Security

Liens, cesser and deadfreight

Published 28 August 2026 · updated 17 October 2026

Winning the argument is the easier part. Getting paid is the harder part. The other party may be a company that owns one ship and has no other assets. It may be in a country where a court judgment is worth nothing. And the cargo may have been sold to someone else months ago. The charterparty (the charter contract) has three tools for this problem. All three do less than their names suggest.

Three different rights, one word

Shipping uses the word lien for at least three different things. A lien is a right to hold or claim against property until a debt is paid. If you mix up the three kinds, you get advice that sounds certain and is wrong.

Countries do not all follow the same rules. That is why the arrest conventions exist. The 1952 Brussels convention was the first attempt to bring the common law and civil law systems together. The 1999 convention adds more maritime claims to the list, such as wreck removal, insurance premiums and brokerage. It clearly states that it creates no new maritime liens. Not every trading country has signed either one. The list that applies depends on where the ship is at the time. So whether you can arrest a ship depends first on geography, and only then on whether your claim is good.

The lien on cargo, and its two weaknesses

A lien clause in a voyage charter usually gives owners a lien on the cargo for freight, deadfreight, demurrage and damages for detention. It works by refusing to hand over the cargo. The ship keeps the cargo, or keeps it under its own control at the discharge port, until the money is paid.

The first weakness is timing. A lien only secures money that is due at the moment the lien is used. Some charterparties make demurrage payable a set number of days after discharge is finished. Then nothing is due while the cargo is still on board. So there is no lien to use at the only moment it could have worked. This follows from how the clause is written, and it is decided when the deal is made, not at the berth.

The second is that the cargo usually does not belong to the debtor. The owner is holding a receiver's goods because of a charterer's debt. Several separate questions follow. Do the bill of lading terms allow this? Do local law and the port authority allow it at all? Who pays for storage while the dispute goes on? In some ports the receiver is a state company, and the lien cannot be used in practice. A lien costs money every day it lasts. That is why owners threaten it more often than they use it.

Lien on sub-freights and sub-hire

Charters often extend the lien to sub-freights and sub-hire. This is money that someone further down the chain owes to the party that owes you. It does not depend on holding anything. It is a right to stop a payment and take it. It only works if you claim it before the money is paid. Once the sub-charterer has paid the party it owes in good faith, there is nothing left to take.

One more point is worth noting, though this page does not settle it. In some countries, courts have treated a lien on sub-freights given by a company charterer as a charge over book debts. If it is one, it may need to be registered. That depends on the law that governs the contract, not on the clause itself.

Cesser, and why it depends on the lien

A cesser clause says the charterer's liability ends when the cargo is shipped. Usually this applies once freight, deadfreight and demurrage earned at the load port have been paid or secured. On its own, it looks like a way for the charterer to escape liability: the charterer is released, and the owner has to claim from the cargo owners instead.

But the clause is not read on its own. Cesser clauses sit next to lien clauses. Under English law they are read together: cesser only works as far as the owner has a working lien in its place. If the lien cannot be used, or does not cover the amount in question, the charterer is liable for that amount again. It is not enough for a lien clause to be in the contract. The lien has to work.

Two things follow. An owner asked to accept cesser should ask whether the lien can actually be used at the discharge ports in the deal, not in theory. And amounts that arise after shipment, such as demurrage at the discharge port, do not fit well with a clause that ends liability on shipment. The exact wording decides those cases.

Deadfreight is damages, not freight

Deadfreight is what an owner claims when the charterer does not supply the full cargo quantity agreed. The name is misleading, and this matters: it is not freight, but damages for breaking the promise to supply a full cargo. This has three results.

• The owner must mitigate, which means take reasonable steps to reduce the loss. If the charterparty sets no deadfreight rate, the amount is not fixed in advance. It is the freight the owner would have earned on the missing cargo, minus the costs saved, and minus any replacement cargo the owner could reasonably have taken. Some tanker contract forms do set a rate. That fixes the amount and ends the argument.
• There is nothing to claim on a lump sum fixture. If freight is one fixed amount paid whatever the quantity, loading less cargo does not reduce the owner's earnings, so there is no deadfreight.
• The contract quantity is the lowest figure in a stated range. On a fixture for 50,000 to 55,000 tonnes in charterers' option, the charterer must supply 50,000. The claim starts from there, not from the top of the range. If the quantity is in the owner's option, the same logic works the other way and the declared figure applies.

The other half of a deadfreight argument is cause, and it decides most of them. If cargo was short because the charterer did not have it, the charterer broke the contract. If cargo was short because the ship could not carry what it was described as carrying, that is the owner's problem and can lead to a counterclaim. Which one happened is shown by the loadable quantity calculation and the load port records, not by emails written afterwards.

What to get right at fixture

• Name the amounts the lien covers. Include deadfreight and damages for detention by name. Do not rely on the word freight to cover them.
• Check when each amount becomes due and compare it with the moment the lien would have to be used. A demurrage payment term counted from the end of discharge makes the lien useless without anyone noticing.
• Extend the lien to sub-freights and sub-hire, and remember that you must claim it before the payment is made.
• Do not accept cesser without a working lien, and be specific about amounts that arise after shipment.
• Record the quantity chain: the charterparty figure, the option, the declaration, the loadable quantity and the bill of lading figure. A deadfreight claim is a sum across those five numbers. When all five are on file, the claim is hard to dispute. When they are not, the claim cannot be won.

References

• Gard, Demurrage: lien and cesser clauses. gard.no
• The Shipowners' Club, Deadfreight: the basics. shipownersclub.com
• West of England P&I Club, Deadfreight in a nutshell. westpandi.com
• Steamship Mutual, The Arrest Convention. steamshipmutual.com

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