2. Payments under problem charters – the continuing effectiveness of the lien David Pitlarge Partner Marine, Trade and Energy

3. 1.Introduction: continuing relevance What you might achieve Alternative rights to recovery –Rule B –Freezing orders –Payment orders –Possessory Liens/Cargo

4. 2.Introduction: Where to find it NYPE 1946 – Clause 18: “The Owners shall have a lien upon…all sub-freights for any amounts due under this charter”… Other “sub-freight” clauses: –Baltime 1939 – Clause 17 –Gastime – Clause 24 –Linertime - Clause 20 –Intertanktime 80- clause 27 –Barecon ’89 ( but not 2001, which includes sub hire and b/l freight)

5. 2.Introduction: Where to find it cont’d Wider terms/sub-hires: –NYPE 1993 – Clause 23 –Boxtime 2004 – Clause 15 (B) –BPtime 3 – Clause 14 –Gentime – Clause 14(D) Offshore/ salvage: Supplytime – Clause 19 (“lien on all cargoes and equipment”) –Wreckhire 2010 / Wreckstage 2010

6. 3.Nature of the Lien Not a lien as such –Not possessory –Contracts: cargo, –General law: Freight, GA, unpaid seller, shares Distinct from maritime lien Equitable assignment and the rival theories: “the Western Moscow” – (Western Bulk Shipowning III A/S v Carbofer Maritime Trading APS and Others [2012] EWHC (Comm).

7. 4.What it covers/wording “Sub-freights”…does not include sub hire … “The Cebu No.1” – Cave Shipping Corporation v Latin American Shipping Corporation [1983] 1 Lloyd’s Rep. 302 “The Cebu No. 2” – Itex Itagrain Export S.A. v Cave Shipping Corporation and Others [1990] 2 Lloyd’s Rep. 316 “The Bulk Chile” – Dry Bulk Handy Holding Inc and Another v Fayette International Holdings Ltd and Another [2012] EWHC 2107 (Comm)

8. 5.What it covers: The “Bulk Chile” chain: tc DBHH/ CSAV; tc CSAV/KLC; tct KLC/Fayette; vc Fayette /Metinvest….owners’ bill, Metinvest as shippers KLC fail to pay – rehabilitation in Korea, recognised subsequently under Cross Border Insolvency Regulations Notice served on Fayette and Metinvest; Metinvest pay freight to Fayette “Owners” could recover: b/l freight, v/c freight (even though not payable as of notice date)…and for post withdrawal service

9. 5.What it covers: So we can look at… Sub freight, perhaps hire Sub, sub freight ( and, if provided for, sub, sub hire) “Assignments of assignments”: charterers’ and sub charterers’ rights to receive Bill of lading freight ( free-standing right, see The Spiros C” [2000] 2 Lloyd’s Rep 319, “The Bulk Chile”) ….BUT this is technically a different right and a function of the owner’s contract with the shipper.

10. 6.Execution and Priorities Notice requirements per the “Bulk Chile”: 1.-owners assignees of debts owed/ to be owed 2.- what debts assigned 3.- an amount due under head charter- an amount; not how much…no breakdown required 4.-owner requires payment of assigned debt directly Effective on service Priorities

11. 7.Risks, Challenges and Disputes (A) The Risk: Double jeopardy “Attika Hope” -[1988] 1 Lloyd's Rep. 439

12. 8.Risks, challenges and Disputes (B) Challenges The language of the clause Registration: “The Ugland Trailer” – Re Welsh Irish Ferries Ltd (in Receivership and in Liquidation) [1985] 2 Lloyd’s Rep. 372 “The Anangel Glory [1988] 1 Lloyd’s Rep. 45 Companies Act 2006 s. 860 ( replacing s.395 CA 1985)

13. 9.Risks, Challenges and Disputes (C) Disputes: Forum for determination of the lien rights Forum for the assigned claim (see the “Western Moscow”) The impact of foreign insolvencies - Cosco Bulk Carrier Co. Ltd v Armada Shipping SA and another Re Armada Shipping SA [2011] EWHC 216 (Ch)) : - Cosco/ Armada/ STX - Armada in liquidation in Switzerland; lien issues to be determined in London arbitration as per c/p

14. 10.Summary and Practical Tips Drafting – as wide as possible –BIMCO Lien clause: –In addition to c/p lien clause –Any sums due under any sub charterperties (in addition to freights and sub freights) –Lien on bunkers –Vesting of property in bunkers on withdrawal. Consider registration issues at the outset

15. 10.Summary and Practical Tips Timely service of effective notices Notice to the proper parties Consider deductions Forum for disputes Pragmatic solutions and escrow

16. For further information please contact: David Pitlarge - Partner Hill Dickinson Direct Dial +44 (0)20 7280 9251 Email david.pitlarge@hilldickinson.com Fax +44 (0)20 7283 1144 Website www.hilldickinson.com