imposed by Articles 87 and 88 for exercising the lien. In addressing the crucial legal
issue regarding the standard of reasonable requirements, the Chinese courts apply
the mitigation principle arising from good faith or the fairness principle to determine
whether the reasonable requirements are satisfied. It is submitted that even though
the shipowner’s duty while exercising the cargo lien is recognized in legislation, the
content of the duty is uncertain.
7 Conclusion
This chapter attempts to critically examine the legal positions in the English and
Chinese laws to determine how the so-called lien clause appearing in standard form
charterparties is treated in light of the legal principles of reasonableness, good faith
in correlation to express and implied terms in commercial contracts. In terms of
relatively recent English law, good faith was neither conclusively accepted as an
overriding principle, nor as an implied obligation applicable in respect of all
commercial contracts. However, the decision in Yam Seng Pte Ltd v. International
Trade Corp Ltd
107 seemingly brought this state of the law to the threshold of
jurisprudential change. But it was not widely recognised as the ideal approach.
Freedom of contract and legal certainty are overriding principles in English law
which was the main impediment to the acceptance of good faith in commercial
contracts. It is more important that parties to a commercial contract know for sure
where they stand. The courts value the terms of the contract which the parties have
negotiated. Widening the implied duty of acting reasonably and in good faith, can
have a negative influence on the legal certainty of the contract.
Parties are free, if they so wish, to expressly require the parties to exercise their
rights under the contract in a reasonable manner and in good faith. If they intend to
require the shipowner to exercise the cargo lien in a reasonable manner, they can
expressly state that in the lien clause of the charterparty. If they choose not to include
such an express term, the courts will likely not impose an implied term to that effect.
Even if there were to be an express clause, what would constitute reasonableness
could be in doubt. With reference to contractual discretion, the courts have not yet
clearly confirmed whether the test of reasonableness or rationality should be
embraced. At any rate, the courts appear to be more protective of legal certainty
which can be easily achieved by the parties exercising their freedom of contract.
In Chinese law, the doctrine of “mean” and the concept of Li are helpful in
understanding the conduct of a party to a contract. Even if a party has a contractual
right, it should be confined. Articles 87 and 88 of the CMC provide some basic
guidance on how a shipowner ought to exercise his cargo lien. The recognized
inadequacy of the provisions is made up by the fallback position entrenched in the
mitigation or fairness principle in Chinese law which are general principles available
107 [2013] EWHC 111 (QB); [2013] B.L.R. 147.
Shipowner’s Implied Obligations in a Charterparty Relating to. . .
337
issue regarding the standard of reasonable requirements, the Chinese courts apply
the mitigation principle arising from good faith or the fairness principle to determine
whether the reasonable requirements are satisfied. It is submitted that even though
the shipowner’s duty while exercising the cargo lien is recognized in legislation, the
content of the duty is uncertain.
7 Conclusion
This chapter attempts to critically examine the legal positions in the English and
Chinese laws to determine how the so-called lien clause appearing in standard form
charterparties is treated in light of the legal principles of reasonableness, good faith
in correlation to express and implied terms in commercial contracts. In terms of
relatively recent English law, good faith was neither conclusively accepted as an
overriding principle, nor as an implied obligation applicable in respect of all
commercial contracts. However, the decision in Yam Seng Pte Ltd v. International
Trade Corp Ltd
107 seemingly brought this state of the law to the threshold of
jurisprudential change. But it was not widely recognised as the ideal approach.
Freedom of contract and legal certainty are overriding principles in English law
which was the main impediment to the acceptance of good faith in commercial
contracts. It is more important that parties to a commercial contract know for sure
where they stand. The courts value the terms of the contract which the parties have
negotiated. Widening the implied duty of acting reasonably and in good faith, can
have a negative influence on the legal certainty of the contract.
Parties are free, if they so wish, to expressly require the parties to exercise their
rights under the contract in a reasonable manner and in good faith. If they intend to
require the shipowner to exercise the cargo lien in a reasonable manner, they can
expressly state that in the lien clause of the charterparty. If they choose not to include
such an express term, the courts will likely not impose an implied term to that effect.
Even if there were to be an express clause, what would constitute reasonableness
could be in doubt. With reference to contractual discretion, the courts have not yet
clearly confirmed whether the test of reasonableness or rationality should be
embraced. At any rate, the courts appear to be more protective of legal certainty
which can be easily achieved by the parties exercising their freedom of contract.
In Chinese law, the doctrine of “mean” and the concept of Li are helpful in
understanding the conduct of a party to a contract. Even if a party has a contractual
right, it should be confined. Articles 87 and 88 of the CMC provide some basic
guidance on how a shipowner ought to exercise his cargo lien. The recognized
inadequacy of the provisions is made up by the fallback position entrenched in the
mitigation or fairness principle in Chinese law which are general principles available
107 [2013] EWHC 111 (QB); [2013] B.L.R. 147.
Shipowner’s Implied Obligations in a Charterparty Relating to. . .
337