Lukoil-Kaliningradmorneft plc v Tate Ltd and Anr - QBD (Com Ct)(Toulson J) - 1 October 1997

Towage contract - Whether bailment of towed vessel - Whether tug owner entitled to exercise lien against towed vessel even if towage contract made with someone other than owner of towed vessel

The plaintiff, a Russian tug-owning company, entered into a towage contract on the Towcon form for the tandem two of two vessels, the Simcoe and the Canadian Hunter from Montreal to Alang, India. The towage agreement was signed as hirer by the second defendant (“Global”), and named the first defendant (“Tata”) as owner of the two vessels. The principal question in the case was whether Global had actual authority to enter into the towage agreement on Tata’s behalf. The judge determined the answer to that question in the affirmative. However, the judge went on to consider whether, if Global had no authority to enter into the towage agreement as agent for Tata, the plaintiff was nevertheless entitled to exercise against Tata a lien conferred by clause 21 of the towage agreement. Clause 21 provided that the tug owner should be entitled to exercise a possessory lien on the two vessels in respect of any sum due to the tug owner under the agreement. In the event, only the initial instalment of 10% was paid.