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575. Agile Holdings Corporation v Essar Shipping Ltd (the “Maria”) [2018] EWHC 1055 (Comm)

Cargo damage – interpretation of NYPE ICA

The Facts

Agile Holdings Corporation let the vessel to Essar Shipping Ltd on a time charter for a single trip from Tunisia to India via Trinidad.

The cargo was a consignment of direct reduced iron and the charter was on the NYPE 46 form.

DRI is highly reactive and combustible in the presence of heat or water.

In the course of loading the cargo onto the vessel by means of a conveyor belt at Port Lisas, Trinidad, the belt was seen to have caught fire.

Supercargo inspected the holds and advised that loading could continue.

The DRI was still on fire through the voyage and upon discharge, the cargo interests, Essar Steel Limited – an associated company of Essar brought a claim against Agile.

Agile commenced an arbitration seeking from Essar a declaration that it was obliged as charterer to indemnify it against any liability it might be found to have to the cargo interests.

By clause 8 of the charter party:

“… Charterers are to load, stow, and trim, tally and discharge the cargo at their expense under the supervision of the Captain…”

By clause 89 of the charter party:

“Cargo claims as between the Owners and Charterers shall be settled in accordance with the Inter- Club New York Produce Exchange Agreement of February 1970 as amended September 1996 as attached, or any subsequent amendments.”

Clause (8) of the ICA provided as follows:

“Cargo claims shall be apportioned as follows:…(a) Claims in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel: 100% Owners…

(b) Claims in fact arising out of the loading, stowage, lashing, discharge, storage or other handling of cargo: 100% Charterers unless [1] the words “and responsibility” are added in clause 8 [of the NYPE form] or there is a similar amendment making the Master responsible for cargo handling in which case: 50% Charterers 50% Owners save [2] where the Charterer proves that the failure properly to load, stow, lash, discharge or handle the cargo was caused by the unseaworthiness of the vessel in which case: 100% Owners

(c) Subject to (a) and (b) above, claims for shortage or overcarriage: 50% Charterers 50% Owners…

(d) All of the cargo claims whatsoever (including claims for delay to cargo): 50% Charterers/50% Owners…”

Finally, by Clause 49 of the charter party (“Clause 49”),

Stevedore Damage

The Stevedores although appointed and paid by Charterers/Shippers/Receivers and or their Agents, to remain under the direction of the Master who will be responsible for proper stowage and seaworthiness and safety of the vessel…”

Agile’s case was that Clause (8) (b) applied without qualification so that Essar was 100% liable.

In the alternative it contended that Clause (8) (b) applied but in circumstances where there was clear and irrefutable evidence that the claim arose out of the act or neglect of Essar so that again, Essar was 100% liable.

Essar’s case was that Clause (8) (a) applied without qualification so that Agile was 100% liable.

In the alternative it relied upon Clause (8) (b) contending that Clause 49 was a “similar amendment making the Master responsible for cargo handling” in which case liability was 50/50. (more…)

573. The “Seaspan Grouse” KZN Local Division, case no’s 69 & 70/2018, 26 February 2018

Protective writ issued before sale of vessel upheld

The facts

Two German single-ship owning companies arrested this vessel as an associated ship in respect of charter claims against Hanjin.

As in the Mare Traveller change of ownership  took place before arrest but after issue of the protective writ.

Interested parties applied for the setting aside of the arrest on the same arguments presented to Burger AJ in the Cape High Court. (more…)

572. The Monica S.; Owners of Cargo Laden on Ship Monica Smith v Owners of Ship formerly “Monica Smith” now “Monica S” [1967] 3 All ER 740

Proceedings in rem – properly brought by issue of writ and not affected by subsequent change of ownership of the vessel

 The facts

In November 1966, the plaintiffs, cargo owners, issued a writ in rem against ship owners, Smith Rederi Aktiebolaget, the Monica Smith, claiming damages for breach of contract .

In January 1967, the ship owners sold the ship to the defendants, Rederi Aktiebolaget Tankoil, who renamed her the Monica S.

On 9 February 1967, the writ was amended to reflect the changed details.

Tankoil applied for an order setting aside the amended writ or service of it. (more…)

571. Tebtale Marine Inc v MS Mare Traveller Schiffahrts GMBH & Co KG (the “Mare Traveller” and the “Mount Meru”) 2018 (2) SA 490 (WCC)

Protective writ set aside on basis that vessel no longer owned by entity liable

The facts

Creditors of Hanjin Shipping issued protective writs out of various South African courts against more than 70 Hanjin beneficially owned ships to facilitate their arrest in rem, as associated ships, when they called at local ports.

Tebtale, owners of Mount Meru, one of the vessels affected, applied to have her removed from the list.

Tebtale had purchased the Mount Meru after the issue of the writs and were not liable in personam to the particular creditor in question.

The Mount Meru found its way onto the list as a ship associated with the Mare Traveller, the vessel against which the creditor had a claim in personam. (more…)

570. Cargo laden and lately laden on board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A)

Security arrest – seminal case on requirements

  The facts

 The Thalassini Avgi loaded general cargo in various ports in the Far East, for carriage to various ports in the Middle East, including Aden, in the People’s Democratic Republic of Yemen.

The owner was Astromando Compania Naviera SA.

Astromando time chartered the vessel to Nippon Yusen Kaisha.

NYK issued bills of lading in respect of the various consignments of goods taken on board the ship including goods destined for consignees in South Yemen.

At Aden, a fire broke out on board the vessel damaging much of the cargo and the vessel.

The Yemeni consignees, being the holders of the bills of lading, arrested the Dimitris in Port Elizabeth as an associated vessel.

It was common cause that the Dimitris was an associated vessel.

The West England Shipowners Mutual Protection and Indemnity Association (Luxembourg) issued a letter of undertaking to obtain the release of the vessel confined to judgments in Japan and South Africa. (more…)

568. Bocimar NV v Kotor Overseas Shipping Ltd ( the “Crna Gora” and the “Kordun”)1994 (2) SA 563 (A)

Associated ship arrested to provide additional security – onus on applicant to prove reasonable and genuine need on a balance of probabilities

The facts

Bocimar NV, a Belgian corporation, concluded a contract with the International Colombia Resources Corporation of Colombia, a seller and shipper of coal, in terms of which Bocimar undertook to carry a cargo of between 60 000 and 64 000 metric tons of coal from Puerto Bolivar, Colombia, to Rotterdam in the Netherlands.

Bocimar chartered the Crna Gora to perform the contract of carriage.

She was owned and controlled by Zeta Ocean Shipping Ltd which was owned by Boka Ocean Shipping Corporation. Boka also owned Kotor which owned the MV Kordun.

The vessel was refused entry to the port of Rotterdam by reason of economic sanctions imposed by the Security Council of the United Nations Organization in respect of the Federal Republic of Yugoslavia (Serbia and Montenegro) and reinforced by a resolution of the European Community.

Application was made on behalf of Bocimar and Enerco BV of Holland, one of the consignees of the cargo of coal, to the District Court of Rotterdam for an order directing the State of the Netherlands to permit the Crna Gora to enter the port of Rotterdam and to discharge her cargo. The Court refused to grant the order sought.

The Dutch authorities were eventually persuaded that if the cargo was not discharged there was a serious danger that the coal would ignite spontaneously and cause damage to the vessel, ships in the vicinity and harbour installations. Later, on the application of Zeta the President of the District Court in Rotterdam ordered the release of the cargo.

Intercor held Bocimar responsible for losses caused by the delay. Bocimar, in turn sought an indemnity from Zeta.

Bocimar arrested the Crna Gora in Rotterdam in order to secure its claim against Zeta. At the same time arrests of the vessel were also effected by three banks, mortgagees of the vessel, in order to secure their interest in the vessel.

In addition, Bocimar made application ex parte to the Cape of Good Hope Provincial Division, exercising its Admiralty Jurisdiction in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983, for an order under s 5(3) of the Act for the arrest of the MV Kordun, then at berth in the port of Saldanha Bay, for the purpose of providing further security for Bocimar’s claim. (more…)

567. Sevylor Shipping and Trading Corp v Altfadul Company for Foods, Fruits & Livestock and SIAT (Societa Italiana Assicurazioni e Reassicurazioni S.p.A. (the “Baltic Strait”) [2018] EWHC 629 (Comm)

Bill of lading holder entitled to full damages from ship owners for damaged cargo irrespective of compensation received from sellers in terms of separate contract of sale.

The facts

Bills of lading issued by the master of the vessel, a refrigerated cargo ship, acknowledged shipment at Guayaquil, Ecuador, in apparent good order and condition of 249,250 boxes of fresh bananas for carriage to Libya. The cargo deteriorated during the carriage and was discharged at Tripoli in that damaged condition. Altfadul, the consignee, received the cargo in its damaged state.

The difference between the value of the cargo as in fact discharged and its value had it been sound on arrival, was US$4,567,351.

Altfadul rejected the cargo, under the contract of sale and claimed a refund of the price.

The seller, CoMaCo. S.p.A., was also the charterer of the vessel under a voyage charter on the Gencon form with additional clauses. The bills of lading were on the Congenbill form issued for use with the Gencon form of charter. They referred to and incorporated the terms and conditions, liberties and exceptions of the voyage charter, including its arbitration clause.

CoMaCo agreed a credit of US$2,586,105.09 in favour of Altfadul, to be spread over three subsequent shipments.

SIAT was the cargo insurer, at the instance of CoMaCo.

Altfadul, as holder, assigned its rights under the bill of lading to CoMaCo who assigned them to SIAT.

Ship owners claimed that damages had to be reduced by the credit given by CoMaCo ie US$ 2 586 105. (more…)

566. Owners of the MV Silver Star v Hilane Ltd 2015 (2) SA 331 (SCA)

Associated ship arrest – arbitration award obtained  to invoke indemnity under LOI – such award held to be a maritime claim justifying the arrest of an associated vessel

The facts

Hilane Ltd was the owner of the Sheng Mu.

It concluded a voyage charter party on the Gencon form with Phiniqia International Shipping LLC, for the carriage of a cargo of coking coal from Bandar Abbas, Iran, to Vizag, India.

The charter party contained the following clause:

‘Clause 38

Owners agree for charterers to issue 2nd set of bills of lading in Dubai against charterers’ simple LOI & charterers undertake to surrender the first set of original bills of lading issued at loadport to owners within   21 days. If required owners agree to issue bs/l showing loadport Middle East Port or Persian Gulf Port or Ras Al Khaimah instead of actual loadport Bandar Abbas.

. . .

Tradeline LLC, Phiniqia’s parent company, purchased the coking coal that was to be carried on the Sheng Mu from Golden Waves FZC.

The first set of bills of lading was issued showing Golden Waves as the shipper, the load port as ‘Persian Gulf Port’ and the notify parties as Tradeline and Fairway Trading Co (Pty) Ltd of Chennai, India.

The following day Tradeline, requested a second set of bills of lading to be issued showing the load port as Ras Al Khaimah in the United Arab Emirates and identifying Tradeline as the shipper with notify parties as Gupta Coal India Ltd and IDBI Bank Ltd, both of Nagpur, India.

Phiniqia executed an LOI in favour of Hilane indemnifying it in respect of any liability, loss, expenses or damage of whatsoever nature that Hilane might sustain by reason of having issued two sets of bills of lading in accordance with Phiniqia’s request.

At Vizag a second LOI was issued to cover owners for delivering without the production of any bills of lading at all.

Golden Waves who remained in possession of the first bill of lading caused the Sheng Mu to be arrested in Napier, New Zealand. (more…)

565. Northern Endeavour Shipping Pte Ltd v Owners of MV Nyk Isabel and another 2017 (1) SA 25 (SCA)

Associated ship arrest-vessel owners ordered to provide security to slot charterers for judgment obtained by slot charterers in Brazil – slot charterers qualifying as charterers for the purposes of associated ship arrest provisions in the AJRA

The facts

By a time charter party Kien Hung Shipping Co Ltd chartered the Andhika Loreto from its owners, Lady Loreto Shipping Inc.

Northern Endeavour Shipping assumed the rights and obligations of the owners under the charter party, renaming the vessel, the Northern Endeavour.

Kien Hung, Nippon Yusen Kabushiki Kaisha and CSAV concluded a slot-exchange agreement for the operation of a regular container service from the Far East to the East Coast of South America, via South Africa.

Kien Hung nominated the Northern Endeavour to undertake this service for a voyage from Pusan, South Korea, to Santos, Brazil, via various ports including Singapore and Durban.

At Singapore NYK loaded a number of containers on board the vessel in bay 22.

The vessel then sailed for Brazil. Near Cape Town the container stack in bay 22 collapsed and eleven containers were washed overboard and lost in storm.

Cargo underwriters, acting under rights of subrogation, instituted action against NYK in Brazil to recover the losses suffered. NYK was the carrier of the cargo under the bills of lading. NYK joined NES to the proceedings, claiming an indemnity.

The Brazilian court upheld both the cargo underwriters’ claim and NYK’s claim against NES. An appeal against that judgment failed. There was a further appeal pending before the highest court in Brazil.

 NES  aggrieved by this result sought to hold NYK responsible. They alleged that the reason for the collapse of the containers was improper stowage.

They contended that any amount they were ordered to pay NYK pursuant to the Brazilian judgment would constitute damages suffered in tort or delict, based on negligence.

They arrested the NYK Isabel, a vessel owned by Mercurius Shipping Pte Ltd, but controlled by its parent, NYK, as an associated ship, when she called at Durban. Security was furnished to secure the release of the vessel and there was then a deemed arrest in place in terms of s 3(10) of the Admiralty Jurisdiction Regulation Act 105 of 1983.

A writ of summons was served in the action and an appearance to defend delivered on behalf of both Mercurius and NYK. Particulars of claim were delivered as was a plea embodying a number of special pleas including one of res judicata.

NYK brought an application against NES claiming security for its claim in Brazil. (more…)

564. Songa Chemicals AS v Navig8 Chemicals Pool Inc (the “Songa Winds”) [2018] EWHC 397 (Comm)

Delivery without the production of bills of lading – construction of LOI’s – relevant belief in the identity of receiver that of the master – limitation of duration of indemnity in charter party  not replicated in LOI construed on its own wording

The Facts

Pursuant to a pool agreement, the vessel was time chartered on the Shelltime 4 form by Songa to Navig8 Chemicals Pool Inc.

Navig8 chartered her on the Vegoilvoy form to Glencore Agriculture BV  to carry a minimum of 19,000 m.t. of crude sunflower seed oil from Ilychevsk, Ukraine, for delivery at safe ports in the New Mangalore/Kakinada range in Glencore’s option.

The vessel loaded under the voyage charter at Ilychevsk and bills of lading consigned to order were issued naming Ruchi as the notify party.

Glencore’s contract of sale was to sell 6,000 m.t. to Aavanti . Aavanti had contracted to sell 6,000 m.t. to Ruchi.

In the event, 4,000 m.t. was delivered to Ruchi from the vessel at New Mangalore and 2,000 m.t. was delivered to Ruchi from the vessel at Kakinada.

Neither delivery was made against presentation of any original bill of lading.

By two LOIs addressed to Glencore, Aavanti requested that delivery without production of bills of lading be made to Ruchi (or to such party as Glencore believed to be, to represent, or to be acting on behalf of Ruchi) (‘the Aavanti LOIs’). One of these LOIs requested delivery of 4,000 m.t. “at the port of MANGALORE, INDIA“, the other requested delivery of 2,000 m.t. “at KAKINADA, INDIA“.

By LOIs addressed to Navig8, Glencore requested that delivery without production of bills of lading be made to Aavanti (or to such party as Navig8 believed to be, to represent, or to be acting on behalf of Aavanti) (‘the Glencore LOIs’).

By LOIs deemed to have been issued by Navig8 addressed to Songa, Navig8 requested that delivery without production of bills of lading be made to Aavanti (or to such party as Songa believed to be, to represent, or to be acting on behalf of Aavanti) (‘the Navig8 LOIs’). The deemed issue of the Navig8 LOIs, by operation of clause 87 of the time charter, is common ground between Songa and Navig8.

The purchase by Aavanti from Glencore was financed by Société Générale, the holder of the bills of lading for the quantities discharged against the LOIs.

Neither Aavanti nor SG were paid .

Having obtained security for its claim by way of a letter of undertaking provided by Glencore, against a threatened arrest of the vessel or a sister ship under in rem proceedings commenced in Singapore, SG pusued Songa in London arbitration under the bills of lading for damages for misdelivery.

Songa claimed against Navig8, in claim no. 627 under the Navig8 LOIs, that in taking delivery from the vessel, Ruchi represented or was acting on behalf of Aavanti so that delivery was indeed to Aavanti as requested, alternatively that in effecting such delivery Songa believed Ruchi to represent or act on behalf of Aavanti, alternatively that the delivery to Ruchi was deemed by paragraph 4 of the Navig8 LOIs to have been delivery to Aavanti.

In claim no. 637 under the Glencore LOIs, Navig8 made the equivalent claim against Glencore.

Songa and Navig8 respectively sought interim declaratory and injunctive relief.

Findings (more…)

562. Farenco Shipping v Daebo Shipping Co.Ltd.(the “Bremen Max”) [2008] EWHC 2755 (Comm)

Multiple LOI”s back to back – cargo discharged to receivers without bills of lading – typical case study

The facts

By an amended NYPE 1946 form of charterparty the vessel was chartered by the Owners to COSCO Bulk Carrier Co.Ltd. (“Cosbulk”). The vessel was sub-chartered under back-to-back charters to the Claimant, Farenco Shipping Co.Ltd. (“Farenco”), the Defendant, Daebo Shipping Co.Ltd. (“Daebo”), the Third Party, Dampskibsselskabet Norden A/S (“Norden”) and the Fourth Party, Deiulemar Shipping SPA (“Deiulemar”)

A cargo of 70,888 metric tonnes of Brazilian origin sinter feed was loaded on board the vessel at Tubarao, Brazil for carriage to and delivery at Bourgas, Bulgaria. Ten bills of lading were issued by the Owners in respect of the cargo. The bills named the consignee as “to the order of HSH Nordbank AG, London.” The notify address was “G and M-5, Bourgas, Bulgaria as agent and Kremikovtzi AD, Sofia, Botunetz”.

On arrival of the vessel at Bourgas the bills of lading were not available.

Clause 68 of each of the charterparties provided as follows:

“In case original Bills of Lading are not available at discharge port(s), Master/Owners to allow discharge and release the cargo on board against Charterers’ single Letter of Indemnity signed by Charterers only with wording as per Owners’ Protection and Indemnity Club recommendation.”

The Owners were requested to deliver the cargo without production of the bills. A letter of indemnity was provided by each charterer to its disponent owner. Each such letter was in the same form. Thus the letter provided by Daebo to Farenco provided as follows:

“The above cargo was shipped on the above ship by COMPANHIA VALE DO RIO DOCE and consigned to THE ORDER OF HSH NORDBANK AG, LONDON for delivery at the port of BOURGAS, BULGARIA but the bill of lading has not arrived and we, DAEBO SHIPPING CO., LTD, hereby request you to deliver the said cargo to KREMIKOVTZI AD, SOFIA – BOTUNETZ at PORT OF BOURGAS, BULGARIA without production of the original bill of lading.

In consideration of your complying with our above request, we hereby agree as follows:-

To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.

In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.

If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.

If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.

As soon as all original bills of lading for the above cargo have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease.

The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.

This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.”

The cargo was discharged at Bourgas. There is no evidence to whom the cargo was delivered.

Thereafter Stemcor UK Ltd. (“Stemcor”) informed the Owners that they were the holders of the bills of lading and asked the Owners to confirm that they were ready to deliver up possession of the cargo in return for the bills of lading. (more…)

561. Laemthong International Lines Company Limited v Abdullah Mohammed Fahem & Co (the “Laemthong Glory”) [2004] EWHC 2738 (Comm)

Shipowners held entitled to claim on back to back letters of indemnity issued by charterers and receivers to cover release of cargo in the absence of original bills of lading

The facts

The vessel was voyage chartered under an amended sugar charterparty to carry a cargo of sugar from Brazil to Yemen

Clause 42 provided as follows:

“In the event of the Original Bills of lading are not being available at discharge port on vessel’s arrival, if so required by Charterers, Owners/Master to release the cargo to Receivers on receipt of Faxed letter of Indemnity. Such letter of Indemnity to be issued on Charterers head paper, wording in accordance with the usual P&I Club wording, and signed by Charterers only always without a bank counter-signature.”

The master signed bills of lading in respect of the shipment of 14,000 metric tons of white crystal sugar in bags at Santos in Brazil for carriage to Hodeidah or Aden in Yemen. The shipper was named as Cargill Agricola SA (“Cargill”) and the goods were consigned “to order” of the shipper. The receivers were named as the notify party.

Cargill sold the sugar to the charterers which was on sold to the receivers.

The receivers opened a letter of credit with the Yemen Kuwait Bank for Trade Investment YSC (“the Yemen Bank”) as the issuing bank. There was no confirming bank. Credit Agricole Indosuez Suisse SA (“CAI”) was the advising bank.

On the issuing of back to back letters of indemnity by receivers and charterers the cargo was released without bills of lading.

The receivers’ LOI read as follows: (more…)

560. Glencore Energy UK Ltd v Freeport Holdings Ltd “ the Lady M” [2017] EWHC 3348 Comm

Hague Visby rules – excepted perils under Article IV – connection between expressly stipulated exceptions and barratry examined

The facts

Fire broke out in the engine room of the vessel en route to Houston, USA from Taman, Russia. The vessel was carrying fuel oil. The fire was put out and salvors were engaged to tow the vessel to Las Palmas.

General average was declared. Salvors claimed remuneration from both cargo interests and vessel owners in arbitration proceedings.

Cargo sought to recover salvage and legal costs from the vessel owners.

It was assumed for the purposes of deciding two preliminary points that the fire was started deliberately by the chief engineer while he may have been suffering from an unknown mental condition.

The questions were: whether the chief engineer’s actions amounted to barratry, and if so, whether Article IV 2b (Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from fire unless caused by the actual fault or privity of the carrier) and 2q (Any other cause arising without the actual fault or privity of the carrier or without the fault or neglect of the agents or servants of the carrier…) protected the owners from Iiability.

Findings (more…)

559. Lennard’s Carrying Company, Limited v. Asiatic Petroleum Company, Limited, the “Edward Dawson” [1915] A.C. 705; [1914] 1 K.B. 419

“Actual fault or privity” under the Merchant Shipping Act as applied to corporations – distinction drawn between ordinary servants and management

The Facts

Benzine oil was carried on this vessel, a 21 year old steel screw oil tank steamer from Novorossisk to Rotterdam.

Intensive employment gradually led to a deterioration of the boilers and when she left Novorossisk, the vessel was unseaworthy. Unseaworthiness led to stranding in a gale and eventual fire which destroyed the vessel and her cargo.

Cargo sued the shipowners.

By s 502 of the British Merchant Shipping Act, owners were exempt from liability for fire unless caused by their actual fault or privity.

Findings (more…)