Lord Marine Co SA v Vimeksim SRB DOO (The “Lord Hassan”) [2024] EWHC 3305 (Comm) King’s Bench Division, Commercial Court – Bryan J – 4 October 2024
On 2 April 2024, Lord Marine Co SA (the owners) and Vimeksim Srb DOO (the charterers) entered into a voyage charterparty for the vessel Lord Hassan. The fixture recap incorporated SYNACOMEX 2000 terms and specified that freight was to be paid in full, less commission, in USD. Clause 2, the lien clause, granted the owners a lien on the cargo for all sums due on “freight, deadfreight, demurrage and average contribution” under the Charter Party.
Around 8 May 2024, approximately 11,000 mt of Ukrainian corn was loaded at Chornomorsk. A bill of lading in Congenform 1994 form was issued the same day, naming AAK as receivers and incorporating the terms of the charterparty. It was marked “Freight Prepaid,” although in reality, the freight had not been paid. Consequently, the owners retained the bill of lading.
The cargo was shipped to İskenderun, Turkey, where the owners exercised their lien and refused to discharge the cargo. Neither the charterers nor the receivers obtained possession of the bill of lading. The owners initiated LMAA arbitration seeking the unpaid freight. When the charterers failed to appoint an arbitrator, the owners’ appointee was confirmed as sole arbitrator.
The owners subsequently applied to the Commercial Court under section 44 of the Arbitration Act 1996 for an order to sell the cargo. At that time, the cargo was stored in a warehouse owned by the receivers, with storage charges being borne by the owners. The receivers were thus deemed agents for storage purposes. Ownership of the cargo was unclear.
The Court granted the order for sale upon the owners’ undertaking in damages, secured in the amount of US$75,000.
Bryan J found that the charterers had been properly notified of both the arbitration and the court application, having been served by email, but had chosen not to participate. The receivers likewise did not engage in the proceedings.
The court was presented with expert evidence showing the cargo was rapidly deteriorating—it was overheating, infested with insects, and affected by mold. Bryan J concluded that section 44(2)(d) authorized the court to order the sale of the cargo, as it was “the subject of the proceedings,” and that section 44(3) permitted such action in urgent cases even without consent from all parties, provided the tribunal had given its consent—which it had.
Citing Dainford Navigation Inc v PDVSA Petroleo SA (The Moscow Stars) [2017] 2 Lloyd’s Rep 409, the judge held that goods subject to a contractual lien were “the subject of the proceedings.” In this case, the urgency was greater than in Moscow Stars, where non-perishable oil was left onboard for over nine months. Here, the corn was deteriorating quickly. The court thus applied CPR 25.1(1)(c)(v), which allows the sale of perishable goods or those requiring quick disposal for good reason.
The fact that the cargo may have been sold to a third party did not prevent the owners from asserting their lien, particularly as the bill of lading remained in their possession and had not been transferred to any lawful holder. Even if it had, the owners’ lien would still have prevailed under the charterparty.
Bryan J noted that, had the bill of lading been released, and freight truly marked as prepaid, the owners could potentially have been estopped from asserting a lien. However, that scenario did not arise because the bill was retained and freight unpaid.
Finally, the judge acknowledged that while it is rare for charterers to also own the cargo, liens are frequently exercised against third-party receivers. This was also affirmed in Five Ocean Corporation v Cingler Ship Pte Ltd (The Corinna) [2015] SGHC 311.