'. Proof of the date on which the declaration is made at the Registry can also follow from the filing at the Registry itself and the date stamping of the declaration by the Registry. The failure to send the declaration by registered letter is at most an irregularity in the form of the procedural act. The Court finds that the statement of claim - although not contained in a registered letter - nevertheless achieved the aim pursued by the law. The declaration is therefore not null and void on the application of art 867 of the Judicial Code.

The demand of the master and crew of the Subhan Allah for unpaid wages is justified for inclusion in the privileged liabilities in the amount of EUR 165,826.70, plus interest on the unpaid wages. Claims arising from the contract of employment of the captain and the crew employed on board the ship, are provided for in Article 2, 2 ° of the International Convention of April 10, 1926, which was incorporated in art 23(1)(2) of the Maritime Code, and are privileged claims over the proceeds of the ship. The master and crew of the Subhan Allah have exercised their maritime lien in good time by impounding the sea-going vessel on 19 November 1999, counting within one year of the day on which their claim is due and payable. They also provide conclusive evidence of the amount of wages still due to them.

Where art 23(1)(2) of the Maritime Code in general terms grants a mritime lien to '[c]laims arising out of the contract of engagement of the master, crew and other persons hired on board', the master and the crew also enjoy this lien for any repatriation costs. These costs stem directly from a failure by the employer to fulfil the obligations of the employment contract, which implied that it had to return the workers ashore in their own country after the sea voyage. They also enjoy the lien for the default interest associated with this wage.

The Court refutes the claim to a maritime lien for the cost of USD 200 for the additional maintenance of seven crew members during the period that they stayed in Ghent. Although the poor conditions in which they resided are manifestly proven (the drinking water was only drinkable after boiling and at several times there was no fuel on board to properly heat the ship), they cannot be privileged for this disadvantage. Furthermore, no documentary evidence shows that the crew themselves also made purchases in order to face the dire circumstances in which they stayed. The Court therefore rejects all claims for an additional payment of USD 200 - including the claim contained in the statement of wages for December 1999. Nor do the master and crew prove their claims for severance compensation, which they redefine in their submissions on 30 August 2005 as a fair claim for the damage they suffered throughout the event. The captain and crew furthermore have not proved that they could claim a severance payment under Syrian law and the Court stated above that the moral damage resulting from the inadequate performance of the employment contract by the ship owner does not enjoy maitime lien status.

MG, one of the crew members, cannot claim a maritime lien under art 23(1)(1) of the Maritime Code for USD 13,500 in compensation that would be due to him as a result of an industrial accident on 25 December 1999. Article 23 of the Maritime Code provides a comprehensive statement of the preferential claims against the seagoing vessel and excludes any further general and special privileges of civil or commercial law. The claim for damages as a result of an industrial accident that happened to MG on 25 December 1999 does not include costs incurred in the common interest of the creditors for the preservation of the ship and which would thus enjoy a maritime lien under art 23(1)(1) of the Maritime Code. The claim to compensation as a result of an accident at work is also not a claim arising from the employment contract which would enjoy a maritime lien under art 23(1)(2) of the Maritime Code. Under Belgian law, the employer must take out occupational accident insurance, but MG does not prove that this obligation also applies under Syrian law and that the employer is obliged to pay compensation on the basis of the negligence to take out occupational accident insurance on the basis of the employment contract. MG's declaration of claim is admissible, but can only be retained for the sum of USD 1,887.46 in ordinary liabilities.