540. Transgrain Shipping (Singapore) Pte Ltd v Yangtze Navigation (Hong Kong) Co Ltd (the “MV Yangtze Xing Hua”) [2016] EWHC 3132 (Comm)

Interpretation of clause 8(d) of the Inter-Club Agreement, 1996

The Facts

Soya bean meal was shipped from South America to Iran under a trip time charter on the NYPE form.

The vessel arrived off the discharge port in Iran in December 2012. Not having been paid for the cargo, charterers ordered the vessel to wait off the discharge port for over 4 months.

Upon discharge, part of the cargo in holds 5 and 6 was found to be damaged. The cause of the damage was the prolonged delay ordered by the charterers themselves.

Clause 8 of the ICA provided as follows:

“(8) Cargo claims shall be apportioned as follows: …

(d) All other cargo claims whatsoever (including claims for delay to cargo):

50% charterers;

50% owners.

Unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of one or the other (including their servants or subcontractors) in which case that party shall then bear a 100% of the claim

Findings

Colin Sheppard, Roger Rookes and Michael Baker-Harber, found that the charterers were 100% liable insofar as their “act” in delaying discharge was the cause of the damage.

Teare J agreed.

He rejected an argument that the phrase in question should be interpreted as it was in Anglian Water Service v Crawshaw Robins, where Burnton J, in the context of a civil engineering contract, said that the word “act’ must take its colour from the context and that the act needed to be culpable.

On the other hand, in the Fiona, HHJ Diamond QC came to a different conclusion in the context of the shipment of dangerous goods.

The Inter-Club Agreement was intended to be a pragmatic division of risk and liability. As such, there was no reason to limit the operation of the word “act” to culpable acts.

Commentary

The decision appears to be clearly right.

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