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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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- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
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- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- The University of Queensland
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Planning Commission, India
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
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