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Web Alert: The Clipper Monach - A time charterer's successful lien over cargo

10 February 2016

The English High Court has recently held in The Clipper Monarch [1] that a time charterer can exercise its right of lien cargo, to recover sums due out of the proceeds of sale of the cargo.

Background

In this case, the time charterer claimant, as disponent owner, voyage chartered the Clipper Monarch for the carriage of a cargo of iron ore from Mexico to China.

When the voyage charterer failed to pay freight, deadfreight, demurrage and other charges, the claimant exercised a lien over the cargo on board and ordered the ship to wait outside China, in international waters.

After several weeks of non-payment, the claimant obtained an order of the English court pursuant to CPR Part 25(1)(c)(v) to sell the cargo. The terms of the order provided for the proceeds of sale to be “treated as if subject to the same rights (if any) as [claimants] had in respect of the goods prior to their sale”. The cargo was subsequently sold and the claimant then applied for an order that the proceeds of sale be paid out to it.

The claimant obtained two arbitration awards in its favour: firstly as disponent owners against the voyage charterer under the charterparty, and secondly as assignees of the head owners against the shipper under the bill of lading. As judgment creditor against both the voyage charterer and the shipper, the claimant then sought enforcement (avoiding double recovery) in the High Court.

Judgment

The English court held that the claimant was entitled to recover the debt owed, out of the sale proceeds based on two grounds:

1. That the claimant was a judgment creditor of both the voyage charterer and the shipper and the subject cargo clearly belonged to one of them.

2. The claimant was the beneficiary of a lien conferred by the voyage charterparty as against the voyage charterer.

The court added that, as assignees of the carrier head owners, the claimant is also the beneficiary of a true lien against the shipper pursuant to the bill of lading.

Whilst certainly an interesting case, as with all things, this case will have been determined based on its own particular facts. For further information on liens more generally members should visit our Defence webpage.

This article intends to provide only general guidance on the above issues, arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. ​In case of any doubt, the member should not hesitate to contact the authors, or their usual club contact. The law is not static and if in any doubt The Standard Club is always on hand to assist. 

1. [2015] EWHC 2584 (Comm)