i-law

Lloyd's Maritime and Commercial Law Quarterly

LIENS ON SUB-HIRE AND FREIGHT

Graeme Bowtle*

The Western Moscow
The nature of the lien on freight and sub-hire in charterparties has recently been the subject of further judicial consideration by Christopher Clarke J in The Western Moscow.1 “Lien” clauses such as cl.18 of the New York Produce Exchange Charter, cl.8 of the Gencon and cl.18 of the Barecon 2001 give the owners of a ship (among other rights) a “lien” on freight and sub-hire so that, if any amounts are due to the owners from the charterers under the charter, the owners can give notice to the cargo interests or subcharterers requiring them to pay to the owners any freight or sub-hire that they would otherwise have paid to the charterers. As Dr Oditah has previously pointed out,2 such clauses have been included in certain charterparties since the nineteenth century.
Although the effect of the lien clause was considered by the courts in the early part of the twentieth century,3 it was not until 1978 that the courts considered the juridical nature of the lien4 and there followed a series of cases which decided that the lien, which was neither a maritime lien, a common law possessory lien nor a statutory lien under the Administration of Justice Act 1956, s.1 (now the Senior Courts Act 1981, s.20), was an equitable assignment by way of security.5 Most of these cases were decided in the Commercial Court, but The Ugland Trailer 6 was heard in the Companies Court, as the receiver of the charterers who had been appointed by the debenture holder had applied to the court for directions as to whom the freight which they had collected was to be paid to—the owners or the bank as debenture holder—both of whom claimed the freight. If the previous decisions were followed, then the owners’ claim to the freight would have failed, as they had not registered the lien as a charge on book debts under the Companies Act 1948, s.95 (now the Companies Act 2006, s.395), the charterers being a limited company to which the Act applied. In the face of the weight of authority against him, the owners’ counsel, Peter Millett QC, adopted the bold approach of submitting that the owners’ lien was not an equitable assignment but a lien sui generis given by maritime law and was therefore not registrable under s.95. This innovative argument was rejected by Nourse J


CASE AND COMMENT

143

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.