Security

Liens, cesser and deadfreight

Published 28 August 2026 · updated 22 September 2026

Winning the argument is the straightforward half. The hard half is collecting from a counterparty that may be a single ship company with no assets, in a jurisdiction where a judgment is worth nothing, months after the cargo has been sold on. Three charterparty devices exist to deal with that problem, and all three are more limited than their names suggest.

Three different rights, one word

Lien is used in shipping for at least three distinct things, and confusing them produces advice that is confidently wrong.

The national picture is not uniform, which is the point of the arrest conventions. The 1952 Brussels convention was the first attempt to reconcile the common law and civil law approaches; the 1999 convention widens the list of maritime claims to cover matters such as wreck removal, insurance premiums and brokerage, while expressly creating no new maritime liens. Not every trading state is party to either, and which list applies is decided by where the ship happens to be, which makes arrest a question of geography before it is a question of merit.

The lien on cargo, and its two failure modes

A voyage charter lien clause typically gives owners a lien on the cargo for freight, deadfreight, demurrage and damages for detention. It works by refusal: the ship holds the cargo, or holds it at the discharge port under her own control, until the money is paid.

The first failure mode is timing. A lien secures sums that are due when it is exercised. Where the charterparty makes demurrage payable a set number of days after completion of discharge, nothing is due while the cargo is still on board, and there is no lien to exercise at the only moment it could have worked. That is a drafting consequence, and it is decided at fixture rather than at the berth.

The second is that the cargo usually does not belong to the debtor. The owner is exercising a lien over a receiver's goods for a charterer's debt. Whether the bill of lading terms allow that, whether local law and the port authority permit it at all, and who pays the storage while the standoff runs are separate questions, and in some ports the receiver is a state entity against whom the lien is theoretical. A lien costs money every day it lasts, which is why it is more often threatened than used.

Lien on sub-freights and sub-hire

Charters commonly extend the lien to sub-freights and sub-hire: money owed by someone further down the chain to the party who owes you. It is not possessory at all. It is a right to intercept a payment, and it works only if asserted before the money moves. Once the sub-charterer has paid its counterparty in good faith there is nothing left to catch.

One further wrinkle is worth flagging rather than resolving: in some jurisdictions a lien on sub-freights granted by a corporate charterer has been analysed as a charge over book debts, with registration consequences if it is. That characterisation is a question for the governing law rather than for the clause.

Cesser, and why it is only as good as the lien

A cesser clause says the charterer's liability ceases on shipment of the cargo, usually once freight, deadfreight and demurrage accrued at the load port have been paid or secured. Read alone it looks like an escape hatch: the charterer walks away and the owner is left to chase cargo interests.

It is not read alone. Cesser clauses sit next to lien clauses and under English law the two are co-extensive: cesser operates only so far as the owner has an effective lien in substitution. If the lien cannot be exercised, or does not cover the sum in question, the charterer's liability revives for that sum. The presence of a lien clause on the page is not enough; the lien has to work.

Two corollaries follow. An owner asked to accept cesser should be asking whether the lien is exercisable in the discharge ports actually in the range, not in the abstract. And sums arising after shipment, such as discharge port demurrage, sit awkwardly with a clause drafted around liability ceasing on shipment, so the wording decides it.

Deadfreight is damages, not freight

Deadfreight is what an owner claims when the charterer fails to supply the full cargo quantity agreed. The name is misleading in a way that matters, because it is not freight: it is damages for breach of the obligation to furnish a full and complete cargo. Three consequences follow.

• The owner must mitigate. Unless the charterparty fixes a deadfreight rate, the claim is unliquidated and the measure is the freight that would have been earned on the shortfall less expenses saved, reduced by any substitute cargo the owner could reasonably have taken. Some tanker forms do fix a rate, which makes the claim liquidated and removes the argument.
• There is nothing to claim on a lump sum fixture. If freight is a lump sum payable regardless of quantity, a short loading does not reduce the earnings and there is no deadfreight.
• The contractual quantity is the minimum of a stated range. On a fixture for 50,000 to 55,000 tonnes in charterers' option, the obligation is to supply 50,000. The claim starts from there, not from the top of the range. Where the quantity carries an owner's option, the same logic runs in the other direction and the declared figure governs.

The other half of a deadfreight argument is causation, and it decides most of them. A shortfall because the charterer did not have the cargo is a charterer's breach. A shortfall because the ship could not lift what she was described as lifting is the owner's problem and can be a counterclaim. Which happened is settled by the loadable quantity calculation and the load port records, not by correspondence written afterwards.

What to get right at fixture

• Name the sums the lien covers, and include deadfreight and damages for detention expressly rather than relying on freight to carry them.
• Check when each sum falls due against the moment the lien would have to be exercised. A demurrage payment term measured from completion of discharge quietly disarms the lien.
• Extend the lien to sub-freights and sub-hire, and know that it must be asserted before payment moves.
• Do not accept cesser without an effective lien, and be specific about post-shipment sums.
• Record the quantity chain: the charterparty figure, the option, the declaration, the loadable quantity and the bill of lading figure. A deadfreight claim is arithmetic across those five numbers, and it is unarguable when they are all on file and unwinnable when they are not.

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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