Gill Nadel, Adv.
Recently, a decision was given (or published) by the local court of Ashdod in which the claim of a bonded warehouse was accepted regarding being awarded a lien on the importer’s merchandise.
As a rule, a lien is the right to self-help- a self remedy intended to enable a creditor to implement his right against the creditor with his own power without needing to turn to litigation. In fact, it is a sort of collateral for the creditor. The creditor has the right to retain property of the debtor in his possession (instead of transferring it to its owner), in order to exert pressure for payment of the debt, all without needing to receive a writ from the court. At the same time, the common opinion is that in order to foreclose on the held property (to sell it in order to pay the debt), one must receive a court writ. Holding the property with court approval- yes. Selling it- no.
In our case, the bonded warehouse held a shipment of an import company due to failure to pay storage charges. What happened was that the importer received services from the customs agent- Refael Et Ron Co., which contacted the bonded warehouse and directed the imported merchandise for storage in the warehouse. The customs agent entered bankruptcy and could not pay its debts. The bonded warehouse claimed that the customs agent was left owing it a sum of 65,000 NIS for storage of the merchandise belonging to the importer, and accordingly, the warehouse informed the importer that it would not release the goods. Later, according to a court writ, the physical hold on the goods was replaced with a bank guarantee for the warehouse, and the discussion revolved around the question who would receive the bank guarantee- the warehouse or the importer?
The importer claimed, among others, two basic claims:
One- the debt regarding the merchandise belongs to the customs agent and not the importer, as there was no contract or agreement between the importer and warehouse, and therefore the importer owes the warehouse nothing.
Two- Even if it is decided that the warehouse has the right of lien, this right applies only to the debt that arises from storage of the held goods themselves, not the debt arising from storage of previous goods of the importer (that have already been released). Against them, the warehouse argued that all the goods of the importer (whether held or released) were held by the warehouse as part of a single transaction and therefore the goods may be held for debts on previous storage.
The court rejected the arguments of the importer.
Regarding the first argument- the court used academic works that establish that one who holds a property may claim a lien against the owners of that property even if the owners are not a side to a contractual relationship with him, on the condition that transfer of the property to the creditor was done with the agreement of the property’s owner. The court applies this to our case and found that the importer knew about the storage of the goods in the bonded warehouse and even was in contact with the warehouse regarding the goods. Accordingly, the court ruled that the warehouse had the right to delay the importer’s property despite the importer not being a side to any contractual agreement with the warehouse, because the importer knew and even expressly agreed that its property be transferred to the warehouse for safekeeping in a contractual transaction.
Regarding the second argument- the court used previous decisions of the High Court which discussed the question of when actions done in the framework of general business relations are viewed as separate transactions and when they are viewed collectively as a single transaction, that creates a right of lien regarding all the actions. In fact, there are three principle tests: the first test involves limitation of the transaction to a defined period of time and a defined general number of items; the second test involves the questions of the uniformity of price on each item; and the third test involves the period of time during which the relevant business arrangement was performed.
In our case, the court found that throughout the period of contact between the warehouse and the customs agent the storage prices were not changed (excluding a one-time price update at the end of the relevant period), and that the storage prices were uniform and did not change over time. Accordingly, the court inferred that the pricing framework for the items was defined ahead of time, and that there was not need to redefine each time the total price for the service being given (the first and second tests).
Regarding the third test, that deals with the amount of time over which the service was provided, the court found that the amount of time for which the warehouse claims the debt stands at about half a year. Accordingly, the court inferred that the service was provided at relatively close dates between shipment and shipment and at consistent times.
The court added that in the above circumstances it would not be right to break the sum of the business interactions between the warehouse and the customs agent down into discrete transactions, “and it is proper to consider the business system between the sides as one transactions, out of the duty to enable flexible and efficient commercial life, that provides a service provider with certainty regarding a guarantee that he holds, without constantly requiring data to test whether merchandise he holds belong to this debt or that. Enabling the receipt of a guarantee of this sort is based on cheap and efficiently-deployed self-help, which is a condition to flexible and efficient commercial life.”
The court explained that it would be unjust for the bonded warehouse not to receive compensation for the storage services it provided.
Accordingly, the court ruled that the merchandise was stored in the warehouse in “one transaction” that took place between the customs agent and the warehouse.
Commentary:
A. The decision starts with the assumption that the storage agreement is, indeed, not between the importer and the warehouse, but between the customs agent and the warehouse, and nevertheless, the warehouse has the right to hold the importer’s merchandise, due to the importer’s knowledge of the storage. It is not clear from the decision whether, in fact, a signed agreement between the customs agent and the warehouse was present to him, or whether the court simply inferred that such was the case. It’s a shame that the matter was not clarified, since it could be argued, fundamentally, that the customs agent acted throughout the process as the agent of the import and was not an independent side to the contract. From the perspective of the court ruling regarding to right of lien, there would be no difference, but there would be other significance, since the decision implies that in the customs agent’s dealing with third parties, he acted as an independent side and not as an agent, taking responsibility upon himself.
B. Two issues were opened and clarified in this ruling- lien on property of one who is not a side to the contract (but knows about it) and the issue of package deals. These issues have a recognizable effect on all service-providers in the foreign trade field: shippers, forwarders, customs agents and others, as we will expand on later.
C. Regarding the right of lien see also these articles:
Lien on merchandise by a ship agent:
http://www.nadel-law.co.il/Index.asp?ArticleID=191&CategoryID=125&Page=3
Customs agent as an agent of the importer/exporter- rights and duties (part 3)- right of lien:
http://www.nadel-law.co.il/Index.asp?ArticleID=692&CategoryID=87&Page=1
תא- 110/03 Charisma v. Adanim, Local Court of Ashdod, decision given 19.4.07
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