Compania Sud American Vapores v MS ER Hamburg Schiffahrtsgesellschaft mbH & Company KG [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Morison J. |
| Judgment Date | 14 March 2006 |
| Date | 14 March 2006 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Morison J.
Simon Rainey QC and Nicholas Craig (instructed by Clifford Chance LLP) for the applicant.
Jeremy Russell QC and Robert Thomas (instructed by Norton Rose) for the respondents.
The following cases were referred to in the judgment:
Canadian Transport Co v Court LineELR [1940] AC 934.
Centrala Handlu Zagranicznego (CHZ) Rolimpex v Eftavrysses Compania Naviera SA (The Panaghia Tinnou)UNK [1986] 2 Ll Rep 586.
Duferco SA v Ocean Wilde Shipping CorpUNK (2000) 210 F Supp 2d 256 (DC).
Fernandez v Chios Shipping Co LtdUNK (1976) 458 F Supp 821 (DC).
GH Renton & Co Ltd v Palmyra Trading Corp of Panama (The Caspiana)ELR [1957] AC 149.
Idaho (D/S A/S) v Peninsular & Oriental Steam Navigation Co Ltd (The Strathnewton)UNK [1983] 1 Ll Rep 219.
Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (The Jordan II) [2004] 2 CLC 1172; [2005] 1 WLR 1363.
Nichimen Co Inc v MV Farland (1972) 462 F 2d 319.
Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] CLC 933.
Pyrene Co Ltd v Scindia Steam Navigation Co LtdELR [1954] 2 QB 402.
Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle)ELR [1961] AC 807.
Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] CLC 928.
Shipping — Stowage — Seaworthiness — Explosion on board vessel — Owners' claim against charterers — Whether container of calcium hypochlorite exploded because it was stowed next to bunker tank which was heated — Clause 8 of charterparty on amended NYPE (1946) form placed responsibility for stowage on charterers — Hague-Visby Rules incorporated — Owners' right to supervise stow did not impose on owners duty in favour of charterers to intervene to avoid unseaworthiness — Bunker heating done as part of running of ship not specifically related to cargo — Hague-Visby Rules, art. III, r. 2, art. IV(2)(a).
This was an appeal by charterers against a final declaratory arbitration award.
The dispute between the parties arose from an explosion on board a vessel owned by a German company (the owners) which was chartered by the owners' predecessors in title to a south american company (the charterers) by a charterparty on an amended New York Produce Exchange (1946) form. The explosion severely damaged the vessel and the owners brought a claim against the charterers for loss of hire and loss and damage which they contended had been caused by the loading of a container of calcium hypochlorite. The amount of the claim was some Us$63 million. The charterers counterclaimed for some Us$12 million.
The Cause of the explosion had yet to be determined by the arbitrators. There were two rival contentions as to why the container exploded: one was that the cargo was inherently unstable and volatile; the other was that it exploded due to the fact that it was stowed adjacent to a bunker tank which was heated during the voyage causing the cargo to become unstable, and explode.
The arbitrators considered liability issues arising from the second scenario, namely the stowage and bunker tank heating. The two issues were (i) the proper interpretation of clause 8 of the charterparty, which placed the responsibility for stowage on the charterers, in the light of clause 24 which expressly incorporated as a clause paramount the Hague Visby Rules (the equivalent of similar US COGSA provisions): in other words, if the stowage was done in such a way as to render the vessel unseaworthy, whether owners or charterers were responsible under the contract for the losses. Clause 8 provided that “Charterers are to load stow and trim the cargo at their expense under the supervision of the Captain”; (ii) assuming that the bunkers were heated to a temperature above what was required to keep the fuel oil reasonably thin and that that was causative of the explosion, whether owners had a defence to a claim for breach of Article III Rule 2 (failing to care for the goods carried) by reason of Article IV Rule 2: in other words whether that was an act, neglect or default in the management of the ship.
Charterers' case was that there was an exception to the transfer of responsibility for bad stowage to the charterers where the bad stowage rendered the vessel unseaworthy because, in that event, the ship was obliged to take steps to correct matters or prevent/avoid that unseaworthiness and, if it did not do so and the vessel was unseaworthy and loss occurred as a result, then the owners could not recover under the clause 8 transfer. The charterers also said that the overheating of bunkers causing the heating of cargo adjacent thereto, contrary to ordinary deck and engine room practice, was a neglect to take reasonable care of the cargo and was a default in the care of the cargo. The arbitrators rejected those arguments and charterers appealed.
Held, dismissing the appeal:
1. The question was not whether the owners were under a duty to intervene in the loading process, but rather whether they owed that duty to the charterers. There was no authority which assisted the charterers” case. The words “under the supervision of the captain” did not place responsibility for stowage or to exercise due supervision over stowage upon the owners. The reservation of the right of the captain to supervise, a right which would have existed even if not expressly reserved, had no effect whatever in relieving the charterers of their primary duty to stow safely. There was clearly a difference between a right to supervise and require re-loading, on the one hand, and a duty to do so (owed to the charterers), on the other. It would be a remarkable construction which produced the result that so long as the loading was carried out by the charterers badly enough to put the or other cargo but not the vessel at risk the charterers would be liable and the owners would not but the moment the loading was so badly carried out that it made the vessel unseaworthy the entire responsibility fell upon the owners and the charterers were relieved of it. (Canadian Transport Ltd v Court Line LtdELR[1940] AC 934 and The Imvros [1999] CLC 928 applied; The Kapitan Sakharov [2000] CLC 933 and The Panaghia Tinnou [1986] 2 Ll Rep 586 considered.)
2. It would be appropriate, all other things being equal, that the English courts should construe the same contract which was widely used internationally in the same way as the US courts. (Nichimen Co Inc v MV Farland(1972) 462 F 2d 319followed.)
3. The owners and arbitrators were right that heating of bunker oil for transfer to the engine room was patently something done as part of the running of the ship not specifically related to the cargo. The heating of the bunker tank was to facilitate the transfer of oil from it to the engines. It was a single act which did not relate in any way to the care of the cargo; albeit it might have indirectly adversely affected the cargo. The fact that the act damaged the cargo was a given, otherwise the issue did not arise at all.
Morison J:
1. This is an appeal against a final declaratory arbitration award dated 1 March 2005. The dispute between the parties arose from an explosion on board a vessel owned by a German company (the Owners) which was chartered by the owners' predecessors in title to a South American company (the Charterers) by a charterparty on an amended New York Produce Exchange (1946) form. The explosion severely damaged the vessel and the Owners brought a claim against the Charterers for loss of hire and loss and damage which they contended had been caused by the loading of a container of calcium hypochlorite. The amount of the claim was some US$63 million. The Charterers counterclaimed for some US$12 million. The cause of the explosion has yet to be determined by the arbitrators, who are all distinguished members of the LMAA: namely Christopher Fyans (who replaced the late Michael Ferryman), nominated by the Owners, George Henderson, nominated by the Charterers and Patrick O'Donovan, the third arbitrator, duly appointed by the other two.
2. As I understand the position, there are two rival contentions as to why the container exploded: one is that the cargo was inherently unstable and volatile; the other is that it exploded due to the fact that it was stowed adjacent to a bunker tank which was heated during the voyage causing the cargo to become unstable, and explode. The issues with which this appeal is concerned arise from the second scenario, namely the stowage and bunker tank heating. Essentially there are two issues:
(1) What is the proper interpretation of clause 8 of the charterparty, which places the responsibility for stowage on the charterers, in the light of clause 24 which expressly incorporated as a clause paramount the Hague Visby Rules (the equivalent of similar COGSA provisions)? In other words, if the stowage was done in such a way as to render the vessel unseaworthy, are the Owners or Charterers responsible under the contract for the losses? Clause 8 provides so far as is material that “Charterers are to load stow and trim the cargo at their expense under the supervision of the Captain”.
(2) Assuming as a fact that the bunkers were heated to a temperature above what was required to keep the fuel oil reasonably thin and that this was causative of the explosion, do Owners have a defence to a claim for breach of Article III Rule 2 (“failing to care for…the goods carried”) by reason of Article IV Rule 2; in other words was this an “act neglect or default…in the management of the ship”?
3. It is convenient to deal with each issue separately. The first involved extensive submissions as to the relationship between seaworthiness obligations and the stowage provisions; the second is a much shorter point and involves, I think, not so much a question of identifying the...
To continue reading
Request your trial