Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu
  • Legal Updates from YHA Law Firm

MARITIME LAW – LIEN, LOSS AND LMAA: ENGLISH COMMERCIAL COURT ORDERS SALE OF DETERIORATING CARGO

1. Summary and Facts

In Lord Marine Co SA v Vimeksim SRB Doo [2025] 2 Lloyd’s Rep 52, Owners of MV Lord Hassan applied under s.44 Arbitration Act 1996 for an order permitting the sale of a cargo of Ukrainian corn over which they had exercised a contractual lien for unpaid freight. The charterparty lien and LMAA arbitration clause were incorporated into the bills of lading; the BLs were marked freight prepaid but freight had not, in fact, been paid, and the BLs remained in owners’ hands. The cargo, discharged to a warehouse at Iskenderun, Turkey, was deteriorating rapidly. Charterers and receivers did not attend the hearing despite notice.

2. Legal Issues

• Whether the cargo was “the subject of the proceedings” so that the court had power under s.44(2) to order interim measures (including sale).
• Whether CPR 25.1 and s.44(3) enabled a sale of perishable/rapidly deteriorating property pending arbitration.
• Effect of freight prepaid notation and the fact owners retained the BLs; whether any lawful BL holder could object; whether possession via receivers’ warehouse affected the lien.

3. Court’s Findings

• The English High Court ordered the sale of the cargo (with an undertaking in damages fortified for USD 75,000).
• The contractual lien was being exercised in support of the arbitral claim, making the cargo the “subject of the proceedings” under s.44(2), and the court could act as it would in legal proceedings. CPR 25.1 allowed an order for perishable property to be sold quickly.
• Evidence showed urgent risk of deterioration (self-heating, mould, infestation), justifying relief under s.44(3) even absent arbitral permission (which existed).
• Because owners retained the BLs, there was no lawful BL holder to object; the freight prepaid stamp did not create an estoppel where freight was in fact unpaid and the BLs never left owners’ hands.
• Storage at the receivers’ warehouse did not negate owners’ possession: for these purposes receivers acted as owners’ agent, so the lien continued.
• The lien could bind third-party cargo; otherwise a lien’s utility would be undermined.
• Undertaking in damages was required and to be fortified for USD 75,000 (P&I LoU or payment into solicitors’ account).

4. Practical Implications

• S.44 AA 1996 remains a potent tool to preserve value where cargo under lien is deteriorating — the court may order interim sale pending LMAA arbitration.
• A “freight prepaid” stamp will not estop owners if freight is unpaid and the BLs never left owners’ possession.
• Possession and lien can subsist even when cargo sits in a receiver-owned warehouse if receivers act as owners’ agent.

Back to Latest Legal Updates

Recent Post

EMPLOYMENT – RETRENCHMENT – INDUSTRIAL COURT UPHOLDS GLOBAL RESTRUCTURING: REDUNDANCY VALID DESPITE ONGOING WORK OVERSEAS

In Sin Leong v BT Systems (M) Sdn Bhd [2025] 4 ILJ 221, the Industrial Court upheld the employer’s retrenchment exercise following a global restructuring, ruling that the claimant was lawfully dismissed due to genuine redundancy. Although the claimant’s functions continued in India, the Court held that the abolition of the entire Malaysian team sufficed to establish redundancy. The company’s profitability did not negate the restructuring, and the LIFO principle did not apply since the whole department was closed. The decision reinforces that courts will respect managerial prerogative, provided the retrenchment is bona fide and not tainted by mala fide or victimisation.

Read More »
30 March ,2026 No Comments

DECREE NISI – ADULTERY AND FRAUD – NOT CONCEAL REMARRIAGE – COLLUSION EVIDENCE

In Kanagasingam a/l Kandiah v Shireen a/p Chelliah Thiruchelvam & Anor [2026] 7 MLJ 494, the High Court set aside spousal maintenance and committal orders after finding that the ex-wife had fraudulently concealed her remarriage, which by law extinguished her entitlement under section 82 of the Law Reform (Marriage and Divorce) Act 1976. The Court held that consent orders obtained through non-disclosure were vitiated by fraud and ordered repayment of RM310,000, together with RM400,000 in aggravated damages and RM300,000 in exemplary damages. The decision underscores that fraud unravels all, even in family proceedings, and that courts will not hesitate to impose punitive consequences for abuse of process.

Read More »
30 March ,2026 No Comments

FEDERAL COURT SAVES SECTION 233 CMA: ‘OFFENSIVE’ AND ‘ANNOY’ REMAIN CONSTITUTIONAL

In The Government of Malaysia v Heidy Quah Gaik Li [2026] MLJU 384, the Federal Court overturned the Court of Appeal’s ruling that had struck out the words “offensive” and “annoy” from section 233(1)(a) of the Communications and Multimedia Act 1998. The Court held that these terms, when read together with the requirement of intent to annoy, fall within the permissible restrictions on free speech under Article 10(2)(a) of the Federal Constitution. While the impugned words were upheld as constitutional, the respondent’s acquittal was maintained as her Facebook posts criticising immigration detention conditions did not demonstrate the required intent to annoy or harass.

Read More »
30 March ,2026 No Comments

HIGH COURT ORDERS TIKTOK VIDEO TAKEN DOWN: ADVICE ON SECRET CONVERSION OF MINORS VIOLATES CONSTITUTION

In Karnan a/l Rajanthiran & Ors v Firdaus Wong Wai Hung [2025] 9 MLJ 14, the High Court granted a mandatory interim injunction ordering the immediate removal of a viral TikTok video advising how underaged non-Muslim children could be secretly converted to Islam without their parents’ knowledge. The Court held that the advice prima facie breached Article 12(4) of the Federal Constitution, which provides that a minor’s religion must be determined by their parent or guardian. Given the risk of irreparable harm to constitutional rights, the Court found the case “unusually strong and clear” and concluded that justice and the balance of convenience favoured the urgent removal of the video pending trial.

Read More »
30 March ,2026 No Comments

MARITIME LAW – CLAUSES 28 AND 29 BARECON 2001 – OWNERS CAN’T PICK ANY PORT: COURT LIMITS ‘CONVENIENCE’ IN VESSEL REPOSSESSION CLAUSE

In Songa Product and Chemical Tankers III AS v Kairos Shipping II LLC [2026] 1 Lloyd’s Rep 100, the Court of Appeal held that a clause allowing owners to repossess a vessel at a location “convenient to them” does not entitle them to demand redelivery at any distant port of their choosing. The Court emphasised that repossession must occur as soon as reasonably practicable, and where the vessel is already at a safe and accessible port, owners cannot require charterers to incur the cost and risk of sailing it across the world. The decision clarifies that charterers, as gratuitous bailees post-termination, are only obliged to preserve the vessel – not to undertake burdensome repositioning for the owners’ convenience.

Read More »
30 March ,2026 No Comments

MARINE INSURANCE – FRAUD DOESN’T DEFEAT COVER: COURT UPHOLDS MORTGAGEE’S CLAIM UNDER MII POLICY OF MORTGAGEE’S CLAIM

In Oceanus Capital Sarl v Lloyd’s Insurance Co SA (The “Vyssos”) [2026] 1 Lloyd’s Rep 79, the Commercial Court held that a mortgagee was entitled to recover under a Mortgagee’s Interest Insurance (MII) policy despite a forged war risks cover note and a breach of trading warranties by the shipowner. The Court found that the proximate cause of loss was the mine strike, not the forged insurance, and that the mortgagee was not “privy” to the breach, as its consent had been induced by fraud. The decision reinforces that MII policies are designed to protect lenders from owner misconduct and non-recovery under primary insurance, and that fraud will not defeat cover where the mortgagee acted reasonably.

Read More »
30 March ,2026 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN