The Hanjin Shipping collapse initially impacted Shippers and Consignees, who had to navigate the waters of transhipment, security arrangements for the release of Hanjin containers, delivery of goods and return of containers to depots prepared to accept them.
Now there is the problem for container terminals and depots in possession of Hanjin containers of what to do with those containers. Many are owed considerable and growing storage charges, in addition to maintenance, repair and storage charges in arrears.
But, before seeking to enforce any claim against Hanjin containers, terminal and depot operators need to ask the following questions:
- Do you have a valid lien or security right?
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You will need to check that your storage contract has a valid and effective lien clause. Alternatively, consider whether you have a statutory lien right for repairs and maintenance and/or warehouse storage.
If you have a valid lien, you may be able to withhold possession of the containers until you are paid. If your lien specifically provides, you may even be able to sell the containers and apply the proceeds towards any debt.
- Does Hanjin own the containers?
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If Hanjin owns the containers, the position is probably more clear-cut. However, if a containers are leased to Hanjin or under finance, the lessor or finance company may have a superior right to possession of the containers. In Australia at least, this will largely only occur if the lessor or finance company has registered their interest on the Personal Property Securities Register, so you may need to conduct searches of the register before taking any action.
- When did you receive possession of the containers?
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Under the Personal Property Securities regime in Australia, you will likely have a right to hold and enforce your lien against any containers as long as you received them before Hanjin entered Rehabilitation and/or the Rehabilitation was registered in Australia. For any containers received after those dates, property and the right to possession may have automatically vested in the Liquidator and they may have a superior right which trumps any lien.
- Does the Hanjin bankruptcy process block you from exercising your security rights against the containers?
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In insolvency situations, there is usually a moratorium on enforcement action against a company/its assets during any period of Administration, in order to preserve the status quo until it is determined whether the company will go into liquidation. Here, the Hanjin 'Rehabilitation proceedings' (equivalent to our Administration) have been registered and recognised by the Federal Court, which has ordered a moratorium on any person exercising any rights against Hanjin's property.
That moratorium is lifted if a company goes into Liquidation. Here, the South Korean Courts declared Hanjin Bankrupt (equivalent to our Liquidation) on 17 February 2017. However, the transition from Administration to Liquidation has not yet been registered with the Federal Court, so the Court's moratorium orders remain in place. The foreign Liquidator is required to register the transition within one month. Once they do so, the Court is likely to lift the moratorium, allowing anyone with a valid lien to enforce it against the containers.
Alternatively and to speed things up, any lien holder could write to the Liquidators (through their Australian lawyers) and seek their consent to the sale of the containers now.
Whilst the commercial pressure is to act quickly in order to stem any growing debt, you should work through the above four questions carefully before taking action. You want to reduce any accrued debt, not expose yourself to a claim from the Liquidator or any container lessor or financier.
Our Transport team have helped a number of companies wade through the turbulence left by the Hanjin collapse. Feel free to get in touch if you need any assistance.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
