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FREEHILL SUSTAINS EXERCISE OF LIEN ON DISCHARGED CARGO

On April 20, 2018 Freehill partners Mike Unger, Don Murnane and Manuel Molina, assisted by associate Mike Dehart, obtained an important decision from the U.S. District Court for the Northern District of New York, upholding a vessel owner’s right to exercise a maritime lien on cargo notwithstanding that the majority of the cargo had actually been discharged from the carrying vessel.

The M/V ORIENT DISPATCH was operating on charter to Spartan Materials LLC and substantial sums had become due for outstanding demurrage and other costs and expenses for which Charterer was responsible. After the vessel had discharged approximately 17,000 out of the 25,000 metric tons of her cargo of fly ash at Coeymans, N.Y., we obtained an order for the arrest of the entire cargo in rem in exercise of the vessel owner’s lien on the cargo for amounts due under the charter party and to secure the owner’s claims against the charterer in arbitration.

Spartan Materials moved to vacate the arrest of the 17,000 metric tons discharged before the order of arrest was issued and served, arguing that the vessel owner had unconditionally discharged and delivered that portion of the cargo, thereby losing its lien. While noting that prior to discharge there was a partial settlement agreement regarding certain sums which were past due, the court found that the vessel owner had never waived its lien by unconditionally delivering the cargo. Of particular importance to the court’s finding was that prior to commencement of discharge notice had been provided to the stevedore and warehouse operator that owner intended to maintain the lien over the cargo ashore. Thus, the arrest was preserved in full. Click here for the full decision.