Coast Lines Ltd v Hudig & Veder Chartering N.v (Brandaris, Grangefield)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER of THE ROLLS,LORD JUSTICE MEGAW,LORD JUSTICE STEPHENSON
Judgment Date07 December 1971
Judgment citation (vLex)[1971] EWCA Civ J1207-1

[1971] EWCA Civ J1207-1

In The Supreme Court of Judicature

Court of Appeal

Appeal (by leave of Mr. Justice Roskill) by defendants from order of Mr. Justice Roskill made on 28th July, 1971.

Before

The Master of The Rolls (Lord Denning),

Lord Justice Megaw and

Lord Justice Stephenson.

Between
Coast Lines Limited
Plaintiffs Respondents
and
Hudig & Veder Chartering N. V.
Defendants Appellants

Mr. ANTHONY DIAMOND (instructed by Messrs. Holman, Fenwick & Willan) appeared on behalf of the Appellant Defendants.

Mr. R. J. H. COLLINSON and Mr. S. GAULT (instructed by Messrs. Alsop Stevens & Batesons) appeared on behalf of the Respondent Plaintiffs.

THE MASTER of THE ROLLS
1

In December 1967, an English company, Coast Lines Ltd., who are the owners of the motor-vessel Grangefield, let her on a voyage charter to a Dutch company - Hudig and Veder Chatering N. V. Under the charter, the vessel was to proceed to Rotterdam and there load a cargo and carry it to Drogheda, a port in the Republic of Ireland. The cargo was loaded at Rotterdam, but the vessel ran into very bad weather conditions. When she arrived at Drogheda it was found that some 65 tons of water had been taken inboard. The cargo was badly damaged. The water had got in by a broken bilge pipe. The pipe was found to be extremely rusted, corroded and wasted. The vessel cannot have been in a seaworthy condition when she started on the voyage. The cargo owners claimed damages from the shipowners. The shipowners admitted liability to the cargo owners, but then the shipowners claimed to be indemnified by the charterers.

2

On 28th May, 1970, the shipowners - Coast Lines Limited - issued a writ against the charterers, Hudig and Veder Chartering N. V., indorsed as follows:

"The plaintiffs claim is for an indemnity under and/or damages for breach of a contract by charter party dated 13th December, 1967, whereby the defendants hired the plaintiffs' motor-vessel Grangefield in respect of the plaintiffs' liability under Bill of Lading signed in accordance therewith at the request of the defendants".

3

The plaintiffs applied ex parte to the Master for leave to serve the writ on the proposed defendants out of the jurisdiction. The Master gave leave. The defendants entered a conditional appearance and applied to set aside the service. Mr. Justice Roskill refused to set it aside. The defendants appeal to this Court.

  • 1. THE CHARTERPARTY

    The Charterparty is dated "Rotterdam, 13th December, 1967". It was for carriage of cargo from Rotterdam in the Ntherlands to Drogheda in Ireland. The negotiations leading to the fixture of the "Grangefield" were conducted over the telephone and on the telex between Hudig and Veder in Rotterdam and J. F. Thomas Ltd. (brokers for the owners) in Cardiff. It is ucstomary in the Netherlands for the charterers' brokers to draw up and sign the charter-party. This charter-party was drawn up in Rotterdam and signed there on behalf of both parties by Hudig and Veder. Copies were subsequently sent to J. F. Thomas & Co. Ltd. The charter-party was made on the Gencon form. This is the form of charter-party which is the most widely used by all those in Rotterdam who are engaged in the European shipping trade. The Gencon form is used, irrespective of whether or not the charter-party has any connection with England or whether or not either party is English.

    The charterparty is dated "Rotterdam, 13th December, 1967". It was for carriage of cargo from Rotterdam in the Netherlands to Drogheda in Ireland. It contained an exemption for the shipowners in the terms usual in the Gencon form:

    "Owners are to be responsible for loss of or damage to the goods or for delay in delivery of the goods only in case when loss, damage or delay has been caused by the improper or negligent stowage of the goods (un Less stowage performed by shippers or their stevedores or servant or by personal want of due diligence on the part of the owners or their manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied or by the personal act or default of the owners or their manager.

    "And the owners are responsible for no loss or damage or delay arising from any other cause whatsoever, even for the neglect or default of the captain or crew or some other person employed by the owners on board or ashore for Whose acts they would, but for this clause, be responsible,-or for unseaworthiness of the vessel on loading or commencement of the voyage or at any time whatever."

    "The captain to sign bills of lading at such rate of freight as present ed without prejudice to the charterparty".

    It is apparent from that clause that the shipowners were relieved - so far as the charterers were concerned – of any liability for the damage done to these goods: for, although the damage was due to the vessel being unseaworthy, nevertheless this was no fault of the owners or manager personally. It was quite permissible in English law for the shipowners to stipulate in the charterparty for that exemption: because the Carriage of Goods by Sea Act does not apply to charterparties.

  • 2. THE BILL of LADING

    The bill of lading was issued in Rotterdam. It was for the carriage of 4,000 paper-bags of bleaching earth (made in Germany) from Rotterdam to Drogheda. It was signed by agents on behalf of the Master. It was in English and contained on the back a clause paramount which incorporated the Hague Rules. It bound the shipowner to exercise due diligence to make the ship seaworthy and made him liable for want of due diligence. It Bade the shipowner liable, therefore, in this case to the cargo owner.

    It is apparent that, under that bill of lading, the shipowners were subject to a greater liability than that provided by the charterparty. The chaterers must take responsibility for the presentation of that bill of lading. By that conduct the charterers imposed on the owners a greater liability than was stipulated for in the charterparty. On this account it has been held that the chaterers were under a duty to indemnify the shipowners; see Kruger & Co. Ltd. v. Moel Tryvan (1907) A. C. 272. This duty may be said to arise from the request of the charterers to the Master to sign the bills of lading. But I would prefer to put it on an implied term in the charterparty to the effect that, in case the charterers shouldpresent - or cause to be presented - bills of lading imposing a greater liability on the shipowners than that contained in the charterparty, the charterers would indemnify the shipowners in respect of that greater liability.

  • 3. ENGLISH LAW AND NETHERLANDS LAW

    If the charterparty is governed by English law, the shipowners will be able to rely on the indemnity of which I have just spoken. They will be entitled to call on the charterers to indemnify them against the liability to the cargo owners. The Hague Rules will not apply.

    But, if the charterparty is governed by Netherlands law, the position will be quite different. The Netherlands Commercial Code (as it existed at the time of this shipment - it has been altered since) contained an Article 517D which applied the Hague Rules to the carriage of goods by sea from Netherlands Ports: and this has been held by the Courts of the Netherlands to apply, not only to bills of lading, but also to charterparties: and to override any stipulation, express or implied, to the contrary. Even if a chatterparty expressly says that it is to be governed by some other law, e. g. English law, nevertheless Article 517D is regarded as mandatory to the Netherlands Courts. They must apply the Netherlands Code to every shipment from a Netherlands port. If the shipowners should, therefore, sue the charterefs in the Netherlands Courts - or the chatterers sue the shipowners - those Courts must ignore English law altogether - they must ignore the exemption clause in the charterparty aand the implications from it – they must hold that the shipowners are liable to the full extent set out in the Hague Rules, and cannot claim indemnity from the charterers.

    In making this mandatory provision binding on their Courts, the Netherlands are out on a limb by themselves. In an ideal world it would be different. If a contract is properly held to be governed by English law, then the Courts of every country should apply English law to it. The Netherlands Code goes against this ideal. It says that every cargo of goods from a Netherlands port is to be governed by Netherlands law, no matter that the contract has nothing else to do with the Netherlands.

    We are told that since 1969 the Netherlands have withdrawn this mandatory provision. They have come into line with the other maritime countries. So the point may not in future arise. But we have to deal with the position as it was in 1967.

    In view of this difference, we have to consider these points:

    1. What is the proper law of the contract? If it is Netherlands law, then the Netherlands Commercial Code will apply. The shipowners will not be entitled to an indemnity. If it is English law, and the case is allowed to proceed in the English Courts, then the English Courts will apply English law, and will give the shipowners an indemnity. But, if the shipowners are forced to sue in the Netherlands Courts, those Courts will (despite the contract being governed by English law) apply the Netherlands Code to it, and will refuse an indemnity.

    2. If the proper law is English law, ought these Courts to allow service out of the jurisdiction so that the case can proceed in the English Courts? or should they refuse and force the shipowners to go to the Netherlands Courts?

  • 4. THE PROPER LAW of THE CONTRACT

    In order to determine theproper law of the contract, the Courts at one time used to have a number of presumptions to help them. Nowwe have to ask ourselves: That is the system of law with which the transaction has the closest and most real connection? This is not...

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