Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

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

CIVIL PROCEDURE – STRIKE OUT UNDER ORDER 18 RULE 19(1)(A),(B) RULES OF COURT 2012 – EXTENSION OF TIME APPLICATION

In Badan Pengurusan Subang Parkhomes v Zen Estates Sdn Bhd [2025] MLJU 3591, the High Court reaffirmed that non-compliance with Order 37 Rule 1(5) of the Rules of Court 2012 does not automatically invalidate assessment of damages proceedings. The Court held that procedural rules must be read with the overriding objective of ensuring justice, and that the six-month time limit to file a Notice of Appointment is directory, not mandatory. Finding no prejudice to the defendant and noting active case management by the plaintiff, the Court dismissed the developer’s strike-out bid and allowed an extension of time for assessment to proceed. The decision underscores the judiciary’s commitment to substantive fairness over procedural rigidity in post-judgment proceedings.

Read More »
16 11 月 ,2025 尚無留言

TORT – PURE ECONOMIC LOSS BAR REAFFIRMED: MMC LIABLE FOR NEGLIGENCE BUT PROTECTED FROM LOST PROFIT CLAIMS

In Asia Pacific Higher Learning Sdn Bhd v Majlis Perubatan Malaysia & Anor [2025] MLJU 3144, the High Court awarded over RM2 million in damages against the Malaysian Medical Council (MMC) for negligence, breach of statutory duty, and misfeasance during its accreditation of Lincoln University College’s medical programmes. While the court allowed direct financial losses such as survey costs, it barred claims exceeding RM550 million for lost profits, reaffirming the Federal Court’s rulings in Steven Phoa and UDA Holdings that pure economic loss is not recoverable from public or statutory bodies. The second defendant was further ordered to pay RM100,000 in exemplary damages for acting with targeted malice, marking a rare personal liability finding against a regulatory officer.

Read More »
16 11 月 ,2025 尚無留言

ERINFORD INJUNCTION – COURT OF APPEAL CLARIFIES: EX-PARTE ERINFORD INJUNCTIONS ARE THE EXCEPTION, NOT THE RULE

In Edisijuta Parking Sdn Bhd v TH Universal Builders Sdn Bhd & Anor [2025] 5 MLJ 524, the Court of Appeal clarified that ex parte Erinford injunctions at the appellate stage should only be granted in truly exceptional circumstances where giving notice would defeat the purpose of the order. Wong Kian Kheong JCA held that, under rule 50 of the Rules of the Court of Appeal 1994, such applications should generally be heard inter partes to ensure fairness and prevent abuse. Exercising powers under section 44(1) of the Courts of Judicature Act 1964, the Court granted a conditional interim Erinford injunction pending appeal, fortified by a RM200,000 deposit and an undertaking to pay damages. The ruling provides clear guidance on balancing urgency, procedural fairness, and judicial efficiency in appellate injunctions.

Read More »
16 11 月 ,2025 尚無留言

TOTAL FAILURE CONSIDERATION – FEDERAL COURT OVERRULES BERJAYA TIMES SQUARE: TOTAL FAILURE OF CONSIDERATION REDEFINED

In Lim Swee Choo & Anor v Ong Koh Hou @ Won Kok Fong [2025] 6 MLJ 327, the Federal Court unanimously overruled Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd and clarified that the doctrine of total failure of consideration applies only to restitutionary relief, not to contractual termination. The Court held that the correct test is whether the promisor has performed any part of the contractual duties in respect of which payment is due, adopting Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574. Finding that the appellants had partly performed their obligations and the respondent had derived benefits, the Court rejected the respondent’s claim for restitution and restored the appellants’ contractual claim. The landmark decision restores clarity between contract and restitution, reinforcing commercial certainty in Malaysian law.

Read More »
16 11 月 ,2025 尚無留言

CONTRACT (BILL OF LADING) – NO DUTY TO DETECT FRAUD: COURT CLEARS MAERSK OF LIABILITY FOR FALSE CONTAINER WEIGHTS

In Stournaras Stylianos Monoprosopi EPE v Maersk A/S [2025] 2 Lloyd’s Rep 323, the English Commercial Court held that carriers are not liable for fraudulent misdeclarations by shippers where bills of lading are issued for sealed containers. The Court ruled that Maersk had no duty to verify or cross-check declared weights against Verified Gross Mass (VGM) data under the SOLAS Convention, as its obligation under the Hague Rules extended only to the apparent external condition of cargo. However, the judgment signals that a limited duty of care could arise in future where a carrier is put on notice of fraud. For now, carriers may rely on shipper declarations, but consignees must exercise commercial vigilance and due diligence when relying on bills for payment.

Read More »
16 11 月 ,2025 尚無留言

EXEMPLARY DAMAGES – STATUTORY BODY DUTY – DAMAGES – OBTAINING APPROVAL

In Big Man Management Sdn Bhd v Tenaga Nasional Bhd [2025] 5 MLJ 290, the Federal Court reinstated nearly RM3.56 million in special damages and awarded RM100,000 in exemplary damages against TNB for wrongfully disconnecting electricity to an ice factory. The Court ruled that “strict proof” of special damages does not mean a higher burden beyond the civil standard of proof and affirmed that TNB, as a statutory monopoly, breached its statutory duty by using disconnection as leverage to collect payment. The judgment underscores that public utilities cannot misuse statutory powers, and consumers wrongfully deprived of essential services may be entitled to punitive remedies in exceptional cases.

Read More »
16 11 月 ,2025 尚無留言
zh_TWZH
en_USEN ms_MYMY zh_TWZH
× 联系我们