## Facts

- World Imports, Ltd. and related entities imported furniture for resale and used OEC Group New York, a non-vessel-operating common carrier, to arrange ocean transportation for about five years.
- In 2009, World Imports executed a credit application incorporating OEC’s terms, including a lien clause providing OEC a lien on all of World Imports’ cargo in OEC’s possession and stating the lien would “survive delivery” and secure existing and future indebtedness.
- By the time World Imports filed for Chapter 11 bankruptcy, it owed OEC unpaid freight and related charges for earlier shipments that had already been delivered.
- At the petition date, OEC controlled a current shipment of World Imports’ cargo awaiting release.
- OEC asserted a lien on the current cargo both for charges on that shipment and for the unpaid charges from prior, delivered shipments, and sought relief from the automatic stay to retain the cargo as security.
- The bankruptcy court and district court rejected OEC’s position, reasoning that unconditional delivery of earlier cargo waived any maritime lien and that the lien could not be extended to new cargo by contract.
- During the appeal, OEC released the current cargo pursuant to bankruptcy court orders, prompting a dispute over mootness.

## Issues

1. Whether the appeal was moot after OEC released the cargo during the appeal.
2. Whether maritime law permits enforcement of a contractual cargo lien that “survives delivery” and attaches to later cargo to secure unpaid freight for earlier, delivered shipments.
3. Whether delivery of prior cargo necessarily implied waiver or extinguishment of the freight lien notwithstanding the parties’ agreement.

## Decision

- The Third Circuit held the appeal was not moot because the court could still grant effectual relief despite the cargo’s release.
- The court held the contractual lien provision was enforceable under maritime law and allowed transfer/extension of unwaived liens from prior shipments to current goods of the same customer in the carrier’s possession.
- The court reversed the district court’s judgment affirming the bankruptcy court and remanded for further proceedings consistent with recognition of OEC’s lien rights.

## Legal Principles

- A case is not moot merely because the status quo cannot be restored; it is moot only if no effectual relief can be granted.
- Maritime law recognizes carriers’ liens for unpaid freight, and waiver is not lightly inferred.
- Delivery does not imply waiver where the parties, by clear advance agreement, provide that the carrier’s lien survives delivery.
- A contractual arrangement that continues a lien through substitution of collateral (from earlier cargo to later cargo of the same customer) may be enforced when clearly stated and not barred by statute or strong public policy.
- In bankruptcy, such a contract-based maritime lien may be recognized as an enforceable secured interest, subject to appropriate proceedings on remand.

## Conclusion

The Third Circuit concluded that OEC’s appeal remained live and that clear contractual language can preserve a maritime freight lien through delivery and allow it to attach to later-held cargo to secure unpaid charges from earlier shipments, requiring reversal and remand for relief consistent with that lien.


World Imports, Ltd. v. OEC Grp. N.Y. (In re World Imports, Ltd.), 820 F.3d 576 (3d Cir. 2016)