The Carrier’s Right of Retention on Goods

June 2021 Duygu Öner Ayçiçek
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Introduction

Arising from the contract of carriage, the legislator has prescribed a right of retention on cargo by the carrier in order to secure the carrier’s receivables. Although the carrier's right of retention is subject to separate regulations within the scope of Turkish Commercial Code numbered 6102 (“TCC”) in terms of land transport and sea transport, the carrier has a right of retention on the goods in terms of both land transport and sea transport. In this article, the sea carrier’s right of retention on sea cargo transport is examined.

Scope of the right of retention and exercise of the same against shipper and consignee

The carrier has the right of retention on the cargo in accordance with Articles 950-953 of Turkish of Civil Law (“TCL”) numbered 4721. Pursuant to Article 950 of the TCL, the creditor may impound the movable or negotiable instruments belonging to the debtor that he had possessed with the debtor’s consent for the carrier’s receivables arising from the contract of carriage at sea until the debt has been paid, if the debt is due, and the goods are related to the debt due to their nature. The legislator refers to the general provisions of the TCL regarding the right of retention under Article 1201 of the TCC, and has drawn up separate and independent regulations regarding the carrier’s right of retention, considering the parties of the carriage relationship and the diverging aspects of the contract of carriage.

The carrier may exercise the right of retention against the shipper, which is a party to the freight contract, for all receivables arising from the freight contract. The scope of the receivables includes freight charges, distance freight, dead freight, demurrage fees, receivables arising from the container’s waiting period, expenses incurred for the execution of the instruction and compensation receivables arising from the breach of the freight contract.[1] As a rule, the right of retention only guarantees claims that arise on the goods from the journey on which the right of retention has been used.

As per Article 1200 of the TCC, the shipper is the debtor of the receivables arising from the freight contract until the delivery of the goods is requested by the consignee. The consignee, who is in the position of a third party, is included in the relationship arising from the freight contract when he requests delivery of the goods. In this respect, in order to use the right of retention against the consignee who is in the position of a third party, the consignee must demand the delivery of the goods.

The carrier’s receivable must be due in order for the right of retention to arise. In terms of non-due receivables, the carrier has no right of retention on the goods. Article 952 of the TCL sets forth an exception to this principle for cases where the debtor is in a state of insolvency. If the debtor is incapacitated, the carrier may use the right of lien on the cargo, even if the debtor's receivable is not yet due.

Exercise of the Retention Right

It is accepted by the scholars that the right of retention should be exercised in a proportional manner. This general acceptance is also stipulated in the TCC in terms of the carrier's right to retention. Pursuant to Article 1201(3) of the TCC, the right of retention can only be exercised on the goods in the amount that was secured. However, in order for this right to be exercised in a proportional manner, the goods must be divisible.

In terms of exercising of the retention right, the carrier may refrain from delivering the goods to the consignee. When the delivery of the goods is requested, the carrier shall notify the carrier that he has exercised this right against the person who has requested the delivery.

The right of retention on the goods cannot be claimed independently from the secured receivable. In the liquidation process of this right, the method of “liquidation by keeping the book” is performed. In this respect, the carrier may request the assistance of the enforcement office for the protection of the right of retention. Afterwards, the executive directorate makes a ledger of the goods that have the right to retention on them and gives the carrier a period of fifteen days to initiate execution proceedings for the foreclosure of the pledge. The carrier must initiate the execution proceedings for the foreclosure of the retention right within the granted fifteen days.

Conclusion

The right of retention that is envisaged to provide a guarantee to the creditor if the debtor cannot fulfill his debt is separately regulated in the TCC in terms of receivables arising from maritime transport. Against whom this right is directed depends on whether the consignee demands the delivery of the goods or not. In order to exercise the right of retention, the debt must be due. In terms of the execution of this right, special regulations are included in the law, and the carrier has the opportunity to claim his receivables as a result of the liquidation of the goods through enforcement proceedings.

[1] Ülgener, Fehmi: Çarter Sözleşmeleri I, Genel Hükümler ve Sefer Çarteri Sözleşmesi, 2. Bası, İstanbul 2017, p. 405.

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