Kirgan Holding SA v. The “Panamax Leader”

In this case the Plaintiff had entered into a contract with the agent for the demise charterer of the Defendant ship for the supply of bunkers. The contract contained a provision requiring the application of U.S. law. Bunkers were supplied to the ship by sub-contractors of the Plaintiff and were not paid for by the demise charterer who became bankrupt. The Plaintiff therefore commenced this proceeding and arrested the defendant ship. The Defendant, the owner of the Defendant ship argued that they were not a party to the contract and that the Plaintiff had no right to a lien over the vessel. The Judge applied U.S. law and held that the demise charter had the presumed authority to bind the ship and to assert a lien unless the Plaintiff had been specifically notified otherwise. The Defendant relied upon a prohibition of lien clause in the charter party and on notices of the prohibition of lien clause posted throughout the ship. The Judge held, however, that these notices were never brought to the attention of the Plaintiff who did not personally deliver the bunkers. In result, the Plaintiff was held entitled to a lien for the bunkers supplied. The Judge did, however, disallow the claim for interest at 1.5% per month on the grounds that it was excessive and substituted an award of interest at 2% over prime.