Shipping

It was settled law that a ship owner was entitled to exercise its lien until the cargo owner’s contribution to the general average was paid. If a ship owner had agreed to give up its lien in return for security, it was entitled to ask for reasonable security in return. The question of what was reasonable was a question of fact for the tribunal. As to the form of what amounted to reasonable security, the long established practice was that the ship owner gave up its lien in return for a general average bond, and security for that obligation in the form of a cash deposit or a general average guarantee.

In order to establish that the taking of a security had had the effect of destroying the lien, there had to be something in the facts of the case or in the nature of the security taken that was inconsistent with the continued existence of the lien. Where inconsistency was in issue, the concept of destruction of the lien