An admiralty bond, more specifically known as an “undertaking on maritime arrest,” releases impounded ships and tankers arrested from a Defendant by a Plaintiff. United States Federal Courts have jurisdiction over the high seas, and therefore maritime judicial proceedings on the Atlantic coast can occur in the US Eastern District of New York. The court only has jurisdiction over ships and shipowners located in its waters. Often, the shipowner’s only relationship with the jurisdiction is via his ship.
Plaintiffs may place a lien on a ship, vessel, or craft if they have sufficient proof of harm done to it by the Defendant vessel. For example, a vessel may have crashed into a Plaintiff’s vessel or caused some other form of damage. In the legal proceeding, the Plaintiff actually sues the vessel or ship as the named Defendant “in rem.” The legal term to describe a lawsuit against an object, rather than a person, is called “in rem,” which in Latin literally means “against a thing.”
In order for the Plaintiff to satisfy his claim, he places a lien on the vessel and the US Marshal seizes it. Plaintiffs often need to reimburse the Marshal for the costs of seizing and maintaining the impounded vessel.
Therefore, an admiralty bond compares in many ways to a discharge mechanic’s lien bond. In order for the Defendant to reclaim the vessel, he must file a surety bond with the court. The admiralty bond guarantees:
all legal costs and damages which may be sustained by reason of the maritime arrest if the Defendants recovers judgment or if it is finally decided that the Plaintiff was not entitled to an arrest of the property of said Defendants.
A surety bond offers the best protection for the Plaintiff because it guarantees full compensation for damages. The Defendant in personam must comply with all court orders regarding its vessel while they use it during the litigation. If the court rules in favor of the Plaintiff, the Defendant in personam cedes the disputed vessel to the Plaintiff. As a result, the Plaintiff sells the vessel at auction to fully extinguish the extent of its warrant.
To read more about Supplemental Rule C for Admiralty Claims in US Federal Courts, click here for J. Ralph White’s helpful interpretation.