What is lien on cargo?

Liens on Cargo. A lien on cargo is a form of security which can in some circumstances put commercial pressure on the charterer to pay or secure the outstanding hire, particularly if there is a dispute about whether or not the withholding of hire was permissible.

When can an owner place a lien on a cargo?

Thus, provisions can be made for a lien on cargo for: dead freight, demurrage or damages for detention, advance freight, freight due under a charterparty as against the bill of lading holder, “all charges whatsoever” (is confined to expenses specifically mentioned in the charterparty), “all moneys becoming in any way …

What is a lien clause?

According to the lien clause, if charterer has failed to make payments due to the shipowner under the terms of the charter-party, shipowner has a right of lien on the cargo. Shipowner may retain the cargo on board or in a warehouse ashore until the outstanding payment is made.

How do you work out a lien?

There are four conditions for the exercise of a particular lien:

1. The documents retained must be the property of the client, not a third party.
2. The documents must have been obtained from the client (i.e. not by accident or improperly).
3. Work must have been done on the documents and a fee note raised.

Can a ship owner put a lien on a cargo?

Under a NYPE charter, owners are entitled to exercise a lien on cargo for unpaid hire. Such lien, however, is a contractual lien.

When do cargo liens occur under time or voyage charterparty?

Cargo liens for unpaid hire and freight due under a time or voyage charterparty During periods in which the global shipping economy is volatile, the likelihood of unpaid freight or hire occurs with higher frequency. Recently, the Club has witnessed charterers facing difficulty in meeting their obligation to pay freight due under a charterparty.

When to use lien on sub-hire and sub-freight?

Apart from lien on cargo, owners will also have the remedy of a lien on sub-hire and/or sub-freight if such right is expressly provided under the charterparty. If subcharterers down the chain have not yet paid charterers, owners will be entitled to exercise a lien and intercept the payment.

Can a cargo lien be exercised by a defaulter?

In some jurisdictions, most commonly civil law jurisdictions, liens are not recognised and cannot be exercised unless the cargo is owned by the defaulting party.