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