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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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Sunday, 10 September 23
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- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
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- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
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- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
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- New Zealand Coal & Carbon
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- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
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- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
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- Therma Luzon, Inc, Philippines
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- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Central Electricity Authority - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
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