Brooklyn Journal of Corporate, Financial & Commercial Law


Ian T. Kitts


Federal courts have had trouble fitting maritime law into the bankruptcy scheme created by the Bankruptcy Code (the Code). Particularly troublesome have been vessel-arrest proceedings that are underway when the vessel’s owner files for bankruptcy. Prior to the enactment of the Code, courts applied the doctrine of custodia legis to decide whether the admiralty or the bankruptcy court would administer the vessel. Since the Code was enacted, courts have generally held that the bankruptcy court gained control. A recent Ninth Circuit decision, however, split with other circuits and seems to have revived custodia legis. This Note argues that the Ninth Circuit was wrong to do so since the text of the Code addresses the issue, the objectives of the Code are undermined by custodia legis, and the Code sufficiently protects maritime lienors. Furthermore, this Note suggests that Congress grant bankruptcy judges Article III status and amend the definitions in the Code so that maritime liens are unmistakably considered ‘liens.’