the first issue that is dealt with is—what exactly is the notion of self-help as a remedy
and its significance in terms of the lien clause in a charterparty. Further to that, the
discussion extends to whether there is an implied duty on the part of the shipowner to
act in a reasonable manner in the course of exercising his right under the lien clause.
This is associated with the doctrine of contractual discretion, the tenets of which are
derived from the case law. Several current English cases are examined analytically in
addressing this question. The duty of good faith is then discussed in terms of whether
there is such an implied duty in every contract as a general proposition and whether
there are wider implications of that duty applicable to a lien clause. There is
discussion on the implications of the cargo lien leading to the proposition that the
lien clause falls under the caption “contractual discretion”, which requires the
shipowner to act in good faith, with honesty and reasonableness. It is suggested
that the test of rationality rather than reasonableness should be applied.
The issue of whether there is an implied duty to act in a reasonable manner under
Chinese law is then examined. In this connection, the notion of good faith and
principle of mitigation is applied in the context of “reasonable requirements” under
the Chinese Maritime Code. The principle of good faith in Chinese law is examined
in terms of how it works in practice. Finally, conclusions emanating from the
discussions in respects of English law and Chinese law are presented.
2 Lien Clause as a Self-Help Remedy
2.1 The Notion of Self-Help
4
It is generally accepted that a remedy for breach of contract can be a judicial remedy
or a self-help remedy.
5 The boundary between these two types of remedies is
sometimes unclear because of different perceptions of self-help. For example, one
author contends that self-help is “[A]ny actions taken by either contracting party to
limit the harm caused by defective performance, to attempt to preserve the contract,
and to prevent non-justified termination of the contract.”
6 By contrast, according to
another author, self-help is “[O]ne party’s ability to take control of an item or sum of
money in dispute without judicial intervention”.
7 Another description of self-help as
a remedy is—“[L]egally permissible conduct that individuals undertake absent the
compulsion of law and without the assistance of a government official in efforts to
prevent or remedy a civil wrong.”
8
4 It should be noted that the concept of a self-help remedy in Chinese law is absent. The concept of a
lien in most situations is simply understood as a type of security interests in the law of property.
5 McKendrick (2016), pp. 120–121.
6 Taylor (1998), p. 842.
7 Rubin (1997), p. 36.
8 Brandon et al. (1984).
Shipowner’s Implied Obligations in a Charterparty Relating to. . .
313
and its significance in terms of the lien clause in a charterparty. Further to that, the
discussion extends to whether there is an implied duty on the part of the shipowner to
act in a reasonable manner in the course of exercising his right under the lien clause.
This is associated with the doctrine of contractual discretion, the tenets of which are
derived from the case law. Several current English cases are examined analytically in
addressing this question. The duty of good faith is then discussed in terms of whether
there is such an implied duty in every contract as a general proposition and whether
there are wider implications of that duty applicable to a lien clause. There is
discussion on the implications of the cargo lien leading to the proposition that the
lien clause falls under the caption “contractual discretion”, which requires the
shipowner to act in good faith, with honesty and reasonableness. It is suggested
that the test of rationality rather than reasonableness should be applied.
The issue of whether there is an implied duty to act in a reasonable manner under
Chinese law is then examined. In this connection, the notion of good faith and
principle of mitigation is applied in the context of “reasonable requirements” under
the Chinese Maritime Code. The principle of good faith in Chinese law is examined
in terms of how it works in practice. Finally, conclusions emanating from the
discussions in respects of English law and Chinese law are presented.
2 Lien Clause as a Self-Help Remedy
2.1 The Notion of Self-Help
4
It is generally accepted that a remedy for breach of contract can be a judicial remedy
or a self-help remedy.
5 The boundary between these two types of remedies is
sometimes unclear because of different perceptions of self-help. For example, one
author contends that self-help is “[A]ny actions taken by either contracting party to
limit the harm caused by defective performance, to attempt to preserve the contract,
and to prevent non-justified termination of the contract.”
6 By contrast, according to
another author, self-help is “[O]ne party’s ability to take control of an item or sum of
money in dispute without judicial intervention”.
7 Another description of self-help as
a remedy is—“[L]egally permissible conduct that individuals undertake absent the
compulsion of law and without the assistance of a government official in efforts to
prevent or remedy a civil wrong.”
8
4 It should be noted that the concept of a self-help remedy in Chinese law is absent. The concept of a
lien in most situations is simply understood as a type of security interests in the law of property.
5 McKendrick (2016), pp. 120–121.
6 Taylor (1998), p. 842.
7 Rubin (1997), p. 36.
8 Brandon et al. (1984).
Shipowner’s Implied Obligations in a Charterparty Relating to. . .
313