Lien On Me: What is a right of lien?

One of the largest trade associations for freight forwarders in the United Kingdom is the British International Freight Association (“BIFA”) who provide their members with standard terms and conditions to use in business.

Clause 8 of the BIFA standard terms and conditions grants the forwarder a general lien for all sums owed by the customer, regardless of when those sums became due or the account to which they relate. Importantly, the lien may apply even where the goods in the forwarder's possession are not owned by the customer.

What is a lien?

At its simplest, a lien is a legal right that allows someone who is lawfully in possession of another person's property to keep hold of that property until an outstanding debt relating to it has been paid.

For example, if a repairer carries out work on a vehicle and the owner fails to pay the repair bill, the repairer may be entitled to retain possession of the vehicle until payment is made.

What makes the BIFA lien a step above this basic level is that the lien is general in nature, meaning it doesn’t just apply to the specific goods which the debt relates to, but any goods lawfully held by the forwarder on a general account of the debt.

The best way to demonstrate is to consider the situation without the BIFA terms. If you have two shipments underway with two separate invoices (one for each shipment) and one of those invoices is paid and one is not, you could only exercise your lien in relation to the unpaid shipment. Under the general lien granted by the BIFA terms the general lien means you can retain both shipments as security to the unpaid debt.

It is important to note that the lien can also be exercised against documents as well as goods. So, where a forwarder holds a bill of lading, the lien can be exercised over that document instead, which can be particularly useful for goods in transit.

Rights of lien

Once the lien is exercised, you need to decide what to do with it.

There are two main options: sell the goods or retain possession of them (restrain).

Restraining goods

If you restrain the goods, you’re likely to incur further storage costs, which can be added to the debt owed. However, it does give the customer the opportunity to make good on their debt and recover their goods. It can also help prevent the situation from escalating unnecessarily.

Selling the goods

The other option is to give the customer notice of your intention to sell. BIFA’s 2025 terms and conditions require a seven day notice period before you can exercise this option whereby you’re entitled to deal with the goods as agent for the customer, and sell the goods to the satisfaction of the debt, any storage costs which have accrued, and the expenses incurred in selling the goods.

You cannot profit from selling the goods. The balance needs to be accounted for to the customer.

Exercising a lien

It is deceptively easy to exercise the lien and enforce security over the goods, but that doesn’t mean things cannot go wrong.

One of the most common scenarios for exercising a lien is where it looks like the customer is on the brink of insolvency and you’re racing to get control of goods as security for the debt owed to you. However, the lien does not override the statutory moratoriums which take effect on formal administration (or where a liquidator has been appointed).

Timing is everything. If you get in too late, you may end up in dispute with the appointed insolvency practitioner, losing your security and incurring costs in the dispute.

Likewise, if you sell the goods before the expiry of the notice period, you expose yourself to claims of breach of contract or conversion of the goods.

It is important to take advice as soon as possible when thinking of exercising a lien, and certainly before exercising your right of sale, to ensure that you’re ahead of the curve and the formalities are adhered to.