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Thursday, 10 December 15
LIENING CARGO - WHICH LIEN CLAUSE APPLIES TO THE BILL OF LADING? : WIKBORG REIN | HELLENIC SHIPPING NEWS
 KNOWLEDGE TO ELEVATE
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether it can lien the cargo on board the chartered vessel to obtain payment voluntarily, or by court sale if necessary.
This often involves looking at a Congenbill bill of lading and establishing whether a charterparty lien clause applies via Clause (1) on the reverse, which incorporates all “terms and conditions, liberties and exceptions of the Charterparty, dated as overleaf”. Problems arise when:
- there is no date overleaf and there are a number of charterparties in a chain, any of which could apply; or
- there are a number of charterparties in the chain with the same date as overleaf.
The question then becomes which charterparty lien clause to apply and to what debt to apply it.
Charterparty liens under English law
As a matter of English law, the absence of a date overleaf on the face of the Congenbill does not prevent a charterparty from being incorporated. Where there is only one charter, direct with the head owner, there is no doubt as to its application. However, the situation becomes complicated if there is:
- a head time charter;
- a sub-time charter;
- a head voyage charter; and
- a sub-voyage charter.
Which of these four charters is to be incorporated? An owner will normally assert that the head charter should be incorporated (ie, because it has signed it). Likewise, a receiver under the bill will usually argue for the sub-voyage charter – again, because this was the contract that it knew of when arranging the shipment. However, English law points in a different direction.
The starting point is that under a time charter, the time charterer has power over the issue of the bill of lading, provided that this reflects the mate’s receipts. The time charterer also has the authority to give orders to the master and direct the vessel in its commercial business. As such, the charterparty of greatest influence on the voyage is likely to have a time charterer as one of the parties.
However, insofar as the Congenbill concerns only a single voyage, the charterparty likely to be most relevant will be a voyage charter. As such, English law hesitantly arrives at the position that the applicable charterparty is that in which a time charterer is acting as disponent owner, with the head voyage charterer as its counterparty. In other words, in the above scenario, the terms of the head voyage charter between the sub-time charterer and the head voyage charterer will be incorporated into the Congenbill.
This raises a further question: if the bill of lading is an owner’s bill made between the head owner and receiver, how can a lien in the head voyage charter be applied to that bill when it refers to freight due to the sub-time charterer, which is not a party to the bill? Does the fact that the freight subject to the lien will not be paid to the head owner bar exercise of the lien? English law suggests not. Provided that the freight is still due to be paid by the head voyage charterer to the sub-time charterer, the sub-time charterer can direct the head time charterer to direct the head owner to exercise the lien on its behalf (against its indemnity for the costs, expenses and potential liabilities involved). The head owner acts as a form of trustee in such a lien and accounts to the time charterer for any payments received as a consequence of the lien.
Persuading the head owner to take such steps can be difficult, particularly if it has been paid hire in full and has no personal interest in collecting the freight for the time charterer.
However, if the head owner does not exercise a formal lien, it might face an order from the time charterer to stop the vessel in an attempt to obtain payment. The head owner might argue that this puts it in breach of the Congenbill as against the receiver, to which the time charterer might reply that it has the right to give orders (including the right to order the head owner on how to exercise rights under the bill of lading), so if the head owner refuses, it is in breach. The respective rights and wrongs of such a showdown would be complex; but faced with this situation, a head owner may prefer to exercise the lien itself as trustee to protect itself from claims under the bill of lading from the receiver – particularly if it obtains an indemnity from the time charterer in the process.
Comment
As in all charterparty matters, generalisations are interesting, but the individual circumstances of each dispute must be carefully checked to see whether they apply. Bearing that in mind, when it comes to liening cargo under a Congenbill, it seems that English law will look first to the head voyage charterparty as the source of relevant terms to be incorporated into the Congenbill (unless another charter is expressly identified), and this is likely to lead to a less-than-obvious outcome.
Source: Wikborg Rein | Hellenic Shipping News
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- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
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