594. MVV Environment Devonport Ltd v NTO Shipping GMBH (the “MV Nortrader”) [2020] EWHC 1371 (Comm)

Bill of lading – named shipper found not to be party to the contract 

The proceedings

This was an appeal in terms of section 67 of the Arbitration Act 1996, challenging the jurisdiction of a panel of arbitrators consisting of Clare Ambrose, Daniella Horton and Clive Aston.

A voyage charterparty with an arbitration clause had been incorporated in a bill of lading which named the claimant in the appeal, MVV Environment Devonport, an energy from waste company, as the shipper. The commodity shipped was incinerator bottom ash (IBA), secondary waste generated by MVV’s processes.

MVV denied that it was a party to the bill of lading. The panel’s finding that it was a party was overturned by His Honour Pelling QC sitting as a High Court Judge. 

The facts

MVV had entered into a contract with RockSolid, a Netherlands company, for the transportation of the IBA from its site in Plymouth for further recycling in the Netherlands. The contract provided that ownership and risk in the IBA would pass to RockSolid ex works, Plymouth. Logically, MVV would have no further interest in the IBA after delivery to RockSolid.

A course of conduct arose whereby RockSolid chartered vessels to transport the IBA. At the same time, ships agents acting for RockSolid, Sanders Stevens, prepared bills of lading which named MVV as the shipper. Copies of the bills and related documents were sent to MVV for information purposes. None of these bills involved the shipowner/defendant in this matter.

With regard to the shipment in this case, the first involving the defendant shipowner, an explosion occurred on board the vessel caused by the spontaneous combustion of the IBA cargo.

The shipowner commenced arbitration to hold MVV liable for damage to the ship as a party to the bill of lading.

Findings

His Honour Pelling QC found, relying on one of many such dicta in relation to bills of lading, that this bill of lading was merely evidence of a prior contract.

It being common cause that there were no direct dealings between MVV and the ship, the question was whether those purporting to make MVV party to the contract had express or implied actual authority or ostensible authority to do so. On the facts, they did not. MVV was therefore not party to the contract and not subject to or bound by the arbitration clause. The panel accordingly had no jurisdiction.

Discussion

All written contracts are “evidence” of what the parties agreed. Bills of Lading are written contracts like any others and the solution in this case would apply to any other written contract between immediate parties.

As is apparent from cases as far back as Lickbarrow v Mason (1797), bills of lading are in fact special contracts, namely, negotiable instruments capable of passing title to third parties.

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