## Facts

- A vessel owner time-chartered the *Amitie* to a charterer under a charter party providing the owner “a lien upon all cargoes, and for all sub-freights for any amounts due under this Charter.”
- The charterer subchartered the vessel to a voyage charterer/shipper for a Bangladesh-to-United States voyage, requiring the shipper to pay a fixed total amount of subfreights to the charterer.
- During the voyage, the charterer fell into arrears on charter hire owed to the owner.
- The shipper paid subfreights to the charterer as instructed under the voyage charter.
- Before the shipper paid, the owner sought to protect itself by demanding payment from the shipper based on an asserted assignment of subfreights from the charterer, but did not clearly notify the shipper that it was asserting a contractual lien on subfreights under the time charter.
- After the shipper had paid the charterer, the owner asserted a lien and threatened to withhold or divert the vessel; the shipper placed $150,000 in escrow to secure release and filed an admiralty action for declaratory relief that the lien was unenforceable.

## Issues

1. Whether a vessel owner may enforce a contractual lien on subfreights against a third-party obligor that paid subfreights to the charterer without receiving actual notice of the lien before payment.

## Decision

- The Fourth Circuit affirmed judgment for the shipper.
- A contractual lien on subfreights is enforceable against a third-party obligor only if the owner gives the obligor actual notice of the lien before the obligor pays the charterer.
- Because the owner failed to provide actual, unequivocal notice of the lien before the shipper paid the charterer, the shipper’s payment discharged its obligation and extinguished the lien as to those subfreights.

## Legal Principles

- A lien on subfreights created by charter party is a contractual security device, not an automatic maritime lien supplied by general maritime law.
- Actual notice to the third-party freight obligor is a prerequisite to enforcing a contractual lien on subfreights against that obligor after payment becomes due.
- Absent such notice, a third party may discharge its freight obligation by paying the charterer under the governing subcharter, without exposure to later collection by the owner for the same freight.
- General awareness of a payment dispute, or the charterer’s knowledge that it granted a lien, does not substitute for clear notice to the third-party obligor that the owner is asserting the lien and expects payment accordingly.
- The notice requirement aligns with commercial assignment principles: without notification, an account debtor’s payment to the original obligee generally discharges the debt.

## Conclusion

The court held that an owner’s contractual lien on subfreights cannot be enforced against a subcharterer or shipper that paid the charterer without actual notice of the lien before payment, and it therefore affirmed declaratory relief for the shipper.


Finora Co. v. Amitie Shipping, Ltd., 54 F.3d 209 (4th Cir. 1995)