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564. Songa Chemicals AS v Navig8 Chemicals Pool Inc (the “Songa Winds”) [2018] EWHC 397 (Comm); [2018] EWCA Civ 1901

Delivery without the production of bills of lading – construction of LOI’s – relevant belief in the identity of receiver that of the master – limitation of duration of indemnity in charter party  not replicated in LOI construed on its own wording The Facts Pursuant to a pool agreement, the vessel was time chartered on […]

562. Farenco Shipping Co.ltd v Daebo Shipping Co.Ltd.(the “Bremen Max”) [2008] EWHC 2755 (Comm)

Multiple LOI”s back to back – cargo discharged to receivers without bills of lading – typical case study

The facts

By an amended NYPE 1946 form of charterparty the vessel was chartered by the Owners to COSCO Bulk Carrier Co.Ltd. (“Cosbulk”). The vessel was sub-chartered under back-to-back charters to the Claimant, Farenco Shipping Co.Ltd. (“Farenco”), the Defendant, Daebo Shipping Co.Ltd. (“Daebo”), the Third Party, Dampskibsselskabet Norden A/S (“Norden”) and the Fourth Party, Deiulemar Shipping SPA (“Deiulemar”)

A cargo of 70,888 metric tonnes of Brazilian origin sinter feed was loaded on board the vessel at Tubarao, Brazil for carriage to and delivery at Bourgas, Bulgaria. Ten bills of lading were issued by the Owners in respect of the cargo. The bills named the consignee as “to the order of HSH Nordbank AG, London.” The notify address was “G and M-5, Bourgas, Bulgaria as agent and Kremikovtzi AD, Sofia, Botunetz”.

On arrival of the vessel at Bourgas the bills of lading were not available.

Clause 68 of each of the charterparties provided as follows:

“In case original Bills of Lading are not available at discharge port(s), Master/Owners to allow discharge and release the cargo on board against Charterers’ single Letter of Indemnity signed by Charterers only with wording as per Owners’ Protection and Indemnity Club recommendation.”

The Owners were requested to deliver the cargo without production of the bills. A letter of indemnity was provided by each charterer to its disponent owner. Each such letter was in the same form. Thus the letter provided by Daebo to Farenco provided as follows:

“The above cargo was shipped on the above ship by COMPANHIA VALE DO RIO DOCE and consigned to THE ORDER OF HSH NORDBANK AG, LONDON for delivery at the port of BOURGAS, BULGARIA but the bill of lading has not arrived and we, DAEBO SHIPPING CO., LTD, hereby request you to deliver the said cargo to KREMIKOVTZI AD, SOFIA – BOTUNETZ at PORT OF BOURGAS, BULGARIA without production of the original bill of lading.

In consideration of your complying with our above request, we hereby agree as follows:-

To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.

In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.

If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.

If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.

As soon as all original bills of lading for the above cargo have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease.

The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.

This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.”

The cargo was discharged at Bourgas. There is no evidence to whom the cargo was delivered.

Thereafter Stemcor UK Ltd. (“Stemcor”) informed the Owners that they were the holders of the bills of lading and asked the Owners to confirm that they were ready to deliver up possession of the cargo in return for the bills of lading. (more…)

561. Laemthong International Lines Company Limited v Abdullah Mohammed Fahem & Co (the “Laemthong Glory”) [2004] EWHC 2738 (Comm)

Shipowners held entitled to claim on back to back letters of indemnity issued by charterers and receivers to cover release of cargo in the absence of original bills of lading

The facts

The vessel was voyage chartered under an amended sugar charterparty to carry a cargo of sugar from Brazil to Yemen

Clause 42 provided as follows:

“In the event of the Original Bills of lading are not being available at discharge port on vessel’s arrival, if so required by Charterers, Owners/Master to release the cargo to Receivers on receipt of Faxed letter of Indemnity. Such letter of Indemnity to be issued on Charterers head paper, wording in accordance with the usual P&I Club wording, and signed by Charterers only always without a bank counter-signature.”

The master signed bills of lading in respect of the shipment of 14,000 metric tons of white crystal sugar in bags at Santos in Brazil for carriage to Hodeidah or Aden in Yemen. The shipper was named as Cargill Agricola SA (“Cargill”) and the goods were consigned “to order” of the shipper. The receivers were named as the notify party.

Cargill sold the sugar to the charterers which was on sold to the receivers.

The receivers opened a letter of credit with the Yemen Kuwait Bank for Trade Investment YSC (“the Yemen Bank”) as the issuing bank. There was no confirming bank. Credit Agricole Indosuez Suisse SA (“CAI”) was the advising bank.

On the issuing of back to back letters of indemnity by receivers and charterers the cargo was released without bills of lading.

The receivers’ LOI read as follows: (more…)

560. Glencore Energy UK Ltd v Freeport Holdings Ltd “ the Lady M” [2017] EWHC 3348 Comm

Hague Visby rules – excepted perils under Article IV – connection between expressly stipulated exceptions and barratry examined

The facts

Fire broke out in the engine room of the vessel en route to Houston, USA from Taman, Russia. The vessel was carrying fuel oil. The fire was put out and salvors were engaged to tow the vessel to Las Palmas.

General average was declared. Salvors claimed remuneration from both cargo interests and vessel owners in arbitration proceedings.

Cargo sought to recover salvage and legal costs from the vessel owners.

It was assumed for the purposes of deciding two preliminary points that the fire was started deliberately by the chief engineer while he may have been suffering from an unknown mental condition.

The questions were: whether the chief engineer’s actions amounted to barratry, and if so, whether Article IV 2b (Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from fire unless caused by the actual fault or privity of the carrier) and 2q (Any other cause arising without the actual fault or privity of the carrier or without the fault or neglect of the agents or servants of the carrier…) protected the owners from Iiability.

Findings (more…)

559. Lennard’s Carrying Company, Limited v. Asiatic Petroleum Company, Limited, the “Edward Dawson” [1915] A.C. 705; [1914] 1 K.B. 419

“Actual fault or privity” under the Merchant Shipping Act as applied to corporations – distinction drawn between ordinary servants and management

The Facts

Benzine oil was carried on this vessel, a 21 year old steel screw oil tank steamer from Novorossisk to Rotterdam.

Intensive employment gradually led to a deterioration of the boilers and when she left Novorossisk, the vessel was unseaworthy. Unseaworthiness led to stranding in a gale and eventual fire which destroyed the vessel and her cargo.

Cargo sued the shipowners.

By s 502 of the British Merchant Shipping Act, owners were exempt from liability for fire unless caused by their actual fault or privity.

Findings (more…)

520. Sino Channel Asia Ltd v Dana Shipping and Trading Pte Singapore [2016] EWHC 1118 (Comm); [2017] EWCA Civ 1703

Notice of arbitration served on employee of associated company – implied actual authority to accept service found on the facts.  The Facts      Charterers, a Hong Kong company, entered into an arrangement with a PRC Company, sellers, in terms of which contracts of purchase and sale of commodities would be entered into in the charterers’ name. […]

554. CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd (the “Pacific Voyager”) [2017] EWHC 2579 (Comm); [2018] EWCA Civ 2413

“shall perform her service with utmost despatch and shall proceed to” load port  – creates an absolute obligation The Facts The vessel was chartered on a Shellvoy 5 form dated 5 January 2015 for a voyage from Rotterdam to the Far East. The cancellation date was 23h59 on 4 February 2015. At the time of […]

551. MT Højgaard A/S v EON Climate and Renewables 2014 [EWHC] 1088 (TCC); 2015 [EWCA] Civ 407; 2017 [UKSC] 59

Design and build contract – minimum lifespan provision taking precedence over specific design requirements agreed upon The Facts The employer, EON, accepted the tender of the contractor, MTH, to design and build the generators for two adjacent windfarms in the Solway Firth. The contract contained a provision regulating the hierarchy of documents, with the contract […]

550. MSC Depots (Pty) Ltd v WK Construction (Pty) Ltd, Wynford’s Civil and Development CC 2011 (2) SA 417 (ECP); [2011] ZA SCA 115

Contractor cannot be in breach of clause 15.3 of the JBCC on grounds of defective performance where it is not given the opportunity to remedy such defective performance. The Facts The Plaintiff shipping company contracted the Defendant paving contractor to provide paving for a container depot. The contract was on an unidentified version of the […]

398. Gard Marine & Energy Ltd v China National Chartering Co Ltd & others (the “Ocean Victory”) [2013] EWHC 2199 (Comm) ;[2015] EWCA Civ 16; [2017] UKSC 35

Safe port warranty – port of Kashima affected simultaneously with long waves and a force 9 gale – running aground and breaking up – charterers not in breach of safe port warranty The Facts The vessel, a Capesize Bulk Carrier, was ordered on a time charter trip on an amended NYPE form to carry iron […]