Bangladesh Chemical Industries Corporation v Henry Stephens Shipping Company Ltd (SLS Everest)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE DUNN,LORD JUSTICE O'CONNOR |
| Judgment Date | 08 April 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0408-5 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 April 1981 |
| Docket Number | 81/0225 |
[1981] EWCA Civ J0408-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE LLOYD)
Royal Courts of Justice.
The Master of The Rolls
(Lord Denning)
Lord Justice Dunn
and
Lord Justice O'connor
81/0225
1980 B. No. 2181
and
MR. ANTHONY HALLGARTEN, Q.C. and MISS HILARY HEILBRON (instructed by Messrs. Clyde & Co.) appeared on behalf of the Plaintiffs (Respondents).
MR. JOHN HOBHOUSE, Q.C. and MR. PEREGRINE SIMON (instructed by Messrs. Gagrat & Co.) appeared on behalf of the Second Defendants (Appellants).
A cargo of natural phosphate of lime was loaded on a vessel at Casablanca in December 1979. The vessel was the "SLS Everest". Over 9,000 tons were loaded. Early in the morning of the 28th December, 1979 the vessel left Casablanca. She anchored seven miles out so as to complete her preparations for the voyage. She was to carry the cargo across the Mediterranian, through the Suez Canal, and then on to Chittagong in Bangladesh. While the vessel was anchored, she took a list to starboard, which eventually increased to 30 degrees. The master shifted some of the cargo to try and correct the list. But he did not succeed. So a tug was brought out, and the vessel was taken back to Casablanca. The harbour master would not allow her to berth. He thought it would be too risky. So she was anchored five miles outside the port of Casablanca.
While the vessel was there, water entered the engine room. The list increased further. She eventually sank in the early morning of the 30th December—two days after she had left Casablanca. She sank in approximately 40 metres of water. Now we have to deal with the legal consequences.
The cargo owners—quite innocent of the matter—want to sue the shipowners either for bad stowage or for the ship being unseaworthy, or something of that kind. But who are the shipowners? They are a Panamanian one-ship company. What assets do they have? None as far as is known: except that there is a claim on the hull underwriters on the London market. Any money which may be recovered for the loss of the vessel will be recovered here in London payable by the Hull underwriters to the Panamanian one-ship company.
The cargo owners are worried as to how they can get their claim satisfied. They applied for a Mareva injunction to stop this money being taken out of London and given to the Panamanian company wherever it may be. A Mareva injunction was granted. But a Mareva injunction can only be granted when a writ can be served out of the jurisdiction, see the decision of the House of Lords in the " Siskina" (1977) 3 Weekly Law Reports 818. Leave had to be obtained for that purpose. Order 11, rule 1, of the Rules of the Supreme Court provides for the various occasions when a writ can be served out of the jurisdiction. In this case the cargo owners said that the bill of lading under which the goods were shipped was governed by English law: and one of the occasions when a writ can be served out of the jurisdiction is when the contract is governed by English law. So they had to show that the contract under which the goods were shipped was governed by English law.
That is the point for decision. To decide it we have first to see what the contract was under which the goods were shipped: and second to see whether that contract was governed by English law.
The story starts in November 1979. The Bangladesh Chemical Industries Corporation wanted to buy phosphate of lime—no doubt for agricultural purposes in Bangladesh. They entered into an agreement in November 1979 with suppliers in Morocco -the Office Cherifien des Phosphates at Rabat in Morocco. Under that contract they would buy 20,000 tons at 35 dollars a ton to be delivered free alongside at Casablanca. The Bangladeshi buyers had to arrange all the shipment. They had to get the ship to Casablanca and arrange for the shipment of the phosphate when it was brought alongside. They did that. They arranged a voyage charter whereby a ship was to go into Casablanca and load the cargo there and then carry the cargo to Chittagong. By a charterparty dated the 29th November, 1979 the Bangladesh Chemical Industries Corporation made a voyage charter with a firm called Drumplace Limited, London. Drumplace were to arrange for the ship to go to Casablanca, load the phosphate of lime: and they would be paid the freight provided by the charter.
Drumplace Limited were not the absolute owners of the vessel. They were only time charterers. They had time chartered the vessel from the Panamanian company. That was the Tex-Dilan Shipping Company Limited which was incorporated in Panama. The time charter was dated the 8th December, 1979. There would be charter hire at so much a day under the charter.
When the goods were loaded aboard, the master signed a bill of lading. He signed it on behalf of the shipowners—the Panamanian company. That is the document which has to be construed in this case. It says: "Shipped in good order and condition by the Office Cherifien des Phosphates on the vessel 'SLS Everest'…Now lying in the port of Casablanca…A cargo of natural phosphate of lime in bulk weighing 9,000 metric tonnes to be delivered in good order and condition at the port of Chittagong 'a ordre'"—that is, "to order". It was endorsed in blank. Then follows the important clause which has given rise to the argument here: "Freight and other conditions as per—then there is a blank—"including the exoneration clause…The master acknowledges having received from the Office Cherifien des Phosphates" on account of the freight a certain sum in advance.
That was the bill of lading which was issued, evidencing not only the receipt of the goods aboard: but also evidencing a contract between the shipowners and the cargo owners.
The blank in the Bill of Lading
The question is: What is to be done about the blank in the sentence, "Freight and other conditions as per—including the exoneration clause"?
In the case of the " San Nicholas" (1976) 1 Lloyd's Law Reports 8, blanks were left in the bill of lading. That bill of lading said:
"This shipment is carried under and pursuant to the terms of the Charter dated—at—between—and—as Charterer".
This court held that, on its true construction, the blanks could be filled in according to the terms of the charter in that case: following a passage from Scrutton on Charterparties at page 63:
"It not infrequently happens that where a printed form of bill provides for the incorporation of 'the charterparty dated…', the parties omit to fill in the blank. It is submitted that the effect is the same as if the reference were simply to 'the charterparty', and that omission does not demonstrate an intent to negative the incorporation".
It seems to me that that reasoning is applicable here. Even though our clause does not say "the charter" or "the charterparty", I should have thought it is quite obvious to anyone that the sentence should read: "Freight and other conditions as per the charterparty including the exoneration clause". Unless the charterparty was incorporated, all sorts of terms and arrangements would have to be implied—or discovered in some other way—in order to make the whole thing workable. But it works simply and completely by incorporating the terms of the charter—that is, the terms of the voyage charter.
If it were a head charter, it might be another matter. Scrutton on Charterparties says: "It is submitted that the general reference would normally be construed as relating to the head charter". Then there is a note which says:
"At any rate if it is a voyage charter. The position is less clear where it is a time charter, the terms of which are in many respects inapposite to the carriage of goods on a voyage. The court might well hesitate to hold the consignee liable for, say, unpaid time charter hire".
The charter here is the voyage charter. Therefore, I would write into the clause: "Freight and other conditions as per the charterparty"—that is, the charterparty of the 29th November, 1979 between Drumplace Limited (the voyage...
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