The shipping industry was faced with the largest container
shipping bankruptcy with Hanjin filing for bankruptcy protection on
31 August 2016. In addition to the global effects triggered by the
bankruptcy, the Turkish market was directly effected as a number of
vessels owned by Turkish shipowners were on time-charter to
Our practice has in the past few months observed a significant
increase in work related to the repudiation of time-charterparties
and with this article, we aim to draw a general picture of remedies
that are offered by Turkish Law to owners in this regard.
In general, Turkish law provides the following options to a
shipowner to claim and secure hire and other receivables that are
due and outstanding under a time charterparty:
Right of detention on movable assets and negotiable instruments
(such as bills of lading, cheques and bonds) owned by the
Right of lien over any freight payable to the charterer,
Right of detention over cargo to secure the lien described in
There are a few points worthy of attention in assessing whether
an exercisable right of lien/detention exists. First and most
importantly, the party owing freight to the time-charterer is
discharged from liability to pay freight if he makes payment to the
time-charterer before he comes on notice of the existence of the
owners' claim and its right of lien. In such a case, the rights
described under (2) and (3) cannot be exercised by the owner.
Secondly, even if freight is yet to be paid to the charterer,
before assessing whether the rights described under (2) and (3) can
be exercised, it must be determined against whom such rights will
be directed. If a demand for delivery of the goods by a receiver
who is not privy to the contract of carriage has not yet been made,
the right of detention would have to be directed against the
shipper of the goods. In such a case, it is simpler as a matter of
Turkish law for the owner/carrier to exercise the right of
On the other hand, exercising a right of lien over the cargo
against a third party holder of a bill of lading is not that
straightforward under Turkish law. To elaborate, the receiver who
is a third party holder of a bill of lading is only liable to pay
freight or demurrage if the bill of lading or other document under
which delivery of the cargo is sought stipulates that freight and
demurrage shall be payable by the receiver. This is one of the
protective provisions implemented by the Turkish Commercial Code
("TCC") (entered into force in July 2012) to protect
third party holders of bills of lading, namely Turkish importers.
This protection offered by the TCC can also be observed when
attempting to determine what constitutes the terms of the bill of
lading held by the receiver and how they can be enforced against
Hoping that the shipping industry escapes as best as it can, the
adverse impact evidenced by the bankruptcy of a major player, we
believe the remedies described above may usefully be employed by
those suffering parties in minimising their exposure.
Originally published 18 October 2016
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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