137. Action S.A. v Britannic Shipping Corporation Ltd. (The “Aegis Britannic”) [1985] 2 Lloyd’s Rep 481

Cesser clause – not protecting charterers from obligation to indemnify owners against claim for damage to the cargo

The facts

Rice in bags was shipped from the United States Gulf to Basrah in Iraq.

In an arbitration it was found that the cargo was damaged due to the negligence of the stevedores for whom the charterers were responsible.

The receiver’s claimed from the owners who in turn claimed from the charterers.

Clause 35 of the charter read as follows:

“35. Charterers’ liability under this charter-party to cease upon cargo being shipped except as regards payment of freight, dead freight and demurrage incurred at both ends.”

The charterers argued that the clause relieved them from liability for the physical damage caused to the cargo by the stevedores.

Findings

Staughton J rejected charterers’ defence on the authority Clink v Radford. They could only escape liability for claims in respect of which the owners were protected by a lien.

Commentary

Staughton J stated that he was unable to give effect to the wording of clause 35, bound by a line of authority stretching back over 94 years. He likened this convention to that of “once on demurrage always on demurrage”.

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