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