Abstract: In the globalized trade environment, maritime cargo transportation is a core component of international trade. As a statutory security interest, the lien provides carriers with a legal mechanism to ensure the realization of their claims. However, the legal relationships involved in maritime cargo transportation are complex, often involving multiple rights and obligations, leading to confusion in the exercise of maritime cargo liens. With the rapid development of my country's maritime transport and the promulgation and implementation of the Civil Code of the People's Republic of China (hereinafter referred to as the "Civil Code"), disputes regarding maritime cargo liens have intensified in practice. This article aims to specifically explore the conditions for exercising maritime cargo liens through interpretation of legal provisions and practical analysis, hoping to provide a reference for relevant legal practice and academic research.
Keywords: Maritime cargo transportation; carrier; cargo lien
I. Comparison of Carrier Lien Rights in the Civil Code and the Maritime Law
The lien rights in the Civil Code are mainly stipulated in the Property Law and Contract Law sections. Article 836 of the Civil Code stipulates the carrier's lien under general transport contracts: "If the shipper or consignee fails to pay freight, storage fees, or other charges, the carrier shall have a lien on the corresponding transported goods, unless otherwise agreed by the parties." Article 87 of the Maritime Law of the People's Republic of China (hereinafter referred to as the "Maritime Law") stipulates: "If the freight, general average contribution, demurrage, necessary expenses advanced by the carrier for the goods, and other charges payable to the carrier are not paid in full, and no appropriate security has been provided, the carrier may retain the goods to a reasonable extent."
Comparing the two, it can be found that the provisions of the Maritime Law and the Civil Code regarding the carrier's lien both fall under the category of broad liens, thus sharing many similarities. In conjunction with the general provisions on general liens in the Property Law section of the Civil Code, the establishment of a carrier's lien requires: First, the carrier's lawful possession of the liened goods. Legitimate possession refers to a creditor's possession of movable property with a legal basis, also known as possession with a legitimate reason. A legitimate reason includes both legal acts and the law itself, such as possession by an agent without mandate. Second, the debtor fails to perform a due debt. If the carrier's claim is not yet due, but the deadline for delivery of the goods has arrived, the carrier's deliberate delay in delivery constitutes an infringement. In this case, the carrier cannot exercise a lien solely based on meeting the formal requirements of a lien. Third, the extent to which the carrier exercises a lien should be commensurate with the debt. Article 836 of the Civil Code states "corresponding transported goods," while Article 87 of the Maritime Law states "within reasonable limits." Although the wording differs, the meaning is the same: both require the value of the liened goods to be commensurate with the amount of the debt, and not to exceed it excessively.
Compared to the Civil Code, the Maritime Law has a stronger maritime focus; therefore, its provisions regarding the carrier's lien also differ. For example: First, under the *Maritime Law*, the principal debt secured by a carrier's lien includes freight, general average contribution, demurrage, necessary expenses advanced by the carrier for the goods, and other expenses payable to the carrier. Under the *Civil Code*, the principal debt secured by a general carrier's lien includes freight, storage fees, or other expenses. Second, under the *Civil Code*, a general carrier can claim a lien on the debtor's movable property, but under the *Maritime Law*, a lien can only be made on goods owned by the debtor.
Due to the complex relationships in international maritime transport, the *Maritime Law* increasingly exhibits inconsistencies with the *Civil Code* in practical application.
II. The Dilemma of Implementing Lien for Maritime Goods
my country's *Maritime Law* incorporated some content and concepts from Anglo-American law during its drafting. However, my country's civil and commercial law is based on a codified legal system. Furthermore, deviations in the understanding of some conventions during legislation have led to ambiguities or vagueness in some clauses, resulting in problems that continue to manifest in maritime judicial practice.
(I) Lack of Rights and Obligations of the Actual Carrier
According to the Maritime Law, a "carrier" is a person who, either personally or through an agent, enters into a maritime cargo transportation contract with a shipper. An "actual carrier" is a person who, entrusted by the carrier, engages in the transportation of goods or part of the transportation, including others who are sub-entrusted to do so. Based on the above legal provisions, there are contractual carriers and actual carriers under the Maritime Law. Normally, a maritime cargo transportation contract has only one contractual carrier. However, in maritime practice, carriers often entrust a third party to carry out the specific cargo transportation activities, which results in the possibility of multiple actual carriers, each acting on behalf of the carrier to carry out part or all of the transportation under the contract.
The actual carrier does not always appear in the transportation contract; it is often based on the entrustment of the contractual carrier, including sub-entrustment relationships. However, it may become a creditor for the various fees listed in Article 87 of the Maritime Law. Article 61 of the Maritime Law stipulates: "The provisions of this chapter regarding the carrier's liability apply to the actual carrier." It is clear that although the Maritime Law mentions that the carrier's liability applies to the actual carrier, it does not explicitly specify the rights and obligations of the actual carrier.
In the case of Shandong Xianglong Industrial Group Co., Ltd. v. Northern Shipping Co., Ltd. and Jinyuan Shipping Co., Ltd. concerning a maritime cargo transportation contract dispute, the Supreme People's Court pointed out that, to protect the rights and interests of bona fide third parties holding bills of lading, Article 69, Paragraph 2 of the Maritime Law stipulates: "The shipper and the carrier may agree that the freight shall be paid by the consignee; however, such agreement shall be stated in the transport documents." The bill of lading in question did not state that the freight was to be paid by the holder of the bill of lading. Although the bill of lading incorporates the freight terms of the charter party dated May 18, 2011, the charterer under that charter party is Lanyang Company, meaning Lanyang Company is the charterer obligated to pay freight. The inclusion of these terms in the bill of lading does not alter their meaning, and the party obligated to pay freight under the freight terms does not change to the bill of lading holder. The bill of lading holder, Xianglong Company, has no obligation to pay freight under this bill of lading. Since the freight claimed by Northern Shipping Company is the freight stipulated in the charter party dated May 18, 2011, between Northern Shipping Company and Lanyang Company, the shipper on the bill of lading, PT Company, also has no obligation to pay freight to Northern Shipping Company. After the bill of lading is transferred to a third party, the goods transported by the carrier no longer belong to the shipper. Therefore, the lien clause does not comply with Article 87 of the Maritime Law and cannot produce the legal effect of exercising a lien.
Under current law, the possession of goods is a necessary condition for the establishment of a lien on maritime cargo owned by the debtor; therefore, the actual carrier lacks a legal basis for retaining goods. Even in cases where there is an agreement between the parties, a lien on goods cannot be created arbitrarily, which is clearly very disadvantageous for the carrier.
(II) Unclear Ownership of the Lien
With the promulgation and implementation of the Civil Code, the ownership of the liened goods in maritime cargo liens has become a highly controversial topic. In practice, the exercise of liens often involves complex legal relationships and a balance of interests; resolving this issue is crucial for clarifying the scope of application of liens.
Regarding the interpretation of the phrase "its goods" in Article 87 of the Maritime Law, there are two main viewpoints. One viewpoint holds that "its" should be interpreted literally, meaning that the carrier's lien must be limited to goods owned by the debtor. The Supreme People's Court, in its "Minutes of the National Symposium of Presidents of Maritime Courts," pointed out that in coastal and inland waterway cargo transportation, if the shipper or consignee fails to pay freight, storage fees, and other transportation costs, the carrier has a lien on the corresponding transported goods in accordance with the provisions of the Contract Law of the People's Republic of China, unless otherwise agreed between the parties. However, in maritime cargo transportation between ports outside the People's Republic of China, if, in accordance with the relevant provisions of the Maritime Law, the freight, general average contribution, demurrage, necessary expenses advanced by the carrier for the goods, and other expenses payable to the carrier are not paid in full, and no appropriate security has been provided, the carrier may retain the debtor's goods within reasonable limits. In judicial practice, attention should be paid to the different provisions made by different laws regarding the exercise of liens. This interpretation emphasizes that the carrier can only retain goods belonging to the debtor. This provision mainly applies to transportation under bills of lading. The rationale for this interpretation lies in protecting the interests of bona fide third parties holding bills of lading, thereby promoting the circulation of bills of lading and realizing their important role in international trade. However, considering the aforementioned case of Shandong Xianglong Industrial Group Co., Ltd. v. Northern Shipping Co., Ltd. and Jinyuan Shipping Co., Ltd. regarding a maritime cargo transportation contract dispute, its limitation lies in the fact that, with the circulation of bills of lading and the intricate nature of transportation relationships, it is generally difficult for the carrier or actual carrier to determine the owner of the goods. In such cases, how can the carrier's rights be protected? Another view draws an analogy between Article 87 of the Maritime Law and Article 836 of the Civil Code regarding the carrier's lien under a general transportation contract. According to this article, when a debtor fails to perform a due debt, the carrier has a lien on the corresponding transported goods. Furthermore, considering Article 447 of the Civil Code, which states that "If a debtor fails to perform a due debt, the creditor may retain the debtor's movable property that it has lawfully possessed and has the right to priority payment from that movable property," and Article 62 of the Interpretation of the Guarantee System of the Civil Code, which states that "A creditor may retain the movable property lawfully possessed by a third party due to the same legal relationship and claim priority payment from that retained property," it is clear that the Civil Code does not limit the carrier's retention of property under a transport contract to the debtor's ownership. Therefore, some argue that Article 87 of the Maritime Law should also be consistent with the legislative intent of the Civil Code, and that "its" does not refer to ownership by the debtor.
With the development of modern container shipping, freight forwarders play an increasingly important role in international maritime cargo transport. Under current Chinese law, international freight forwarding companies registered as independent operators, i.e., non-vessel operating common carriers (NVOCCs), have the right to issue bills of lading. In this case, they are parties to the transport contract corresponding to the cargo owner, and also the shipper to the actual carrier. In this situation, limiting the carrier's right to retain goods to the debtor's possession would likely negatively impact the protection of the carrier's rights. Therefore, removing the "its" before "goods" to relax restrictions on ownership of the subject matter of the lien would provide a more flexible and comprehensive protection of the carrier's rights.
(III) Unclear Scope of "Reasonable Limits"
Maritime law, as a special law of civil and commercial law, is not simply subordinate to civil and commercial law but possesses relative independence. According to Article 87 of the Maritime Law, the carrier may retain goods within reasonable limits to ensure the repayment of freight, general average contributions, demurrage, and necessary expenses advanced by the carrier for the goods. This article is more lenient than the Civil Code's provisions on the conditions for exercising liens; it does not explicitly require that the retained goods belong to the same legal relationship as the debt, nor does it provide a detailed explanation of "reasonable limits."
Therefore, the original intent behind the establishment of liens must be considered. The right of retention in civil law originated from the right of malicious defense in ancient Roman law. It refers to a creditor's right to refuse performance and does not have the effect of a property right. This also means that there should be a connection between the carrier's possession and its claim. There are two main academic views on the interpretation of this connection: one view holds that the carrier's claim against the debtor exercising a maritime cargo retention right exists based on the same legal relationship as the counterparty's claim for the return of the retained goods, similar to the relevant provisions of the German Civil Code. The other view holds that the retained goods are the cause of the claim, arguing that the claim is related to the retained goods. This view is reflected in the Japanese Civil Code and the Swiss Civil Code, namely, when a creditor possesses another's property, if the claim arises from the possessed property, the creditor can exercise a retention right on the goods before receiving payment. Combined with relevant provisions of Chinese law, this manifests as civil retention and commercial retention. Under the premise of applying civil liens, the goods retained by the carrier must belong to the same legal relationship as the debt. However, whether this "same legal relationship" refers to the same type of legal relationship or the same contractual relationship is crucial to clarifying the limit of the lien. In fact, in international maritime cargo transportation, carriers, shippers, and consignees generally participate in transportation in a commercial capacity. Therefore, the traditional tripartite relationship in maritime law is more reflected in the legal relationship between commercial entities. This means that a carrier can apply a commercial lien to retain cargo owned by the debtor on other voyages for the cost of one voyage, provided that the "other voyages" are overdue and the cargo is in the carrier's lawful possession. However, this provision means that the carrier's exercise of the lien is not limited to goods directly related to the debt, and the value of the retained goods may not be commensurate with the value of the voyage freight. For example, in the following situation: the debtor owes freight for several voyages, and then the carrier retains cargo on one voyage exceeding the value of that voyage's freight, which is clearly very unfair to the debtor.
IV. Suggestions for Improving the Cargo Lien System in Maritime Transport
(I) Clarifying the Rights and Obligations of Actual Carriers
The Hamburg Rules introduced the concept of actual carriers for the first time, clarifying their legal status and responsibilities. Actual carriers are typically those who, entrusted by a carrier, engage in the transport of goods or part of the transport. They have an agency relationship with the carrier, but no direct contractual relationship with the shipper.
my country's Maritime Law does not explicitly stipulate the rights and obligations of actual carriers, only providing vague provisions in Article 61. Literally, this article only stipulates that the actual carrier's responsibilities are subject to the carrier's relevant regulations, while the carrier's obligations, rights, and exemptions do not actually apply to the actual carrier. From a legal perspective, this article only stipulates the actual carrier's responsibilities, while the actual carrier does not enjoy the carrier's obligations, rights, and exemptions, which is highly unreasonable and contrary to the original legislative intent. Rights, obligations, and exemptions should complement responsibilities, and should not be borne unilaterally by one party. It should also be noted that the provisions of the Maritime Law regarding the rights and obligations of carriers do not all apply to actual carriers and should be treated differently. Therefore, the provisions of the Maritime Law regarding actual carriers are significantly inadequate and need to be revised and clarified. Furthermore, the author believes that the rights and obligations of actual carriers in maritime cargo transportation contracts should be subject to the various rights, obligations, and exemptions of the carrier. Although many complex details in practice require further clarification, achieving equivalence between the rights and obligations of actual carriers and the carrier is of significant positive importance and requires further careful consideration from legislators to provide clearer regulations.
(II) A Clear Definition of "Goods" in Article 87 of the Maritime Law
While Anglo-American law grants shipowners "continued possession of the goods carried on their ships at the port of discharge as security for freight and other charges," it does not emphasize that the goods must belong to the debtor. "English law does not need to examine the ownership behind the lien because it recognizes contractual liens and allows parties to establish liens on goods by contractual agreement." In maritime practice, a large number of waybills serve as transport documents, and many of these are resold. Especially in maritime commercial transactions, buyers often resell goods that are still in transit but not yet received to third parties. Carriers often find it difficult to determine the final consignee when accepting the goods. In such cases, if the lien on the goods is only established if the goods belong to the debtor, the carrier's right to retain the goods can easily become meaningless.
This would clearly be detrimental to the development of economic trade, and the rights and interests of carriers would not be protected.
Therefore, based on the special characteristics of the maritime transport industry and the special provisions regarding liens in the Contract Law section of the Civil Code, this author suggests deleting the word "its" from "its goods" to align its meaning with the current Civil Code. This would allow the carrier to legally possess the goods it transports, which would better protect the legitimate rights and interests of carriers, enhance the credibility of my country's foreign trade, and maintain the credibility of the implementation of Chinese law.
This author believes that maritime cargo liens are more similar to commercial liens. Regarding commercial liens, Article 62, Paragraph 3 of the Supreme People's Court's Interpretation on the Application of the Guarantee System in the Civil Code of the People's Republic of my country imposes restrictive provisions. Specifically, the movable property liened between enterprises is not the same legal relationship as the debt. If a creditor lies with the property of a third party, and the third party requests the creditor to return the liened property, the People's Court should support this request. This article, while relaxing the requirements for liens between enterprises, protects the property rights of third parties by restricting the exercise of liens, thus preventing the abuse of commercial liens. In conclusion, although the exercise of the lien on goods under the Maritime Law may involve the retention of the debtor's property in certain circumstances, according to the spirit and legal principles of the Civil Code, and considering the interconnectedness of commercial liens, the lien should be on property lawfully possessed by the debtor. The movable property retained between enterprises is not the same legal relationship as the debt, but if the creditor retains the property of a third party other than the debtor, and the third party requests the creditor to return the retained property, the creditor should return it. This provision protects the legitimate rights and interests of the creditor and avoids undue harm to the interests of third parties, reflecting the fairness and rationality of the law.
(III) Clarifying the Reasonable Limits of Lien Property
Article 836 of the Civil Code makes special provisions regarding the carrier's lien on goods: "If the consignor or consignee fails to pay freight, storage fees, or other expenses, the carrier shall have a lien on the corresponding transported goods, unless otherwise agreed by the parties." This article is clearer, explicitly expanding the scope of the carrier's lien to "the corresponding goods." The author believes that, following the provisions of the Civil Code, Article 87 of the Maritime Law should change "reasonable limits" to "corresponding goods."
"Corresponding goods" should also be considered in two different scenarios. First, in the case of civil lien, the "same legal relationship" applies. Here, "same legal relationship" should be interpreted as a single contractual relationship, not a single type of legal relationship. The main reason is that, compared to other security interests, liens are given higher legal effect and priority. According to Article 62, Paragraph 1 of the "Interpretation of the Supreme People's Court on the Application of the Security System in the Civil Code of the People's Republic of China," under the same legal relationship, even the ownership of the liened property by a third party is excluded. If the creditor is allowed to arbitrarily retain property unrelated to its claim, it may harm the legitimate rights and interests of other secured creditors on that property, and would lack legitimacy. Therefore, in the case of civil lien, the goods retained by the carrier should be related to the principal debt, such as the outstanding transportation fees. The freight charges owed to a carrier should arise from the goods transported on that voyage, and not from previous freight charges settled on a rolling basis. The carrier can only retain goods corresponding to the freight charges for the specific voyage owed by the debtor. This is to ensure the debtor's property safety and fair interests. Otherwise, it would lead to confusion in legal relationships and violate the principle of fairness in civil law. In commercial liens, the liened goods can encompass not only the same legal relationship but also transcend it. In such cases, the scope of the liened goods must still be limited to goods commensurate with the unpaid transportation fees. Here, "commensurate with the transportation fees" should be understood as goods equivalent to the value of the voyage's freight charges.
Furthermore, how to control the liened goods within reasonable limits is also a problem that needs to be addressed in practice. Article 450 of the Civil Code stipulates: "If the property subject to lien is divisible, the value of the property subject to lien shall be equivalent to the amount of the debt." This article can also be applied to the determination of the limit of lien on maritime cargo. If the property subject to lien is divisible, the scope of the property subject to lien shall be determined by the amount of the debt. Although the law does not directly provide specific provisions for the exercise of lien rights on indivisible property, it can be inferred from the indivisibility of security interests. The indivisibility of security interests means that regardless of whether the debt is partially extinguished or the collateral is partially lost, the creditor can still exercise rights over the entire collateral for the outstanding debt. Therefore, for indivisible property, the creditor can exercise a lien on the entire property to secure the realization of its claim. For indivisible property, a lien can be exercised on the entire property.
V. Conclusion
Maritime law has developed along with maritime trade... Emerging from the rise and development of maritime trade, the right of retention of goods in maritime transport is highly technical and internationally relevant. However, as my country is a country with codified law, it inevitably lags behind the continuous development of maritime practices. This paper provides an in-depth analysis of the legal basis of maritime cargo liens and proposes suggestions for improving the lien system. However, the research is limited in that it does not cover all relevant international conventions and domestic legal provisions. Future research could further explore the international applicability and coordination of maritime cargo liens, striving to resolve disputes over maritime cargo liens using principles of fairness, impartiality, and reasonableness. The aim is to align domestic and international legislative practices, enhance my country's credibility in international maritime trade, strengthen judicial credibility in resolving international maritime economic disputes, and thus better and more effectively promote my country's "Belt and Road" economic strategy.
Published September 2024