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Indemnity – Charterparty expressly provided that master would sign bills of lading incorporating Hague Rules – charterers not liable for damage to cargo covered by exception in the Rules

The facts

Milk powder was shipped from Amsterdam to Durban. On outturn the milk powder was found to be damaged as a result of ingress of seawater during the voyage.

The cargo owners instituted action against the shipowners in Durban. The shipowners gave the charterers notice of the action who failed to intervene. The shipowners settled the claim and sought to recover the amount of the claim and legal expenses from the charterers.

The charterparty expressly provided that the master would sign bills of lading incorporating the Hague Rules.

The shipowners contended for an implied indemnity.


The Commercial Court, (Bingham J) held in favour of charterers. There was clearly no breach on the part of the master in signing the bills of lading incorporating the Hague Rules and there was no indication in the charterparty as to where ultimate liability would reside.


The case contains a useful obiter dictum relating to estoppel. Volume 20 of Halsbury’s Laws of England suggests that if a party is put on notice and then refuses to intervene, he will, in general, be estopped from denying the validity of the judgment or the reasonableness of any compromise entered into. The court held that there was no such general rule of law and that, on the facts of this case, the charterers were entitled to contend that cargo owners in Durban did not have a valid claim and that their claim had been improperly compromised.

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Charter Party Casebook