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16 Jul 2013

The Lehmann Timber: a landmark decision on the carrier's lien


Marine and international trade briefing note

In The Lehmann Timber (a case in which Stephenson Harwood acted for the successful shipowners) the Court of Appeal has handed down a landmark judgment concerning the exercise of a lien over cargo. It is one which will be warmly welcomed by shipowners and P & I Clubs.

The judgment deals with two issues, one which applies generally to any lien over cargo and one which relates to a lien in respect of GA contributions. The Court of Appeal decided that:

  1. where owners discharge cargo but maintain their lien - for example, where they warehouse the cargo - they are entitled at common law to recover the expenses of exercising the lien. (This principle is of general application, but there is a possible exception in the case of an "artificer's lien", that is, a lien granted to a party who has carried out work on a chattel.) 2 owners are entitled to exercise a lien in respect of GA in circumstances where a GA guarantee has been provided by insurers, but no GA bond has been provided by the consignees.
  2. The ruling in respect of the expenses of exercising a lien is one of particular importance. Storage expenses can be substantial - in the present case they exceeded $1m - and it was an issue where the law had been unclear until now. Some commentators had expressed the view that such expenses were not recoverable at common law, and that was what the High Court had decided in this case. This left shipowners in the difficult position of having to retain the cargo on board the ship indefinitely or discharge the cargo and lose the lien. In deciding that such expenses are, in fact, recoverable the Court of Appeal has made the exercise of a lien a much more attractive course to be adopted by a shipowner who is owed money.

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