Carboex SA v Louis Dreyfus Commodities Suisse SA

JurisdictionEngland & Wales
JudgeLord Justice Moore-Bick,Lord Justice Toulson,The Master of the Rolls
Judgment Date19 June 2012
Neutral Citation[2012] EWCA Civ 838
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2011/1457
Date19 June 2012

[2012] EWCA Civ 838

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Mr. Justice Field

[2011] EWHC 1165 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Master of the Rolls

Lord Justice Moore-Bick

and

Lord Justice Toulson

Case No: A3/2011/1457

Between:
Carboex S.A.
Claimant/Respondent
and
Louis Dreyfus Commodities Suisse S.A.
Defendant/Appellant

Miss Siobán Healy Q.C. and Miss Jessica Sutherland (instructed by Reed Smith) for the appellant

Mr. Charles Kimmins Q.C. and Mr. Socrates Papadopoulos (instructed by Thomas Cooper) for the respondent

Hearing dates: 24th & 25 th April 2012

Lord Justice Moore-Bick
1

This appeal concerns liability for delay to four vessels waiting to discharge cargoes of coal at Ferrol, North-west Spain in June and July 2008.

2

On 6 th March 2008 the appellant, Louis Dreyfus Commodities Suisse S.A. ("Dreyfus"), as owner entered into a contract of affreightment with the respondent, Carboex S.A., as charterer for the carriage of ten cargoes of coal from Indonesia to Ferrol or Carboneras in charterer's option between 1 st April and 15 th August 2008. The contract was made on the American Welsh Coal Charter form (1979 amendment), clauses 4 and 9 of which contained provisions governing the calculation of laytime at the loading and discharging ports and the payment of demurrage or despatch money, as the case may be.

3

Clause 4, which related to laytime at the loading port, contained the following provision:

"Any time lost through riots, strikes, lockouts, or any dispute between masters and men, occasioning a stoppage of pitmen, trimmers or other hands connected with the working or delivery of the coal for which the vessel is stemmed, or by reason of accidents to mines or machinery, obstructions, embargo or delay on the rail way or in the dock; or by reason of fire, floods, frosts, fogs, storms or any cause whatsoever beyond the control of the Charterer affecting mining, transportation, delivery and/or loading of the coal, not to be computed as part of the loading time (unless any cargo be actually loaded during such time)."

4

Clause 9, which governed laytime at the discharging port, contained the following provision:

9…. In Case of strikes, lockouts, civil commotions or any other causes included but not limited to breakdown of shore equipment or accidents beyond the control of the Charterers consignee which prevent or delay the discharging, such time is not to count unless the vessel is already on demurrage.

The words underlined were inserted in type into the printed form.

5

As is commonly the case, the parties agreed a number of additional clauses, only one of which, clause 40, need be referred to in detail. It provided as follows:

"At port of discharge, time to commence twelve (12) hours after the vessel's arrival at berth, vessel is ready to unload and Notice of Readiness received and accepted, unless sooner commenced in which case time actually used to count. If the berth is not available when vessel tenders Notice of Readiness, but provided vessel/Owners not at fault in relation thereto, then laytime shall commence twelve (12) hours after first permissible tide, Notice of Readiness received and accepted, whether in berth or not, whether in free pratique or not, whether in customs clearance or not, unless no customs clearance or no free pratique due to vessel's fault, unless sooner commenced in which case only time actually used to count. Notices to be tendered in writing Telex, Cable, Fax or Radio form from usual waiting place, any time day or night Sundays and Holidays included excepting Superholidays as below. …."

6

This appeal relates to four vessels nominated by Dreyfus under the contract of affreightment, the 'Co-op Phoenix', the 'Alpha Glory', the 'C Young' and the 'Royal Breeze'. The 'Co-op Phoenix' arrived at Ferrol and gave notice of readiness on 14 th June 2008. There were two vessels ahead of her and in the event she was unable to complete discharging until 2 nd July 2008. The 'Alpha Glory' arrived at Ferrol and gave notice of readiness on 15 th June 2008. There were three vessels ahead of her (one being the 'Co-op Phoenix') and she was unable to complete discharging until 7 th July 2008. The 'C Young' arrived and gave notice of readiness on 7 th July. At that time there were three vessels ahead of her; she completed discharging on 25 th July. The 'Royal Breeze' arrived and gave notice of readiness on 16 th July. At that time there were three vessels ahead of her; she did not complete discharging until 29 th July.

7

Between 9 th and 16 th June 2008 there was a nationwide haulage strike in Spain and during that period no coal was removed from the terminal. When the strike ended there was a large amount of coal stockpiled at the terminal, which no doubt took some time to clear. Carboex alleged (and for the purposes of the preliminary issues it was assumed) that an unofficial stoppage by some lorry drivers took place between 23 rd and 24 th June. No discharging took place on either day, but some cargo was removed from the stockpile on 25 th June. For the purposes of the preliminary issues it was assumed that the congestion at Ferrol was entirely due to the haulage strike and the interruption to discharging caused by the later unofficial stoppage. In those circumstances Carboex maintained that in accordance with clause 9 the time lost by each of the vessels as a result did not count against laytime. Dreyfus maintained, however, that on the true construction of clause 9, read in the context of the other terms of the charter, in particular clauses 4 and 40, the words "the discharging" referred to the working of cargo and that therefore time ceased to count only if the vessel was in berth and was ready to discharge cargo or had begun cargo handling operations.

8

The dispute was referred to arbitration and at the request of the parties the arbitrators agreed to determine a number of preliminary issues including the following:

"(i) whether clause 9 of the COA applies in the case of a vessel which is delayed by the after-effects of a strike which has ended; and

(ii) whether clause 9 of the COA applies in the case of a vessel which has arrived after the strike has ended."

The first question was directed to the position of the 'Co-op Phoenix' and the 'Alpha Glory'; the second to that of the 'C Young' and the 'Royal Breeze'.

9

On 11 th June 2010 the arbitrators published a declaratory award in which they answered each of the questions in the negative. In reaching their decision they relied on the decision of the House of Lords in Central Argentine Railway v Marwood [1915] A.C. 981. In the light of their decision on those two questions they found it unnecessary to consider other preliminary issues which the parties had formulated.

10

Gloster J. gave permission to appeal against the award under section 69 of the Arbitration Act 1996. On the hearing of the appeal before Field J. the parties invited the court to add a third issue which it was said would decide the issues of construction that were common to those raised by the tribunal's questions (i) and (ii), namely,

"Does the strike exception in clause 9 apply to a vessel which is unable to berth due to berth congestion caused by a strike?"

The judge held that the questions posed by both of the tribunal's preliminary issues and that posed by the parties' third issue should all be answered in the affirmative. He therefore set aside the award. This is the appeal of Dreyfus against the judge's order.

11

On behalf of Dreyfus Miss Siobán Healy Q.C. drew particular attention to two features of the contract, clause 4 and clause 40. She pointed out that this charter form is worded as a berth charter, thus placing on the owner the risk of congestion preventing the vessel from reaching a berth and so becoming an arrived ship. In the present case, however, the parties had by clause 40 expressly provided that notice of readiness might be given from the usual waiting place, whether in berth or not, and that if a berth was not then available laytime was to commence 12 hours after first permissible tide. The effect of those provisions, she submitted, was to transfer to the charterer the risk of congestion at the port of discharge. Indeed, it has been held that that is the very purpose of incorporating the expression "whether in berth or not": see Bulk Transport Group Shipping Co. Ltd v Seacrystal Shipping Ltd (The 'Kyzikos') [1989] 1 A.C. 1264. She submitted that clause 40 as a whole indicated a clear intention to place the risk of congestion on the charterer which was not to be qualified or undermined except by clear words. She relied on the language of clause 4 as showing how it is possible to transfer the risk of delay caused by events on shore, including events at some considerable remove from the loading berth, to the charterer. That is to be contrasted with the language of clause 9, which is much more restricted in its scope. All that pointed to the conclusion that the words "the discharging" are to be given a narrow meaning, as they were in Marwood. Miss Healy also submitted that Marwood was binding authority on the meaning and effect of clause 9, or at any rate of such strong persuasive authority that it would be wrong for this court not to follow it. Finally, as an alternative argument, Miss Healy submitted that clause 9 operated only during the continuation of the strike and did not extend to delay caused by congestion which was itself a consequence or after-effect of the strike.

12

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