More unwanted cargo.

The Bao Yue [2015] EWHC 2288 (Comm), is another case of nobody wanting to take delivery of the cargo when it gets to its destination. What’s a shipowner to do?

The case involved a shipment of iron ore from Iran to China under a bearer bill of lading. Due to a dispute between the seller and the buyer nobody came forward to take delivery in China and the shipowner arranged for the cargo to be discharged into a warehouse under a contract which gave the warehousekeeper a lien for unpaid storage charges. The shipper, who had retained the original bill of lading, sued the shipowner for conversion, in allowing the creation of a lien over the cargo in favour of a third party, the warehousekeeper, alternatively for denying it access to the cargo.

Both claims failed. The bill of lading expressly provided for the discharge and storage of the cargo and in any event there would have been an implied right on the part of the shipowner to do so if delivery was not taken by the bill of lading holder. It was a foreseeable incident of the right to store the cargo that a lien would be created in favour of the warehousekeeper. The shipper had therefore impliedly authorised the creation of the lien. The Commercial Court also held that there was no denial of access as the shipper could still obtain the cargo by presenting the bill of lading and by paying the storage charges which by now amounted to US$2m.

The shipowner successfully counterclaimed the cost of the storage charges and obtained an order that the shipper deliver an original bill of lading to it to enable it to sell the cargo.

A small footnote. The summary on Westlaw is inaccurate in that it refers to the defendant being the shipper, rather than the shipowner.

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