The Carrier’s Right of Retention on Goods

June 2021 Duygu Öner Ayçiçek
% 0

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.

All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.

Other Contents

Newsletter Articles
Lawsuit for Dissolution of Companies for Just Cause

The dissolution of a company is a specific type of dissolution, which results in the cancellation of the legal personality which was gained by registration at incorporation. The specific proceeding which leads to the dissolution, and thus, the termination of a company upon the constitutive decision...

Commercial Law 30.06.2022
Newsletter Articles
Parting Ways in Family Businesses

Companies in which shares or authority to manage is held by members of a family are considered to be “family businesses”. Family members can hold shares that control the company, as well as retain management authority. Having a family business means opportunity, security and income for...

Commercial Law 30.06.2022
Newsletter Articles
Carriage of Goods by Road under the Turkish Commercial Code

Turkey ratified the Convention on the Contract for International Carriage of Goods by Road (“CMR”) in accordance with Act No. 3939 dated 7 December 1993, and the CMR entered into force in Turkey on 31 October 1995. In accordance with Article 1 / 1 of the CMR, the carriage of goods by road...

Commercial Law August 2017
Newsletter Articles
Ordinary Partnerships

Ordinary partnerships are governed by Article 620 et seq. of the Turkish Code of Obligations No. 6098 (“TCO”). An ordinary partnership agreement is defined as an agreement whereby two or more persons undertake to join efforts and/or goods to reach a common goal...

Commercial Law April 2014
Newsletter Articles
Nationality Of Legal Entities
Commercial Law October 2012
Newsletter Articles
Board Members’ Financial Rights in the Context of Disguised Profit Transfers

The concept of disguised profit transfer in joint stock companies, in its broadest meaning, covers the transfer of company assets to related parties and may occur in different ways. This concept is regulated in detail under capital markets legislation...

Commercial Law February 2022
Newsletter Articles
Newsletter Articles
Newsletter Articles
General Assembly Summons Lawsuits
Commercial Law August 2021
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Actual Carrier in Carriage of Goods by Sea
Commercial Law February 2021
Newsletter Articles
Newsletter Articles
Newsletter Articles
Freight Forwarder Contract under Turkish Law
Commercial Law September 2020
Newsletter Articles
Veto Rights in Joint Stock Companies
Commercial Law August 2020
Newsletter Articles
Newsletter Articles
Ship Hypothéque under Turkish Law
Commercial Law May 2020
Newsletter Articles
Newsletter Articles
Newsletter Articles
Legal Liability of Limited Company Managers
Commercial Law January 2020
Newsletter Articles
Employer’s Remedies under FIDIC Silver Book
Commercial Law October 2019
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Transfer of Seized Shares
Commercial Law July 2019
Newsletter Articles
Newsletter Articles
Newsletter Articles
Corporatization of Football Clubs
Commercial Law April 2019
Newsletter Articles
Newsletter Articles
2016 York Antwerp Rules
Commercial Law March 2019
Newsletter Articles
Newsletter Articles
Amendments on Capital Loss and Insolvency
Commercial Law September 2018
Newsletter Articles
Foreign Currency Payment Ban
Commercial Law September 2018
Newsletter Articles
Newsletter Articles
Installment Sales Agreements
Commercial Law July 2018
Newsletter Articles
Newsletter Articles
Newsletter Articles
Arrest of Ships under Turkish Law
Commercial Law May 2018
Newsletter Articles
Share Pledges in Joint Stock Companies
Commercial Law May 2018
Newsletter Articles
Newsletter Articles
Updated FIDIC Contracts
Commercial Law April 2018
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Features of Joint Venture Contract
Commercial Law October 2017
Newsletter Articles
Newsletter Articles
Stock Option Plans in Turkey
Commercial Law June 2017
Newsletter Articles
Voting Agreements under Turkish Law
Commercial Law May 2017
Newsletter Articles
Newsletter Articles
Pre-emptive Right in Joint Stock Companies
Commercial Law April 2017
Newsletter Articles
Holding Company Structure under Turkish Law
Commercial Law January 2017
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Loss Of Capital in Joint Stock Companies
Commercial Law September 2015
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Non-Compete Obligation Of The Commercial Agent
Commercial Law December 2014
Newsletter Articles
Right To Request Special Audit
Commercial Law October 2014
Newsletter Articles
Special Committee Of Preference Shareholders
Commercial Law October 2014
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Conditional Capital Increase
Commercial Law March 2014
Newsletter Articles
Newsletter Articles
General Communiqué On Electronic Books
Commercial Law December 2013
Newsletter Articles
Domination Agreements
Commercial Law January 2014
Newsletter Articles
Newsletter Articles
Representation in Joint Stock Companies
Commercial Law December 2013
Newsletter Articles
Squeeze-Out in Group Companies
Commercial Law November 2013
Newsletter Articles
Shareholder Agreements
Commercial Law November 2013
Newsletter Articles
The Regulation On Private Health Insurance
Commercial Law October 2013
Newsletter Articles
Newsletter Articles
Newsletter Articles
Freedom of Settlement of Foreign Companies
Commercial Law September 2013
Newsletter Articles
Branches And Liaison Offices
Commercial Law August 2013
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Conversion of the Commercial Enterprise
Commercial Law April 2013
Newsletter Articles
Newsletter Articles
Trade Registry Regulation
Commercial Law January 2013
Newsletter Articles
Newsletter Articles
Financial Leasing Agreements
Commercial Law December 2012
Newsletter Articles
Newsletter Articles
Newsletter Articles
Advance Dividend
Commercial Law September 2012
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles
Newsletter Articles

For creative legal solutions, please contact us.