Bill of lading signed by master on charterer’s form – charterer party to contract – operation of owners’ lien
The facts
Oil was shipped from the United States to Japan. The bills of lading were signed by the captain on the time charterer’s form. The time charterer assigned the right to receive freight to the ship’s agent in Japan who had made certain advances to the time charterer.
The time charterer died insolvent while the vessel was en route.
The owners exercised their lien over freight for unpaid hire and other advances to the charterers.
The master intercepted the freight on behalf of the owners.
The owners withdrew the vessel and a portion of the hire payable in advance was unearned.
The parties agreed that the owners were entitled to the bulk of the freight and the entitlement to the balance was contested between the ship’s agents and the owners.
Findings
The arbitrator found that the agents would receive nothing as the amount collected for freight was exceeded by the owners’ claim.
Walton J pointed out that the owners’ lien did not extend to damages arising from cancellation. He pointed out that the lien could only operate on an existing right to hire even if unearned.
The dispute was referred back to the arbitrator to make findings on the timing of the receipt of freight.
Commentary
Walton J found that the owners were not party to the freight contract and their only right to freight was by way of their lien as provided in the time charterparty.
At some points the terminology used by the judge is confusing: he refers to a lien existing under a bill of lading, whereas it derives from the charterparty – and to the owners “collecting” bill of lading freight under their lien.
It was clear that the owners were never party to the bill of lading contract.
Scrutton KC appeared for the ship’s agents while JA Hamilton KC appeared with Bailhache for the owners.
This case was referred to by Hamilton J (later Lord Sumner) in Steamship Calcutta Company Ltd v Andrew Weir & Co to illustrate that each case had to be decided on its own facts.
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