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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.

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