46 U.S.C. § 56305 — Vessel encumbrances

(a) In General. The fact that a vessel has an encumbrance — like a lien or mortgage — attached to it does not stop the government from requisitioning it under this chapter. (b) Deposit in Treasury. (1) If an encumbrance exists, the Secretary of Transportation may set aside part of the compensation (up to the total value of all the encumbrances) in a special fund at the Treasury, and must publish a notice in the Federal Register announcing that the fund was created. (2) Money in that fund can be used to pay the compensation, or to pay off any of the encumbrances that existed when the vessel was requisitioned — including ones already recognized by a U.S. or state court. (c) Civil Action. (1) Within six months after that Federal Register notice, the holder of an encumbrance can sue the fund in federal admiralty court, following the rules for this type of maritime lawsuit ("libels in rem"). (2) The suit must be filed in the right federal district court — either where the vessel was (or could be) requisitioned from, or where the vessel was located when requisitioned. (3) The lawsuit papers must be formally served on the relevant U.S. Attorney, the Attorney General, and the Secretary, following the Federal Rules of Civil Procedure, and the court must ensure notice reaches everyone else with an interest in the case. (4) The lawsuit proceeds and gets decided under the same legal principles and court rules used in similar lawsuits between private parties.