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

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

563. Sea Powerful II Special Maritime Enterprises v Oldendorff GMBH & Co KG (the “Zagora”) [2016] EWHC 3212 (Comm)

Cargo released without bills of lading – LOI’s issued – typical case study

The Facts

On 21 October 2013 SCIT Trading agreed to sell a cargo of 70,000 mt of iron ore to Xiamen on CFR China Main Port terms with Koolan Island as the loading port.

Clause 9 of the contract of sale provided for the discharge port agent to be appointed by the buyer, Xiamen.

On 6 November 2013 Xiamen agreed to sell the cargo to Cheongfuli Company Limited (“Cheongfuli”).

On 28 November 2013 Cheongfuli agreed to sell the cargo to Shanxi Haixin International Iron and Steel Co. Ltd. (“Shanxi Haixin”).

SCIT Services concluded a voyage charterparty dated 19 November 2013 with Oldendorff Carriers for the carriage of the cargo from Koolan Island to China.

The charter provided for the agents at the discharge port to be “Charterers’agents” and also provided that in the event that an original bill of lading was not available at the discharging port “the owners/master agree to discharge and release” the cargo against a letter of indemnity.

Oldendorff Carriers had in place a long term agreement, “General Agreement about Cargo Re-Lets” dated 5 March 2005, with Oldendorff whereby the latter would provide tonnage to the former. The agreement provided that any charter concluded would be on back to back terms with the relevant voyage charter that Oldendorff Carriers wished to perform.

On 3 December 2013 Oldendorff concluded a time charter trip on the NYPE form with the Owners of the Zagora.

The time charter provided that if an original bill of lading was not available at the discharge port the charterers would issue a letter of indemnity and “the vessel will not discharge until a faxed copy of the letter of indemnity has been received……”.

On 16 December 2013 Shanxi Haixin informed Xiamen that Lanshan was the discharge port and stated that the shipping agent was Sea-Road.

Between 17 and 18 December 2013 the Owners’ requested form of LOI was passed down the line to SCIT Services, SCIT Trading and Xiamen.

When Xiamen passed on the form of LOI to Shanxi Haixin on 18 December 2013, Xiamen identified the person to whom delivery was to be made as Sea-Road (or such party as was believed to be Sea-Road or to be acting on behalf of Sea-Road).

However, when Xiamen provided SCIT Trading with the requested LOI the person to whom delivery was to be made was identified as Xiamen (or such party as was believed to be Xiamen or to be acting on behalf of Xiamen). An LOI in this form was passed up the line so that on 19 December 2013 SCIT Services issued an LOI to Oldendorff Carriers and Oldendorff issued an LOI to the Owners.

On 29 December 2013 the Owners of the vessel instructed the master to deliver the cargo Xiamen without production of the original bill of lading.

A representative of Sea-Road boarded the vessel claiming to handle discharge on behalf of Xiamen and the cargo was released to him.

Eight months later, on 27 August 2014 when the vessel was again at Lanshan, she was arrested at the suit of the Bank of China as the holders of an original bill of lading.

Owners claimed an indemnity from Oldendorff pursuant to the terms of the letter of indemnity.

In addition claims for indemnities pursuant to related letters of indemnity were made down the chartering chain.

Following the arrest of the vessel in Lanshan on 27 August 2014 at the suit of the Bank of China the Owners called upon Oldendorff to obtain the release of the vessel pursuant to the LOI it had issued. Oldendorff Carriers made a like demand on SCIT Services and SCIT Trading passed on the demand to Xiamen.

On 5 September 2014 Oldendorff carriers obtained in interim mandatory injunction requiring SCIT Services to do what was necessary to secure the release of the vessel. SCIT Trading obtained a similar order against Xiamen but no action was taken to secure the release of the vessel.

Oldendorff  provided security to obtain the release of the vessel and for the Owners’ losses without prejudice to their right to argue that the LOI had not been engaged and the vessel was released from arrest.

The only parties represented at the trial were the Owners, Oldendorff and Oldendorff Carriers.

Findings

Teare J held that the inevitable inference to be drawn from Xiamen naming itself as the person to whom the cargo should be delivered in the absence of an original bill of lading was that Xiamen intended that the nominated agent, Sea-Road, would take delivery of the cargo on its behalf.

That being so, the LOI’s were engaged.

 

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

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

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

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

558. Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (the “Great Peace”) [2001] EWHC 529; [2002] 2 Lloyds Rep 653

Voyage charter party – vessel hired to assist another vessel in distress – charterer under misapprehension as to the position of hired vessel – contract not void for mistake. Continue reading “558. Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (the “Great Peace”) [2001] EWHC 529; [2002] 2 Lloyds Rep 653”