Lloyd's Maritime and Commercial Law Quarterly
THE JURIDICAL NATURE OF A LIEN ON SUB-FREIGHTS
Fidelis Oditah*
Most time charters contain a clause entitling the shipowner to a lien over subfreights for any amounts due under the charter. For example, cl. 18 of the New York Produce Exchange form provides that:
… the owners shall have a lien upon all … sub-freights for any amounts due under this Charter, including General Average contributions … 1
The purpose of the clause is to give the shipowner a security for accrued obligations under the charterparty in those cases where the sub-freight is due to the charterer, and not the owners, or where the vessel is sub-chartered, or for some reason the goods are carried without a bill of lading.2 Neither equity nor common law conferred this right on the shipowner. Even now, no statute has done so. The right is contractual in nature and its effect was summarized by Lord Alverstone, C. J., in Tagart, Beaton & Co v. James Fisher & Sons
3 in these words:
… a lien for sub-freight means a right to stop the freight and receive it as such. It does not give a right to follow, wherever the fund may be found, a sum of money merely because it is the proceeds of a debt due for freight
This statement accurately describes the extent of the right conferred by the lien clause. It does not, however, discuss the nature of that right.
Until recently, there has been little or no discussion of the juridical nature of the right conferred by a lien on sub-freights. The lack of discussion is accentuated by the fact that, even today, little or nothing has been offered by text writers by way of analysis.4 Three recent cases5 have highlighted the dangers of this omission. In two of them it was held that the lien clause created a registrable charge and was void for
* Magdalen College, Oxford.
1. Similar clauses are contained in the Baltime form, cl. 18; and Linertime form, cl. 20.
2. Molthes Rederi Aktieselskabet v. Ellerman’s Wilson Line Ltd. [1927] 1 K.B. 710, 717. Where the master signs the bills of lading, there is a direct contractual relationship between the bill holders and the shipowners because he signs for, or as an agent of, the owners. In such a case the sub-freights are due directly to the owners and they do not need to rely on the lien clause: see Wehner v. Dene S.S. Co. [1905] 2 K.B. 92.
3. [1903] 1 K.B. 391, 395. See also ibid., 394, per Lord Halsbury, L.C.; Molthes v. Ellerman’s Wilson Line, supra; Federal Commerce & Navigation Co. Ltd v. Molena Alpha Inc. (The Nanfri) [1979] A.C. 757, 784; Re Welsh Irish Ferries Ltd. (The Ugland Trailer) [1986] Ch. 471, 479; The Annangel Glory
[1988] 1 Lloyd’s Rep. 45, 49; G. & N. Angelakis Shipping Co. S.A. v. Compagnie Nationale Algerienne de Navigation (The Attika Hope)
[1988] 1 Lloyd’s Rep. 439, 441. See Wilford [1986] 1 LMCLQ 1; [1988] 2 LMCLQ 148.
4. See for example Carver’s Carriage by Sea, 13th edn. (1982), para. 2013; Scrutton on Charterparties and Bills of Lading, 19th edn. (1984), p. 391, n. 47. There is no discussion of the issue in Abbott’s Law of Merchant Ships and Seamen, 14th edn. (1901).
5. The Ugland Trailer, supra, fn. 3; The Annangel Glory, supra, fn. 3; The Attika Hope, supra, fn. 3.
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