Compania Sud Americana De Vapores SA v Sinochem Tianjin Import & Export Corporation

JurisdictionEngland & Wales
JudgeMR JUSTICE CHRISTOPHER CLARKE
Judgment Date24 July 2009
Neutral Citation[2009] EWHC 1880 (Comm)
Docket NumberCase No: 2004 FOLIO 934
CourtQueen's Bench Division (Commercial Court)
Date24 July 2009

[2009] EWHC 1880 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Before:

Mr Justice Christopher Clarke

Case No: 2004 FOLIO 934

Between
Compania Sud Americana DE Vapores S.A.
Claimant
Sinochem Tianjin Import and Export Corp
Defendant

Simon Rainey QC & Ruth Hosking (instructed by

Holman Fenwick Willan) for the Claimant

Robert Bright QC & Anna Gotts (instructed by Reed Smith LLP) for the Defendant

Hearing dates: 4th, 11th, 12th, 16th, 17th, 18th, 19th, 23rd, 24th and 31st March and 1st April 2009

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE CHRISTOPHER CLARKE MR JUSTICE CHRISTOPHER CLARKE

MR JUSTICE CHRISTOPHER CLARKE :

1

At about 0230 local time on 30 th December 1998 an explosion took place in the No 3 hold of the m.v. “Aconcagua” when she was on passage off the coast of Ecuador. The fire which resulted was so great that the crew had to abandon ship. Widespread damage was caused to the vessel and her cargo.

2

The cause of the explosion was the self ignition of 334 kegs of calcium hypochlorite stowed in a container (“the container”). The container had been loaded at Busan, South Korea and was due to be discharged at San Antonio in Chile. The vessel was on time charter to Compania Sud Americana de Vapores S.A (“CSAV”), a Chilean company, the now claimant. The owners of the vessel—MS ER Hamburg Schiffahrtsgesellschaft Mbh & Co (“the Owners”) – commenced an arbitration under the charterparty against CSAV. They held it responsible for the explosion and their consequent loss, claiming damages or an indemnity. The arbitration proceeded to an interim award in which the arbitrators decided certain issues, after which CSAV reached a settlement with the Owners pursuant to which they paid them US $ 27,750,000.

The parties' contentions—Overview
3

CSAV now claims damages against the shippers of the calcium hypochlorite, Sinochem Tianjin Import and Export Corp (“Sinochem”), for breach of the contract contained in or evidenced by the bill of lading in respect of the container. It seeks to recover the amount which it paid the Owners in settlement and the costs of defending the Owners' claim in addition to the amounts that it had counterclaimed in the arbitration. Sinochem is a Chinese State-owned trading house, which supplies many different chemicals and which is the Tianjin based company in a large group of other Sinochem companies.

4

Calcium hypochlorite is a dangerous cargo for the reasons set out in paras 41 ff below. CSAV claims that this particular cargo had, unknown to it, an abnormally high thermal instability, being prone to self-heat at ordinary carriage temperatures. As a result it exploded on board the “Aconcagua” at temperatures which were ordinarily to be expected onboard that vessel during this voyage. If it had not been abnormal (or “rogue”) it would not have done so and any self heating would have been negligible. CSAV claims compensation for its losses under Article IV, Rule 6 of the Hague Rules. Sinochem contends that the cargo shipped was not abnormal or, at the lowest, has not been shown to be so.

5

The cargo was stowed in a position where it was surrounded on three sides (forward, base and outboard side) by a bunker tank – No 3 FFOTS 1. That tank was heated during the voyage in order to allow the transfer of bunkers to one of two settling tanks for fuel oil in the engine room. The stowage of the container in that position is admitted by CSAV to have been negligent. The

relevant International Maritime Dangerous Goods (“IMDG”) Code requires the cargo to be stowed “away from” sources of heat. When heated the bunker tanks were sources of heat. Sinochem contends that the heating of the bunker tank on the voyage was either the or a cause of the explosion; that the bad stowage of the container and its contents amounted to unseaworthiness; and that, even if the cargo was a rogue cargo, CSAV is not entitled to any relief under Article IV, Rule 6 because it had failed to take due care to make the vessel seaworthy.

6

CSAV contends that the stowage of the cargo next to a bunker tank which was heated on the voyage was of no causative significance. The contribution made by the heating of the bunker tank to the warming of the container and its contents was wholly insufficient to have had any significant effect on, and made no difference to, the outcome. The explosion occurred when the vessel was, and had been for some 6–7 days in tropical waters. As a result the temperatures which the calcium hypochlorite (CH) would have experienced without heating were sufficient to cause an explosion in this material, but not in normal material. Further, or alternatively, if the container had not been stored where it was, it could and would properly have been stored somewhere away from No 3 FFOTS in which position the explosion would still have occurred.

7

In any event, CSAV contends, when the vessel was loaded at Busan in Korea, bound for South America, she was not unseaworthy. If heat from No 3 FFOTS was of any causative significance that only arose when the heating took place as a result of a decision of the Chief Officer to use and heat that tank as opposed to others available. His negligent decision to heat a bunker tank adjacent to a cargo of calcium hypochlorite does not mean that the vessel was unseaworthy at the commencement of the relevant voyage (Busan to San Antonio). In addition his decision was “an act, neglect or default in the management of the vessel” for which CSAV is not responsible by virtue of Article IV Rule 2 (a) of the Hague Rules.

The evidence
8

The witnesses of fact who were called to give evidence were (i) Dr Paul Beeley, who also gave expert evidence, and (ii) Mr Julian Clark of HFW on behalf of CSAV; and (iii) Mr Wang Fei on behalf of Sinochem. Dr Beeley had been instructed as an expert witness for the Owners in the arbitration and Mr Clark (then at Clifford Chance) had acted for CSAV in the dispute with Owners. Written evidence was adduced by CSAV from the members of the crew of the “Aconcagua” referred to in para 13 below and Captain Hector Araya, CSAV's operations Manager Asia and Bulk Director.

9

Most of the evidence adduced at the hearing consisted of expert evidence from the following:

For CSAV:

(i) Professor Gray who is the Emeritus Professor of Chemistry at Macquarie University, Sydney, New South Wales and a Visiting Professor at the Computational Fluid Dynamics Centre at the University of Leeds; he has done extensive research in, inter alia, combustion, ignition and explosion theory.

(ii) Dr Paul Beeley, who in 1998 was a partner in Dr J H Burgoyne and Partners (“Burgoynes”), and now operates his own consultancy;

For Sinochem:

(iii) Mr Mark Phillips of Burgoynes;

(iv) Mr Graham Charlton, also of Burgoynes.

That evidence, particularly from Professor Gray and Mr Phillips, was both extensive and complex.

10

In order to address the issues of which I have given an overview it is necessary to set out a considerable amount of detail.

The vessel
11

The m/v “ACONCAGUA” is a 2,226 TEU fully-cellular container vessel built by China Shipbuilding Corporation in Kaohsiung, Taiwan. She was a new build and left the shipyard on 15 th September 1998. The vessel had 5 holds forward of her engine room and accommodation. Hold No. 1 was designed to accommodate 40' cargo containers stowed longitudinally. Hold Nos. 2, 3, 4 and 5 were divided into forward and aft sections by transverse partial bulkheads. Each section was long enough to accommodate one 40' or two 20' shipping containers. All holds aboard the vessel were certified for the carriage of dangerous goods falling within Class 5.1 of the International Maritime Dangerous Goods (“IMDG”) Code. The vessel was operated by CSAV in their Asia Andes (“ANDEX”) liner service operated jointly with NYK.

12

Water ballast was carried in double bottom tanks. The vessel also had side heeling tanks in way of the No. 4 hold. The fuel oil tanks on the vessel include No. 3 AFOT (P&S) and No. 3 FFOT (P&S) 2. These tanks represent the port and starboard sides of the hold. Additional bunker tanks were No 2 FOT (P & S) located in the bulkhead between Nos. 2 and 3 cargo holds, and No 4 FOT (P & S), which were deep tanks built into the bulkheads between holds 4 and 5. All the fuel oil tanks could be heated by the use of steam heating coils, whose control valves were located at the forward bulkhead of the engine room. The bunker tanks are fitted with remote read-out level gauges.

13

On the voyage in question the Master was Captain Andreas Horber. The Chief Officer was Mr Philipp Dieckmann. The Chief Engineer was Mr Wolfgang Gruener. The 3 rd Engineer was Mr Christian Obst. The 1 st Assistant Engineer was Mr Roy Muzones.

The contractual documents
Charterparty
14

CSAV was the charterer under a time charterparty dated 21 st May 1998 on an amended NYPE 1946 form for 40–51 months. The vessel was to be taken over from the yard where she was being built in Taiwan. Clause 8 of the Charterparty provided that :

“Charterers are to load and stow the cargo at their expense under the supervision of the Captain.”

The sales contract
15

Sinochem had sold the calcium hypochlorite to a company called Franmar Ltda, CIF Valparaiso under a contract dated 16 th October 1998.

Arranging the carriage
16

On 5 th November 1998 Sinochem applied to CSAV to have a cargo of calcium hypochlorite carried and delivered to San Antonio. CSAV agreed to carry the cargo provided that the documents were in order. On 10 th November a Container Packing Certificate and Declaration on Safety and Fitness of Packaged Dangerous Goods were issued by a packing inspector for the container.

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1 firm's commentaries
  • Hague Rules: Dangerous Goods And Negligent Stowage
    • United Kingdom
    • Mondaq United Kingdom
    • 6 Noviembre 2009
    ...Sud Americana de Vapores S.A. v. Sinochem Tianjin Import & Export Corp. (The Aconcagua) [2009] EWHC 1880 The Aconcagua is the first dangerous goods case to deal directly with a carriers' right to recover an indemnity under Art IV rule 6 of the Hague Rules where loss arises from a combin......
1 books & journal articles

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