AMS Ameropa Marketing and Sales AG v Ocean Unity Navigation Inc. ‘Doric Valour’

Hearing date: 22 October 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on Friday 1 November 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

The issue on this appeal is whether a bill of lading holder making a claim against a shipowner for damage to cargo occurring during the voyage must give credit for a payment received from the seller of the damaged goods. The judge, Ms Clare Ambrose, sitting as a Deputy High Court Judge, held that no such credit need be given. The shipowner appeals.

The facts

The first claimant and the respondent to the appeal (‘Ameropa’) is a company based in Switzerland. It purchased a cargo of soybeans from Zen-Noh Grain Corporation on FOB terms and entered into a voyage charter dated 7 ^th July 2020 with Pacific Basin Spuramax Ltd for carriage of the cargo from (in the event) Convent in Louisiana to Abu Qir Port in Egypt.

The second claimant is an insurer based in Belgium. It was common ground before the judge that, as the insurer of the cargo, it has no title to sue in its own name as a matter of English law and that its claim should be dismissed. I need not consider its position further.

By a sale contract dated 15 ^th July 2020 Ameropa agreed to sell 50,000 metric tons of US no.2 or better yellow soybeans in bulk +/- 10% to an Egyptian company called International Oil Multiseed Extraction Co (‘Oilex’) on CIF terms. The sale contract provided that quality and condition would be final at loading as per an independent first class FOSFA approved surveyor's certificate.

On 3 ^rd and 4 ^th August 2020 the cargo, a total of 49,574.949 metric tons of yellow soybeans in bulk, was loaded on board the vessel ‘DORIC VALOUR’, owned by the appellant (‘the shipowner’), from the Zen-Noh Grain Elevator at Convent.

On 4 ^th August 2020 50 clean bills of lading on the Congenbill form were issued on behalf of the shipowner. The bills name Zen-Noh Grain Corporation as shipper and state ‘to order’ in the consignee box. Oilex was identified as the notify party.

On 25 ^th August 2020 Ameropa issued an invoice to Oilex for USD 21,565,102.82, with the sale price stated as USD 435/mt. On 2 ^nd (or possibly 4 ^th) September 2020 Oilex paid Ameropa the invoiced amount and became the holder of the bills of lading and owner of the cargo.

Meanwhile, on or around 30 ^th August 2020 the vessel arrived at Abu Qir Port. When the holds were unsealed by SGS, the cargo in holds 1, 2, 3, and 5 was found to be sound but damage was found on the surface of the cargo in hold 4. The crew started work to segregate the damaged cargo. On 2 ^nd September 2020 a further quantity of heat-damaged cargo was found adjacent to the No. 4 port topside fuel oil tank. A total of about 3,631.79 mt of cargo discharged from hold 4 was sent by truck to a separate warehouse about 100 km away, at a place called El Sherouq. The judge found that this represented an admixture of sound and damaged cargo.

The judge recorded that although there was no direct evidence from Ameropa or Oilex to explain their actions, one of the survey reports indicated that Oilex had rejected the cargo taken to El Sherouq. It was Ameropa who arranged and paid for the trucks and the warehousing of this cargo.

By 12 ^th September 2020 all visually damaged cargo in hold 4 had been removed and discharge was completed by 14 ^th September 2020. The vessel sailed on 15 ^th September 2020.

On 17 ^th September 2020 an inspection took place at the El Sherouq warehouse. The inspection report indicated that segregation was not feasible and that a salvage solution would be sought. Bids were obtained, at prices ranging between USD 200/mt and USD 355/mt. On 24 ^th September 2020 Ameropa notified Oilex that the damaged cargo had been sold at USD 355/mt and that the buyer (named as Itihad) would transmit the price to Oilex. Ameropa asked Oilex to notify it once payment had been received so that the cargo could be released to the buyer. Ameropa added:

‘We hereby undertake to compensate you with the difference between the $355 and the final price of this quantity.’

Thus it was Ameropa who arranged the salvage sale of the damaged cargo, but it did so on behalf of Oilex, to whom the price was payable.

Later on 24 ^th September 2020 Oilex confirmed that it had received the sum of USD 1,289,286.45 (i.e. 3,631.79 mt x USD 355), and that it was awaiting Ameropa's ‘transfer of the difference between $355 and the final price that was paid by us’ under its sale contract with Ameropa.

It appears that Ameropa did not immediately transfer this amount to Oilex. However, on 15 ^th March 2021 it provided Oilex with a credit note for USD 284,015.08, being the difference between the ‘final price’ of USD 433.20/mt under the sale contract 1 and the price of USD 355/mt achieved on the sale to Itihad.

On 12 ^th July 2021 Ameropa arrested the vessel in South Africa. The affidavit sworn to obtain the arrest of the vessel stated that the receivers, Oilex, had confirmed that their rights were assigned to Ameropa by reason of the credit note. In fact no written assignment had been executed at that stage, but on the following day Oilex did execute an assignment (albeit backdated to 7 ^th September 2020) in the following terms:

‘We, the undersigned INTERNATIONAL OIL MULTISEED EXTRACTION CO. herewith assign to AMS AMEROPA MARKETING AND SALES AG, all rights pertaining to us in connection with the above-referenced shipment.

In particular we assign all rights to AMS AMEROPA MARKETING AND SALES AG to recover the loss suffered from the liable parties and in particular against the owner of the vessel m/v “DORIC VALOUR”.’

On 16 ^th July 2021 the shipowner's P&I Club issued a Letter of Undertaking so that the vessel could be released. The LOU included an agreement that the claim against the shipowner would be subject to English law and jurisdiction.

The claim form in this action was issued on 2 ^nd December 2021. I infer that the necessary extensions of time had been granted.

Liability

Ameropa's claim was brought as assignee of the rights of Oilex. Although there was also a pleaded claim that Ameropa was entitled to bring proceedings as a party to whom the shipowner owed duties in contract and tort, this claim was not pursued. Accordingly whether Ameropa was entitled to claim damages, and if so in what amount, depended on what Oilex would have been entitled to claim at the date of the assignment in July 2021.

The trial proceeded on the basis, admitted in the pleadings, that at all material times Oilex was the lawful holder of the bills of lading with rights of suit pursuant to section 2 of the Carriage of Goods by Sea Act 1992. 2

The shipowner admitted at the trial that the damage to the cargo was caused by the heating during the voyage of fuel oil in the fuel oil tank adjacent to hold 4 and that this was a breach by the shipowner of the contract of carriage contained in or evidenced by the bills of lading. However, no such admission was made at the time, and in its Defence the shipowner originally pleaded that the damage to the cargo was caused by inherent vice. That defence was abandoned by an amendment made a few months before the trial.

The judgment

The main focus of the trial was the shipowner's case that the true extent of the damaged cargo was no more than about 300 mt and that the damages claimed were overstated. However, the judge found that the cargo interests had acted reasonably in concluding the sale to Itihad and in not attempting to segregate further the sound and damaged cargo which had been sent to the El Sherouq warehouse. Permission to appeal on this issue was refused.

The judge held that Ameropa was entitled to recover the sum of USD 293,755.10 as assignee of Oilex's rights under the bills of lading. That sum was based on the difference between (1) the sound value on arrival of the cargo sent to the El Sherouq warehouse and (2) the actual value of the cargo on discharge. The judge found that the best evidence of these values was respectively (1) the price under the CIF sale concluded on 15 ^th July 2020 and (2) the price achieved on the sale to Itihad.

In reaching that conclusion, the judge held that Ameropa did not have to give credit (because Oilex would not have had to give credit) for the payment of USD 284,015.08

The appeal

The sole ground of appeal for which permission was given is that Oilex would have had to give credit for the payment of USD 284,015.08 made by Ameropa, which had effectively made it whole (save for USD 9,740.02, being the difference between the sum awarded by the judge and the amount of the credit note) and that Ameropa, as the assignee of Oilex's claim, could be in no better position. Mr David Semark for the shipowner submitted that this payment had avoided (or very substantially reduced)...