The Lebanese Court of Cassation (Mahkamat al-Tamyiz), the highest court in Lebanon's ordinary judicial hierarchy, delivered a landmark judgment on the ranking of maritime liens (privilèges maritimes) against a registered ship mortgage (hypothèque maritime) in the distribution of proceeds from the judicial sale of an arrested vessel. The dispute arose from the arrest and forced sale of the M/V Cedars of Byblos, a Lebanese-flagged general cargo vessel registered in the Port of Beirut, which had been arrested on the application of its crew for unpaid wages and simultaneously faced enforcement of a maritime mortgage held by a Beirut commercial bank. The vessel was sold at judicial auction for an amount insufficient to satisfy both the crew's wage claims and the bank's mortgage, forcing the courts to determine the order of priority between a super-priority maritime lien for seafarers' wages and a mortgage that had been duly registered in the Lebanese ship registry. The Court of Cassation held that seafarers' wage claims for the last voyage — including repatriation and social insurance contributions — enjoy the status of a privileged maritime claim ranking ahead of the registered mortgage, and it articulated a comprehensive ranking scheme for maritime claims under the Lebanese Code of Maritime Commerce (Law of 18 February 1947, as amended) consistent with the International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages (Brussels, 1926).
Levant Maritime Navigation S.A.L., a Lebanese shipping company with its registered office in the Beirut Central District, owned and operated the M/V Cedars of Byblos, a 12,400-deadweight-tonne general cargo vessel flying the Lebanese flag and registered in the Port of Beirut. To finance a fleet expansion in 2019, the company granted Banque de la Méditerranée S.A.L. a maritime mortgage over the vessel securing a term loan of USD 12 million, duly registered in the Lebanese ship registry in accordance with Articles 38 and 39 of the Code of Maritime Commerce. Between 2021 and 2023, the owner's trading position deteriorated sharply amid the regional shipping downturn, and from mid-2023 it fell into arrears on both its loan instalments and its crew payroll. By early 2024, the vessel's complement of twenty-three seafarers — comprising Lebanese officers and Filipino, Syrian, and Egyptian ratings — had accumulated unpaid wages totalling approximately USD 480,000 for the last two completed voyages, together with unpaid repatriation costs and social insurance contributions. In February 2024, the crew, represented by the International Transport Workers' Federation (ITF), applied to the Beirut Court of First Instance for the arrest of the vessel on the basis of their wage claims, invoking the maritime privilege attaching to crew wages under Article 74 of the Code of Maritime Commerce. The vessel was arrested while berthed in the Port of Beirut. Shortly thereafter, Banque de la Méditerranée intervened in the proceedings, asserting its rights as mortgagee and applying for the judicial sale of the vessel. The Court of First Instance ordered the vessel sold at public auction, and in May 2024 it was sold to a Greek buyer for USD 7.4 million — a figure substantially below the combined value of the mortgage debt and the crew's claims. The first-instance court, distributing the proceeds, ranked the bank's registered mortgage ahead of the crew's wage claims on the reasoning that the mortgage was a registered proprietary security, whereas the wage claims were merely unregistered personal claims. The crew appealed, and the Beirut Court of Appeal reversed in part, holding that crew wage claims rank ahead of the mortgage but only up to the wages earned during the voyage in which the arrest occurred. Both the bank and the crew then appealed to the Court of Cassation on points of law, giving the highest court its first opportunity in over two decades to settle the full priority scheme for maritime claims under Lebanese law.
The Court of Cassation framed three principal questions of law: (1) Whether seafarers' wage claims constitute a maritime lien (privilège maritime) under Article 74 of the Code of Maritime Commerce, and, if so, whether such a lien ranks ahead of a maritime mortgage registered under Article 39, notwithstanding the general principle that registered rights prevail over unregistered ones; (2) What temporal scope attaches to the wage lien — specifically, whether it is confined to wages earned during the last voyage only, or whether it extends to all wages, repatriation costs, and social insurance contributions arising from the last engagement of the crew; and (3) Whether the Brussels Convention of 1926 on Maritime Liens and Mortgages — to which Lebanon is a party and which is incorporated into the Code of Maritime Commerce — mandates a particular ordering of privileged claims among themselves (for example, wages versus salvage versus port dues) that the Lebanese courts must apply in a distribution of proceeds.
The Court of Cassation dismissed the bank's appeal and partially allowed the crew's appeal, holding that:
(1) Seafarers' wage claims enjoy the status of a maritime lien under Article 74 of the Code of Maritime Commerce, and that such a lien ranks ahead of a registered maritime mortgage. The Court rejected the bank's contention that the registered mortgage must prevail because it is a real right entered in the ship registry, observing that the maritime lien is a privilege attaching to the vessel itself and following it into whomever's hands the vessel passes, and that its ranking is fixed by statute and by Lebanon's obligations under the Brussels Convention of 1926 rather than by the general rules of the Code of Obligations and Contracts governing the priority of securities. The Court noted that Article 2 of the Brussels Convention expressly subordinates the mortgage to the privileged maritime claims enumerated in Article 2, and that this scheme has been transposed into the Code of Maritime Commerce. The Court of Appeal's limitation of the wage lien to the last voyage was accordingly affirmed as to its ranking but corrected as to its scope.
(2) The wage lien extends beyond the narrow window of the last voyage to encompass all remuneration, including overtime, leave pay, repatriation expenses, and social insurance contributions, accrued during the crew's last engagement with the vessel. The Court held that confining the privilege to a single voyage would be artificial in the modern era of rolling employment contracts and would defeat the protective purpose of the privilege, which exists to shield seafarers — a class of workers uniquely exposed to the insolvency of a foreign-domiciled and frequently judgment-proof shipowner. In so holding, the Court aligned Lebanese practice with the "super-priority" treatment of seafarers' wages recognised in the Maritime Labour Convention 2006 and reflected in the 1993 Geneva International Convention on Maritime Liens and Mortgages (not ratified by Lebanon but persuasive).
(3) Among privileged maritime claims themselves, the Court articulated a ranking that places claims for wages and other sums due to the master, officers, and crew by reason of their employment first; claims in respect of salvage, wreck removal, and general average contributions next; and claims for port, canal, and pilotage dues after those — followed by claims arising out of contracts (such as the supply of necessaries) that have not been secured by a mortgage, and finally the registered mortgage and other registered charges. The Court emphasised that this ordering is mandatory and may not be altered by private agreement between the mortgagee and the shipowner, since the priority scheme exists to protect third-party creditors and reflects public policy considerations inherent in the maritime lien regime.
This judgment is the most consequential decision on maritime credit in Lebanon since the modernisation of the Code of Maritime Commerce, and it resolves a two-decade doctrinal controversy over the interaction between the maritime lien and the maritime mortgage in forced-sale distributions. For ship-finance lenders, the ruling is a sobering clarification: a registered mortgage, however diligently perfected, ranks behind the statutory privileged claims enumerated in Article 74, and in particular behind seafarers' wage claims, which the Court has now given an expansive temporal reach. Lenders financing Lebanese-flagged tonnage will need to reassess their security margins and, in practice, will increasingly insist on crew-payroll escrow arrangements, wage-assignment acknowledgements, and regular verification of payroll compliance as conditions of drawdown. For the international maritime community, the decision brings Lebanese practice firmly into line with the Brussels 1926 Convention and the prevailing civil-law orthodoxy, reducing the risk that a Lebanese judicial sale would be denied recognition in foreign jurisdictions on public-policy grounds — a concern that has historically deterred buyers from bidding on vessels arrested in Lebanese ports. The case is also notable for its expansive reading of the wage lien to include repatriation and social insurance contributions, a position that exceeds the letter of Article 74 but reflects the Court's evident policy sympathy for the protective function of maritime labour law. Shipping practitioners in Beirut expect the ruling to stimulate renewed interest in Lebanese ship registration, which has contracted sharply over the past decade, by signalling that Lebanon's admiralty courts can produce commercially predictable and internationally coherent outcomes.
"The maritime lien is the oldest and most venerable institution of maritime law, and its supremacy over the mortgage is not a technicality but a matter of deep public policy. The seafarer who has given his labour in the service of the ship, far from home and without effective recourse against an owner who may be beyond the reach of any court, stands in a position the law has always recognised as entitled to first call upon the ship herself. A mortgagee who lends against a vessel knows, or must be taken to know, that his security is subject to the privileged claims the maritime law imposes, and that the wages of the crew are a charge upon the ship that no registry entry can displace. To hold otherwise would be to permit the formality of registration to defeat the very purpose for which the privilege was created." — President of the Third Civil Chamber, Justice Nadim Haddad