In Five Ocean Corporation v Cingler Ship Pte Ltd  SGHC 311 the High Court of Singapore has ordered the sale of cargo subject to a lien exercised by the shipowner on behalf of the head charterer pursuant to a bill of lading incorporating the terms of the sub-charter, which was subject to Singapore arbitration and English law. The order was made pursuant to the powers of the court under s12 A (4) of the International Arbitration Act, which is in similar terms to s 44(3) of the English Arbitration Act 1996. Section 12 A (4) provides “If the case is one of urgency, the High Court or a Judge thereof may, on the application of a party or proposed party to the arbitral proceedings, make such orders under subsection (2) as the High Court or Judge thinks necessary for the purpose of preserving evidence or assets.” All parties were before the court and subject to its in personam jurisdiction.
The court held that an order for sale was “necessary” in order to preserve the “asset”, the disponent owner’s right to detain possession of the Cargo. The vessel was in international waters in the Bay of Bengal and the crew had been on board the vessel for almost four months, and some were falling ill. There was a lack of fresh food, water and medical supplies and overheating of the cargo of coal had been detected, with the risk of self-ignition should it continue to remain in the Vessel’s holds, a dire situation exacerbated by the monsoon season. The shipowners had been willing to exercise their lien under the bill of lading but the court noted that they would have been obliged to do so by reason of the employment clause in the time charter.
Can disponent owners lien cargo for sums due under their sub-charter? Dicta in The Clipper Monarch  EWHC 2584 (Comm);  1 Lloyds’ Law Rep 1, suggests that they can. The sub-charterers, Silver Rock, had failed to pay freight, deadfreight, and demurrage to disponent owners, CCS, and the vessel waited outside Chinese territorial waters. CCS obtained and order to sell the cargo under CPR Part 25.1(1)(c)(v), which provided for the gross proceeds of sale to be held by the claimant’s solicitors to the order of the court and “treated as if subject to the same rights (if any) as [CCS] had in respect of the goods prior to their sale”.
The cargo had been purchased by Silver Rock from Max Coal and sold on to Grupo Minero, the original consignee. Silver Rock found a new purchaser and the vessel berthed to discharge the cargo. The cargo was sold and its proceeds held by CCS’s solicitors pursuant to the High Court’s order. CCS obtained arbitration awards against Silver Rock for sums due under the voyage charter, and against Grupo Minero, claiming as assignee of the head owner’s right to claim an almost identical amount as carrier under the bill of lading. The awards were converted into judgements. His Honour Judge Waksman QC held that the sale proceeds representing the cargo clearly belonged to one of the two judgment debtors and CCS was entitled to the monies as judgment creditor against whichever of them was the appropriate owner.
His Honour Judge Waksman QC then considered, obiter, a second ground on which CCS would be entitled to the proceeds of the sale – by way of its rights on a lien on the cargo which arose prior to the sale. If the cargo was owned prior to sale by Grupo Minero, CCS relied on the voyage charter “lien” clause as incorporated into the bills of lading, CCS having taken an assignment of the carrier’s rights. If the cargo was owned by Silver Rock, CCS relied on the voyage charter “lien” clause as giving it a right with similar effect to a possessory lien, namely a right to procure that the cargo be withheld from Silver Rock by directing the employment of the vessel in its capacity as time charterer.
This second ground assumes that the time charterer has the right, under the employment clause, to direct the shipowner to lien the cargo by not unloading it. Such an order would only be lawful if the shipowner had the right to lien the cargo under the bill of lading, as was the case in The Clipper Monarch. It is worth noting that a similar argument was rejected in The Mathew  2 Lloyd’s Law. Rep 323 where Steyn J held that there was no implied term that the time charterers could direct the shipowners to lien cargo.
The Bao Yue  EWHC 2288 (Comm), is another case of nobody wanting to take delivery of the cargo when it gets to its destination. What’s a shipowner to do?
The case involved a shipment of iron ore from Iran to China under a bearer bill of lading. Due to a dispute between the seller and the buyer nobody came forward to take delivery in China and the shipowner arranged for the cargo to be discharged into a warehouse under a contract which gave the warehousekeeper a lien for unpaid storage charges. The shipper, who had retained the original bill of lading, sued the shipowner for conversion, in allowing the creation of a lien over the cargo in favour of a third party, the warehousekeeper, alternatively for denying it access to the cargo.
Both claims failed. The bill of lading expressly provided for the discharge and storage of the cargo and in any event there would have been an implied right on the part of the shipowner to do so if delivery was not taken by the bill of lading holder. It was a foreseeable incident of the right to store the cargo that a lien would be created in favour of the warehousekeeper. The shipper had therefore impliedly authorised the creation of the lien. The Commercial Court also held that there was no denial of access as the shipper could still obtain the cargo by presenting the bill of lading and by paying the storage charges which by now amounted to US$2m.
The shipowner successfully counterclaimed the cost of the storage charges and obtained an order that the shipper deliver an original bill of lading to it to enable it to sell the cargo.
A small footnote. The summary on Westlaw is inaccurate in that it refers to the defendant being the shipper, rather than the shipowner.