Liens on Goods

It is common for a charterparty to give an owner a contractual right of lien over goods, for sums due to him but not paid. This is in addition to the owners’ common law rights of lien over goods. A lien is a right to retain possession of goods. The goods must be in the possession of the person exercising the lien or of his agent. As soon as that person (or his agent) loses possession he loses his opportunity to exercise a lien and cannot recover it. The contractual liens given by a charterparty will identify the sums in respect of which the owner is entitled to exercise a lien. Clause 8 of the Gencon voyage charterparty entitles owners to lien for freight, deadfreight, demurrage and damages for detention. Clause 21 of Asbatankvoy voyage charterparty grants owners a lien for all freight, deadfreight, demurrage and costs, including attorney fees, of recovering the same. [which is a particular favourite of lawyers and their defence clubs]. English law has long decided that a lien granted by a charterparty is a lien against the charterer. So, if he is the owner of the goods, then there is no problem. However, it is commonly the case that the goods are owned by someone else, a buyer who has paid for the goods and obtained a bill of lading. He will produce the bill of lading to the shipowner/carrier and call for delivery in the normal way. The shipowner/carrier may face a problem exercising a lien. Unless the lien terms of the charter have been incorporated into the bill of lading, then a refusal to deliver the goods to the bill of lading holder/buyer would be a breach of the bill of lading contract of carriage. It is unlikely that under a liner bill of lading the owner will incorporate any charterparty rights. He must rely on the clear wording of the bill of lading. If sums are not due under that contract, he will have little ground for exercising lien against a bill of lading holder. However, if the bill is a charterparty form of bill of lading, incorporating charterparty terms, then the shipowner/carrier has reason- able prospects for arguing that the charterparty lien clause is incorporated into the bill of lading terms. As in Miramar (1984), whereas the English courts were not willing to manipulate the charterparty language to impose on the bill of lading holder an obligation to pay demurrage under the bill of lading, the court was ready to incorporate the charterparty lien clause into the bill of lading, allowing the owners/carrier to exercise a lien on the goods for unpaid demurrage both under the charterparty and the bill of lading. Whether a lien can be exercised is also a practical matter and the local court where the lien is exercised will usually be involved too.