Time Charterparty
Liens
A lien is a right in one man to retain that which is in his possession belonging to another, till certain demands of him the person in posssession are satisfied.
Per Grose J in Hammonds and Another, Executors of Blight, against Barclay and Others, Assignees of Fentham a Bankrupt [1802] EngR 107; (1802) 2 East 227.
A lien operates as a defence available to one in possession of a claimant’s goods who is entitled at common law or by contract to retain possession until he is paid what he is owed.
Per Mocatta J. in The Chrysovalandou Dyo [1981] 1 Lloyd’s Rep. 159 said at p.164.
In shipping business most common type of lien is shipowner’s lien over goods while in his possession, i.e. during sea carriage, which is equally available for time and voyage chartered vessels. Usually this lien amounts only to a passive right to retain, cannot be transferred or sold and if/when the goods delivered to the receiver, the lien entitlement is lost forever.
The owners’ right for lien over cargo is often expressly reserved in time charter contract. Such liens of contractual origin (contractual liens) create respective rights only between parties to the contract (charter party) in question. Therefore the shipowners have no any right to retain the goods against bill of lading holders, unless bill of lading holders and the charterers are the same legal entity. See respective clauses in NYPE, Baltime and Shelltime4 forms below, notable that Baltime form qualifies the shiponwers’ right to the lien only over cargo belonging to the time charterer.
BPTIME3, clause 14, lines 282-284:
Owners shall have a lien upon all cargoes, hire, sub-hire, freights and sub-freights for any amounts owed by Charterers under this Charter.SHELLTIME4, clause 26, lines 360-362:
Owners shall have a lien upon all cargoes and all freights, sub-freights and demurrage for any amounts due under this charter; and Charterers shall have a lien on the vessel for all monies paid in advance and not earned, and for all claims for damages arising from any breach by Owners of this charter.NYPE, clause 23, lines 259-263:
The Owners shall have a lien upon all cargoes and ail sub-freights and/or sub-hire for any amounts due under this Charter Party, including general average contributions, and the Charterers shall have a lien on the Vessel for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once.Baltime, clause 18, lines 258 – 264:
The Owners to have a lien upon all cargoes and sub-freight belonging to the Time-Charterers and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the Vessel for all moneys paid in advance and not earned.Examples of contractual liens reproduced above are possessory liens. At common law such lien does not, in general, authorise a sale.
For the shipowner to be said to be exercising a lien on cargo it is not sufficient only to refuse to carry it any further to the port of destination. The essence of the exercise of a lien is the denial of possession of the cargo to someone who wants it.
If contract does not limit the cargoes to be liened to those owned by the charterers, as for example Baltime does, then lien will be properly exercised, where the bill of lading covering the goods in question incorporates the terms and conditions of the governing charterparty . Moreover hire will continue to be payable all period of delay. Considering wording of clause 18 of NYPE form, Donaldson J said in The Aegnoussiotis [1977] 2 Lloyd’s Rep. 268, at p.276:
In my judgment, cl. 18 is to be construed as meaning what it says, namely, that the time charterers agree that the owners shall have a lien upon all cargoes. In so far as such cargoes are owned by third parties, the time charterers accept an obligation to procure the creation of a contractual lien in favour of the owners. If they do not do so and the owners assert a lien over such cargo, the third parties have a cause of action against the owners. But the time charterers themselves are in a different position. They cannot assert and take advantage of their own breach of contract. As against them, the purported exercise of the lien is valid. It follows that hire continued to be payable during the delay in discharging and that the time charterers’ claims, based upon that delay, fail.
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