In Samsun Logix Corporation v Oceantrade Corporation; Deval Denizeilik VE Ticaret A.S. v Oceantrade Corporation and another – Butterworths Law Direct 18.10.07 the Defendant in both cases was subject to Chapter 11 proceedings in the US.
The first dispute arose under a time charterparty and in August 2005 the Claimant ( Samsun) obtained a without notice worldwide freezing order which made specific reference to sums due under the voyage charter in respect of the vessel which was the subject of a time charter party between the Defendant and the Claimant in the second action ( Deval).
The freezing order was varied and payment under that voyage charter was made into the account of a firm of solicitors to be held in that account and paid only to the owners of the second vessel or in the ordinary course of the Defendant’s business.
Samsun’s disputes were referred to arbitration and Samsun obtained permission to enforce the resulting award as if it was an order or judgment of the court.
In the second dispute, the Claimant (Deval) had chartered the vessel on an amended NYPE form, clause 18 of which provided for the owners to have a lien upon all cargoes, and all sub-freights for any amounts due thereunder. Deval purported to exercise its rights under the cl 18 lien against the monies paid into the solicitor’s account. At the end of September 2005, Deval obtained a freezing injunction against the Defendant and began London arbitration seeking damages and a declaration that it was entitled to a lien over sub-freights. The arbitrator found in favour of Deval.
Samsun applied to the court to determine the issue of Deval's purported lien over the freight monies and required payment by the solicitors to Samsun.
Although there was no question of the court ordering out any payment of the funds, the Commercial Court held that its decision, though not binding in the US, would be of assistance.
It held that the cl 18 lien created rights only as between the parties to the contract in which it was contained. The arbitrator's decision was only valid as between the parties to the arbitration. The Deval award did not, therefore, preclude further argument as between Deval and Samsun.
As between Deval and Samsun, the former had not validly exercised its cl 18 lien. By the time Deval purported to exercise the lien, it was too late, the sub-freights in question having already been paid by the voyage charterers to the solicitors, as agents for the Defendant. Therefore, under English law, Deval did not enjoy priority over Samsun to the funds.