Court of Appeal, Singapore

LP Thean, Rajendran J, Karthigesu J

3 February 1993

KEYWORDS

Charterparty – Bill of Lading – Demise Clause – Shipowner’s Lien on Sub-Freight – Mode of Exercise of Lien

FACTS AND DECISION

A ship was on time charter. The charterparty included a demise clause which authorised the charterer to issue bills of lading as agents for the shipowner. It also included a lien clause which gave the shipowner a lien on sub-freight. The charterer had an agent who issued bills and collected freight. The charterer defaulted in payment of hire. The shipowner gave notice to the charterer’s agents that the shipowner had exercised the lien and accordingly asked the agent to pay any freight they were holding and will collect to the shipowners. Then the shipowner quickly switched its stand by saying it was claiming freight as the principal in the bills of lading issued.

The agent refused to pay and the shipowner sued the agent. The court summarily dismissed the claim of the shipowner holding that the shipowner did not have a right to intercept otherwise than by exercise of the lien. The exercise must be by giving notice to the shippers asking them to pay any freight, not paid yet, to the shipowners. It could not be exercised by giving notice to the charterer or its agent to on-pay any freight collected or to be collected.

The court decided this summarily at the instance of the shipowner’s application for summary judgment.

Overview by ARUN KASI