Agile Holdings Corporation v Essar Shipping Ltd
| Jurisdiction | England & Wales |
| Judge | Waksman |
| Judgment Date | 11 May 2018 |
| Neutral Citation | [2018] EWHC 1055 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No: CL-2017-000413 |
| Date | 11 May 2018 |
[2018] EWHC 1055 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
HIS HONOUR JUDGE Waksman QC
(sitting as a Judge of the High Court)
Claim No: CL-2017-000413
Simon Rainey QC and Peter Stevenson (instructed by Bentleys, Stokes and Lowless, Solicitors) for the Claimant
Charles Priday and Sushma Ananda (instructed by Fishers, Solicitors) for the Defendant
Hearing date: 12 and 13 March 2018
JUDGMENT APPROVED
INTRODUCTION
This is an appeal on a question of law under s69 of the Arbitration Act 1996 (“the Act”), brought with the permission of Popplewell J given on 4 October 2017. It is in respect of an arbitration award made on 24 April 2017 (“the Award”). The arbitrators were Mr Alan Oakley, Mr Michael Baker-Harber and Mr Robert Thomas QC.
The arbitration arose as follows. In early 2004, the Claimant Owner and Appellant here, Agile Holdings Corporation (“Agile”), let the vessel “Maria” to the Defendant Charterer and Respondent here, Essar Shipping Ltd (“Essar”) on a time charter for a single trip from Tunisia to India via Trinidad. The cargo was a consignment of direct reduced iron (“DRI”) and the charter was on the NYPE 46 form. As is well known, 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. However the appointed supercargo inspected the holds and advised that loading could continue. In fact the DRI was still on fire through the voyage and upon discharge, the cargo interests, Essar Steel Limited (“Essar Steel” — an associated company of Essar) brought a claim against Agile. Despite the lengthy passage of time, no actual claim has yet been brought by Essar Steel.
Nonetheless, 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.
RELEVANT CONTRACTUAL PROVISIONS
By clause 8 of the charterparty (“Clause 8”):
“… Charterers are to load, stow, and trim, tally and discharge the cargo at their expense under the supervision of the Captain…”
It is common ground that as a result of the decision in Court Line v Canadian Transport [1940] AC 934, this clause is effective to transfer responsibility for all cargo handling from owner to charterer.
By clause 89 of the charterparty:
“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.”
I shall refer to that agreement as “the ICA”.
Clause (8) of the ICA provides 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 [ my addition of the numbered square brackets to indicate the two provisos]
(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 charterparty (“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…”
THE QUESTION FOR THE APPEAL
Introduction
Agile's primary case was that Clause (8) (b) applied without qualification so that Essar was 100% liable. In the alternative it contended that Clause (8) (d) 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 primary case was that Clause (8) (a) applied without qualification so that Agile was 100% liable. In the alternative it relied upon Clause (8) (b) but in one of two qualified ways:
(1) the failure to load or stow the cargo was caused by the unseaworthiness of the vessel so that Agile was 100% liable under the second proviso, or
(2) at the very least, the first proviso to Clause (8) (b) applied. This was because Clause 49 was a “similar amendment making the Master responsible for cargo handling” in which case liability was 50/50.
Agile disagreed with those contentions and in particular that Clause 49 was a “similar amendment”.
The question of law with which this appeal is concerned is that final point which involves a consideration of the proper interpretation of Clause (8) (b) along with Clause 49.
The salient parts of the Award
The parts of the Award dealing with this question are as follows:
“101. The Charterers accepted (quite correctly in our view) that loading a cargo of hot DRI would constitute improper loading… As we have also explained above, the failure to halt the belt promptly (which might have led to burning cargo entering the hold) constitutes a further failure properly to load which must, in our view, be for the account of the Charterers.
102. In our view, the claim therefore falls within Clause (8) (b). Liability is 100% for the Charterers unless one or other of the provisos apply.
103. In this regard, the Charterers argued first of all that Clause 49 constituted a “similar amendment” to the addition of “and responsibility” and therefore, that at worst there should be a 50/50 split …”
104. The relevant part of clause 49 provides that ‘ …the Master…will be responsible for proper stowage and seaworthiness and safety of the vessel.’. Having given careful consideration to this clause, we cannot see that its purpose is anything other than to make it clear that the Master is responsible for (part at least of) the loading process. We accept Ms Master's point [for Agile] that the first part of the clause refers only to ‘stowage’ (as opposed to loading etc) but a similar argument seems to have found little favour with the Court in The Sea Miror [2015] 2 LI Rep 395. Moreover, it ignores the remainder of clause 49 which expressly refers to the Master being responsible for the seaworthiness and safety of the ship. Whilst it might be argued that this does no more than reinforce the Master's existing rights, it is, in our view, impossible to ignore the use of the word ‘responsible’. In the context of clause 8, the importance of the addition of the words ‘ and responsibility’ is well-known and we can attribute no less significance to it in clause 49.
105. Accordingly we find that the first proviso to Clause (8) (b) is engaged with the result that liability should be split 50/50.
106. For the sake of clarity, our findings in relation to unseaworthiness [where the tribunal rejected Essar's clause (8) (a) claim] mean that the second proviso to Clause (8) (b) does not come into play.
On this appeal, Agile contends that the tribunal was wrong because in order for there to be a “similar amendment”, the relevant provision must transfer all cargo responsibilities (i.e. loading, stowing, discharge, trimming etc) to the Master/Owner, and a partial transfer is insufficient, (b) on any view Clause 49 effects a partial transfer only. Hence the tribunal was wrong to conclude that liability here should be 50/50 as opposed to 100% on Essar.
A PRELIMINARY POINT
Essar contends (and contended when leave was sought) that the question for the appeal as identified above had not in fact been raised at the arbitration and was therefore not determined by the tribunal. That is why it was not specifically addressed in paragraph 104 of the Award, and why the tribunal appeared to accept expressly that it was dealing only with a partial transfer. Accordingly, this appeal fails at the first hurdle because it does not involve a question of law arising out of the Award or one which the tribunal was asked to determine. See s69 (1) and (3) (b) of the Act.
However, Agile claims to have a complete answer to this argument which is that Popplewell J. granted leave of the basis of very full written arguments including on this point. Having granted leave, that particular point cannot now be re-argued and this Court must move straight to a substantive consideration of the question of law posed.
In order to deal with this point it is first necessary to recite the reasons given by Popplewell J for granting leave:
“The question is of one of law as to the construction and application of clause 8(b) of the Inter-Club Agreement and clause 49 of the charterparty. That question will substantially affect the rights of the parties because, as the tribunal found, the prospect of the cargo claim being pursued to a judgment is not fanciful, and the question will determine the Claimant's rights of recovery of 50% of such liability from the Defendant in that eventuality. Accordingly the question affects the rights of the Claimant, and the effect is substantial because the potential liability is a real and substantial one. That question is one which the tribunal was asked to determine: it was articulated at paragraphs 65 and 103 of the award,...
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