No-lien clauses are a familiar feature of vessel charter parties. For vessel owners, lenders, and finance lessors, these provisions are intended to protect vessels from liens arising from a charterer's operations. But a recent decision from the U.S. Court of Appeals for the Fifth Circuit underscores an important limitation: a no-lien clause may allocate risk between the owner and charterer without preventing a third-party supplier from acquiring a maritime lien against the vessel.
In Trailer Bridge, Inc. v. Louisiana International Marine, L.L.C., No. 25-30331 (5th Cir. June 17, 2026), the Fifth Circuit held that a vessel owner's no-lien provision did not defeat a supplier's maritime liens where the supplier lacked actual knowledge of the provision before entering into its contract with the charterer.
For maritime lenders and equipment finance companies, the decision is a useful reminder that contractual restrictions on liens are not necessarily self-executing protections against third-party maritime claims.
The Dispute
Trailer Bridge owned two barges that it bareboat chartered to Work Cat Trans Gulf LLC (Work Cat). The barge charter contained a no-lien provision restricting Work Cat from permitting liens or encumbrances that might have priority over the owner's interest in the barges.
Work Cat separately contracted with Louisiana International Marine, L.L.C. (LIM), for tug services to tow the barges. After Work Cat failed to pay substantial amounts owed for the towage services and later entered bankruptcy, LIM asserted maritime liens against the barges.
Trailer Bridge sought a declaration that no valid liens existed. Among other arguments, it relied on the no-lien provision in its charter with Work Cat.
The Fifth Circuit rejected that argument and affirmed the existence of LIM's maritime liens.
Why the No-Lien Clause Was Not Enough
Under the Commercial Instruments and Maritime Liens Act (CIMLA), a person providing "necessaries" to a vessel on the order of the owner or a person authorized by the owner may acquire a maritime lien against the vessel. "Necessaries" expressly include towage, and CIMLA presumes certain persons, including specified agents of a charterer, to have authority to procure necessaries.
The Fifth Circuit concluded that LIM satisfied those requirements. The towage services were necessaries provided to the barges, and Work Cat's agents were statutorily presumed to have authority to procure them.
The no-lien clause did not change the result. The court held that LIM would be prevented from acquiring a lien only if it had actual knowledge of the no-lien restriction before entering into its agreement to provide the services. Although LIM later received a copy of the barge charter, it did not receive it until after entering into the tug charter.
The timing was therefore critical. As the court explained, actual knowledge of the no-lien provision must precede formation of the supplier's agreement.
The Fifth Circuit also rejected the argument that LIM had an independent duty to exercise reasonable diligence to discover the no-lien provision. The court explained that Congress eliminated that former diligence requirement from the federal maritime lien statute.
What the Decision Means for Vessel Finance Transactions
The decision is relevant across multiple vessel financing structures.
In a traditional secured financing, a lender may finance a vessel owner and take a preferred ship mortgage over the vessel. The borrower may then charter the vessel to an operator. In a lease-finance structure, an equipment finance company or other lessor may own the vessel and bareboat-charter it to the charterer.
In either structure, the charterer may enter into additional contracts for towage, repairs, supplies, fuel, dockage, or other vessel services. Depending on the circumstances, those arrangements may give rise to maritime liens even though the vessel owner or mortgage lender did not contract with the supplier and may have had no involvement in the underlying transaction.
Trailer Bridge therefore highlights an important distinction: a no-lien clause may create valuable contractual rights against the charterer without, standing alone, preventing a third party from acquiring rights against the vessel itself.
That distinction can become particularly important when a charterer experiences financial distress. An indemnity from the charterer may offer limited practical protection if the charterer is insolvent or in bankruptcy, while a supplier may continue to pursue an in rem claim against the vessel.
Practical Considerations for Lenders and Finance Lessors
The decision does not make no-lien clauses unimportant. To the contrary, they remain a key component of vessel finance and charter documentation. But Trailer Bridge suggests that lenders, owners, and finance lessors should view them as one part of a broader lien-risk framework.
Depending on the transaction, parties may consider:
- Robust no-lien covenants and indemnities: Charter documents should clearly prohibit unauthorized liens, require the charterer to discharge asserted liens promptly, and indemnify the owner against resulting claims, losses, and enforcement costs.
- Notice mechanisms: Because Trailer Bridge makes actual knowledge before contracting central to the analysis, owners and financing parties should consider whether commercially appropriate procedures can provide notice of ownership and no-lien restrictions to counterparties likely to furnish significant necessaries.
- Information and monitoring rights: Transaction documents may require disclosure of material service contracts, notice of unpaid vessel expenses, periodic lien searches, or certifications regarding outstanding claims.
- Control over material downstream arrangements: In higher-risk structures, consent rights or other controls may be appropriate for significant subcharters, management agreements, towage arrangements, repair contracts, or other commitments that could expose the vessel to lien claims.
- Prompt response to distress signals: Aging payables, unpaid vendors, lien notices, and charterer liquidity issues can quickly become collateral issues. Early intervention may be particularly important because maritime liens can arise by operation of law without a consensual filing process.
For mortgage lenders, the existence of a maritime lien does not necessarily determine lien priority. Priority questions depend on the nature and timing of the competing claims and other statutory considerations. Nevertheless, even a junior maritime lien can create meaningful enforcement, arrest, sale, and collateral management complications. Those concerns may be heightened in transactions involving foreign-flagged vessels, where federal law includes additional priority rules for certain necessaries liens arising in the United States.
The Takeaway
Trailer Bridge largely reaffirms established Fifth Circuit principles, but it provides a timely reminder for the vessel finance market: a contractual prohibition on liens is not the same thing as preventing liens from arising.
For lenders and finance lessors, the practical question is therefore broader than whether the charter party contains a no-lien clause. The more important inquiry is whether the overall transaction structure addresses the possibility that a charterer, operator, or its agents may procure services that create third-party rights against the financed asset.
No-lien language remains important. Trailer Bridge confirms why it should not be the only line of defense.
If you have questions or need additional information, please contact Samuel J. Noblin or a member of Baker Donelson's Vessel Finance and Recovery Team.