603. The David Agmashenebeli [2003] 1 Lloyd’s Rep 92

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Master’s duty in clausing bills of lading – section 2(2) COGSA 1992 – spent bills not qualifying under proviso because they were negotiated under a fresh contract

The facts

Thirty Five Thousand tonnes of urea shipped from Finland to China. Chain of FOB sales and sub-voyage charters.

Master clausing bills of lading and refusing to enter discharge port because he thought the port unsafe for the draft of the vessel.

Price of urea dropping from time of arrival to time of discharge.

Because the bills were claused, the shippers were forced to accept a lower price as part of a settlement involving the receivers and their bank.

The receivers became holders of the bills of lading pursuant to the settlement which was reached after the bills were presented to the shipowners ie the bills were presented to the ship before they were presented to the bank to obtain payment under the letter of credit. This was to facilitate the payment of freight to the ship and the ship’s release of the cargo.

The master’s refusal to berth as directed by harbourmaster caused shippers additional expense in obtaining an alternative berth.

Findings

Although the claimants are described as the “cargo owners”, it is not clear from the judgment or the Lloyd’s report who they were. If they were the ultimate receivers ie Guangxi, it is not clear what they were claiming or what loss they suffered because they benefitted from the drop in price.

Because the bills were negotiated after the contract between the shippers (Agrosin) and the ship, they were incapable of conferring contractual rights on the receivers as claimants vis a vis the ship.

Colman J held that although the master exaggerated the defects in the cargo which was unreasonable and therefore breach of the duty to describe the state of the cargo fairly, there were defects which did justify clausing. The breach was therefore not causative of the loss the shippers, Agrosin, may have suffered – an entirely irrelevant consideration because Agrosin were not the claimants.

On the 3rd issue, the master’s refusal to berth according to port instructions was held to be breach.

Discussion

Poorly drafted and obscure judgment.

 

 

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