527. LvA [2016] EWHC 1789 (Comm)

Liability of charterers to owners under indemnity established by judgment obtained in India subject to appeal – held that indemnity enforceable without waiting for the outcome of the appeal.

The Facts

Clause 47 of a voyage charterparty on a Gencon 1976 form read:

In case of ‘clean on board’ bills of lading to be issued, Master has the right to reject damaged cargo which might clause the bills of lading and charterers to replace the same with sound cargo at charterers’ time / risks / expenses”.

The Master rejected cargo relying on clause 47 which lead to delay.

Arising from delay, vessel owners were sued in India by port operators.

The Court gave judgment for port operators which judgment was appealed against.

The appeal was pending when owners instituted arbitral proceedings against charterers claiming to be indemnified for loss suffered by reason of having to pay damages to the port operators.

Findings

The Arbitral Tribunal held that clause 47 created an indemnity in favour of the vessel owners but held that until the appeal head been finalized, the owners’ right to indemnity had not been perfected.

Mr Justice Knowles CBE both gave permission for, and allowed the vessel owners’ appeal.

He held that clause 47 created an indemnity against consequences. Once liability had been fixed by the Indian Court, a consequence arose against which the vessel owners were entitled to be indemnified.

He held that they were entitled to immediate payment. If the appeal was successful, they would have to repay the money received under the indemnity.

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