LIEN ON CARGO

LIEN ON CARGOLIEN ON CARGO

by Zeynep Özkan Özerenby Zeynep Özkan Özeren

ÖZKAN Law OfficeÖZKAN Law Office

LIEN ON CARGOLIEN ON CARGO

1-) Which debts are covered?1-) Which debts are covered?

a) a) ContContractual Liensactual Liens: depends on the : depends on the construction of the lien clause of the c/p construction of the lien clause of the c/p

eg. Gencon (94)eg. Gencon (94)““Owners shall have a lien on the cargo and on Owners shall have a lien on the cargo and on all subfreights payable in respect of the cargo all subfreights payable in respect of the cargo for for freight, deadfreight, demurrage, freight, deadfreight, demurrage, claims for damages and all other claims for damages and all other amounts due under the charterpartyamounts due under the charterparty including the costs of recovering the same.”including the costs of recovering the same.”

a) a) Contractual liensContractual liens

eg. Gencon (76)eg. Gencon (76)“…“…damages for detention”damages for detention”

eg. Scanconeg. Scancon

““the owners shall have a lien on the the owners shall have a lien on the cargo for cargo for any amountany amount duedue under under this contract and the necessary this contract and the necessary costs of recovering the same.”costs of recovering the same.”

““charter-party sub-freights”charter-party sub-freights”

b) b) Statutory liens under Statutory liens under Turkish lawTurkish law

freight, deadfreight, distance freight, deadfreight, distance freight, demurragefreight, demurrage

general average contribution of general average contribution of the cargothe cargo

salvage renumeration, masters salvage renumeration, masters transactionstransactions

2-) What is subject/scope of 2-) What is subject/scope of the cargo lien?the cargo lien?

Entire consignment of cargo Entire consignment of cargo carried under the same contract of carried under the same contract of carriage even though only a part carriage even though only a part of the freight is outstandingof the freight is outstanding

Once different bills of lading are Once different bills of lading are issued covering different parts of issued covering different parts of the cargo, lien may be exercised the cargo, lien may be exercised on that part of the cargo, the on that part of the cargo, the outstanding freight is relatedoutstanding freight is related

3-) 3-) What rights over the What rights over the cargo does the lien cargo does the lien

give?give?a) a) Contractual liens:Contractual liens: merely right to retain possession merely right to retain possession

as security for payment, no right as security for payment, no right of resaleof resale

Possible to provide for the right of Possible to provide for the right of resale in the contractual clauseresale in the contractual clause


give?give?

eg. eg. Cl.14 of P&O Nedlloyd bill of Cl.14 of P&O Nedlloyd bill of lading:lading:

“…“….In any event any lien shall extend to .In any event any lien shall extend to cover the costs recovering the sums cover the costs recovering the sums due and for that purpose the Carrier due and for that purpose the Carrier shall have the right to sell the Goods by shall have the right to sell the Goods by public auction or private treaty, public auction or private treaty, without notice to the Merchant at any without notice to the Merchant at any time and at any place at the sole time and at any place at the sole discretion of the Carrier”discretion of the Carrier”


give?give?

b) b) Statutory liens under Turkish lawStatutory liens under Turkish law Right to retain possesRight to retain possesssion,ion, Right to have the cargo sold by public Right to have the cargo sold by public

auctionauction

4-) 4-) When can the lien be When can the lien be exercised?exercised?

Requirements:Requirements: Shipowner must have taken the Shipowner must have taken the

possepossesssion of cargosion of cargo Freight or other rights must be dueFreight or other rights must be due

eg. Tamvaco v Simpson (1866) LR 1 eg. Tamvaco v Simpson (1866) LR 1 CP: not able to exercise lien when CP: not able to exercise lien when the contract provided for the the contract provided for the payment of freight at a later date payment of freight at a later date than the fixed delivery of cargothan the fixed delivery of cargo

5-) 5-) Against which parties Against which parties can the lien be can the lien be

exercised?exercised?a) a) Contractual liensContractual liens: : only against the contractual only against the contractual

party to the contract of party to the contract of carriage carriage

so a lien incorporated in a time so a lien incorporated in a time charter to provide security for charter to provide security for unpaid hire is not enforceable unpaid hire is not enforceable against cargo of third parties against cargo of third parties shipped under a bill of ladingshipped under a bill of lading

The Chrysovalandou DyoThe Chrysovalandou Dyo [1981] 1 Lloyd’s Rep 159[1981] 1 Lloyd’s Rep 159

5-5-) Against which parties ) Against which parties can the lien be can the lien be

exercised?exercised?The Chrysovalandou DyoThe Chrysovalandou Dyo [1981] 1 [1981] 1

Lloyd’s RepLloyd’s Rep

it was held that such a clause did it was held that such a clause did notnot

““entitle the shipowners to a lien on entitle the shipowners to a lien on the goods of persons who have the goods of persons who have come under no contract with come under no contract with them…A right to seize one person’s them…A right to seize one person’s goods for another person’s debt goods for another person’s debt must be clearly and distinctly must be clearly and distinctly conferred before a court of justice conferred before a court of justice can be expected to recognize it.”can be expected to recognize it.”


exercised?exercised?existence of the right of lien existence of the right of lien over cargo in the cp will not over cargo in the cp will not entitle entitle owners owners to exercise a to exercise a lien under the bill of lading lien under the bill of lading unless a-) charterer is the unless a-) charterer is the owner of the cargo b) the bill owner of the cargo b) the bill of lading gives the owners a of lading gives the owners a specific contractual right of specific contractual right of lien over cargo as against the lien over cargo as against the consignees for sums due under consignees for sums due under the cpthe cp


exercised?exercised?b)b) Statutory liensStatutory liens Enforceable against the third Enforceable against the third

party receivers: owner can party receivers: owner can exercise his right of statutory lien exercise his right of statutory lien for outstanding freight due under for outstanding freight due under the head charterparty against the head charterparty against cargo shipped by a sub-charterercargo shipped by a sub-charterer

6-) 6-) Where should the lien Where should the lien be exercised?be exercised?

Is it necessary to be at the port of Is it necessary to be at the port of discharge in order to exercise the discharge in order to exercise the lien or is it possible for owners to lien or is it possible for owners to exercise a lien by halting a laden exercise a lien by halting a laden ship en route to the port of ship en route to the port of dischargedischarge?? The Mihalios Xilas The Mihalios Xilas [1978] 2 Lloyd’s Rep 186[1978] 2 Lloyd’s Rep 186

The Chrysovalandou Dyo The Chrysovalandou Dyo [1981] Lloyd’s Rep 159[1981] Lloyd’s Rep 159

unless there are exceptional unless there are exceptional circumstances, the owners have to circumstances, the owners have to exercise their right of lien at the exercise their right of lien at the discharge portdischarge port

7-7-) Can the lien be ) Can the lien be exercised after exercised after

discharge?discharge?a) a) Contractual liensContractual liens Owner must keep possession of Owner must keep possession of

the cargothe cargo Accordingly, owners must arrange Accordingly, owners must arrange

warehousing at their own risk and warehousing at their own risk and expense or lose their right of lienexpense or lose their right of lien

May be insecure or expensiveMay be insecure or expensive

7-7-) Can the lien be ) Can the lien be exercised after exercised after

discharge?discharge?b) b) Statutory liensStatutory liens Lien can be exercised on board or Lien can be exercised on board or

after discharge or even after after discharge or even after delivery to the receivers provided delivery to the receivers provided that it is enforced within 30 days that it is enforced within 30 days and the receivers still keeps and the receivers still keeps possespossesssion of the cargoion of the cargo

An example: Gemlik Court of First An example: Gemlik Court of First Instance File No: 2010/10D.İsInstance File No: 2010/10D.İs

8-)8-)What are the formalities What are the formalities for enforcing a lien?for enforcing a lien?

a) a) Contractual liensContractual liens exercised by retaining the exercised by retaining the

possession and the shipowner possession and the shipowner does not have to obtain any court does not have to obtain any court order before doing soorder before doing so

not necessary to notify the not necessary to notify the interested parties although interested parties although advisable to do soadvisable to do so


It is possible to provide detailed It is possible to provide detailed provisions about the enforcement provisions about the enforcement of lien procedures in the contract of lien procedures in the contract of carriage. See for example P&O of carriage. See for example P&O Nedlloyd Bill of Lading Cl.14:Nedlloyd Bill of Lading Cl.14:

“…“….for that purpose the Carrier .for that purpose the Carrier shall have the right to sell the shall have the right to sell the Goods by public auction or private Goods by public auction or private treaty without notice to the treaty without notice to the Merchant at any time and at any Merchant at any time and at any place at the sole discretion of the place at the sole discretion of the CarrierCarrier””


b) b) Under Turkish lawUnder Turkish law a court order is requireda court order is required not required to notify the not required to notify the

interested parties before applying interested parties before applying to the courtto the court

the owner may apply to the court the owner may apply to the court and obtain an ex-parte arrest and obtain an ex-parte arrest order and start proceedings for order and start proceedings for the enforcement of the right of the enforcement of the right of lien and having the cargo sold lien and having the cargo sold through the public auctionthrough the public auction

9-) 9-) Contractual vs Contractual vs Turkish Turkish sstatutory tatutory

liensliens the law of contract shall be the law of contract shall be applicable to evaluate as to applicable to evaluate as to whether there is an outstanding whether there is an outstanding receivablereceivable

However, Turkish law shall be However, Turkish law shall be applicable to the issue as to applicable to the issue as to whether such receivable would whether such receivable would give a right of lien. give a right of lien.

Turkish law shall be applicable to Turkish law shall be applicable to the enforcement procedures as the enforcement procedures as wellwell

9-) Contractual vs 9-) Contractual vs Turkish Turkish sstatutory tatutory

liensliens The provisions of the contract of The provisions of the contract of carriage on cargo liens shall be carriage on cargo liens shall be valid as long as they are not in valid as long as they are not in breach of the mandatory breach of the mandatory provisions of Turkish lawprovisions of Turkish law. . ExampleExamples to invalid provisions:s to invalid provisions:

““the owner shall have right of lien the owner shall have right of lien on the cargo even if he has not on the cargo even if he has not had the possessionhad the possession””

““the owner would have title to the owner would have title to liened cargo if the debt is not liened cargo if the debt is not paidpaid””

Özkan Law OfficeÖzkan Law OfficeHüsrev Gerede Cad. Hüsrev Gerede Cad. Ömer Rüştü Paşa Sok.Ömer Rüştü Paşa Sok.No 12, Teşvikiye, Istanbul,No 12, Teşvikiye, Istanbul,TurkeyTurkeyTel: +90 212 3276940Tel: +90 212 3276940Fax: +90 212 3276943Fax: +90 212 3276943E-mail: [email protected]: [email protected]

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LIEN ON CARGO