Common Law Lien

In relation to the Carriage of Goods by Sea, the shipowner will have a Common Law possessory lien on the cargo for any unpaid freight that is due to him and earned. The lien is confined to freight due on particular goods that have been carried, i.e. it is a ‘particular possessory lien’ and is dependant upon the shipowner having possession of the goods and arises only in respect of those goods. Where the receiver or consignee fails to pay the freight due, for example at the port of destination, the shipowner must take action to enforce his lien by retaining continuous possession of the goods until such time as the freight has been received. This is his right under Common Law. Possessory liens do not arise in respect of deadfreight or demurrage payments. In order for the shipowner to have a lien in respect of deadfreight or demurrage, there must be express provisions for this within the terms of the contract i.e. a contractual lien. As the possessory lien arises in respect of freight due on delivery of the cargo, it should be noted that there is no possessory lien in respect of advance freight. The shipowner can retain the goods on the vessel although in practice this is not always possible due to future commitments of the vessel and usually the shipowner will place the goods in the custody of a wharfinger and will notify the wharfinger in writing that the lien attaches. These provisions are in accordance with Section 497 of the Merchant Shipping Act 1894. If the freight continues to be unpaid then the shipowner, through the wharfinger, has authority in law to sell the cargo after a waiting period of approximately 90 days. The money raised from the sale of the cargo may be disbursed to defray various expenses of the sale, handling of the cargo and of course the freight due to the shipowner.