E D and F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH Polska Zegluga Morska PP (Interested Party)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Christopher Clarke,Lord Justice Patten |
| Judgment Date | 19 November 2013 |
| Neutral Citation | [2013] EWCA Civ 1449 |
| Date | 19 November 2013 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2012/3016 |
[2013] EWCA Civ 1449
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Eder
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Tomlinson
and
Lord Justice Christoper Clarke
Case No: A3/2012/3016
and
Timothy Young QC (instructed by Jackson Parton) for the Appellants
Luke Parsons QC and Nevil Phillips (instructed by Waltons & Morse LLP) for the Respondents
Mark Jones (instructed by Holman Fenwick Willan LLP) for the Interested Party
Approved Judgment
Hearing date: 15 October 2013
By a charterparty on the Sugar Charter Party 1999 Form dated 9 June 2010 the "Ladytramp" was chartered by her disponent owners Unicargo, the Respondents on this appeal, to the well-known sugar trader ED & F Man, the Appellants. I will refer to these parties hereafter as simply the owners and the charterers. The charter was for the carriage of bulk sugar on a voyage from 1–2 safe berth(s), 1 safe port (intention Santos) but not south of Paranagua to the Black Sea (intention Odessa). A dispute has arisen as to charterers' liability for demurrage at the load port, which was in the event Paranagua, as nominated by charterers on the day of the fixture itself. Owners claimed demurrage in the sum of US$ 397,912.77 in respect of a period spent waiting to load at Paranuaga. The dispute was referred to arbitration. The arbitrators, Mr John Tsatsas and Mr Christopher Moss, upheld the claim for demurrage and awarded the owners the amount claimed plus interest and costs. On an appeal brought pursuant to s.69 of the Arbitration Act 1996, Eder J, sitting in the Commercial Court, upheld the award, albeit not on the principal ground relied upon by the arbitrators. Now there is a further appeal to this court, brought with permission of the judge himself. He was persuaded to grant permission to appeal in the light of the circumstance that the charterers face other claims for demurrage arising out of the same circumstances as gave rise to the delay to the Ladytramp.
Clause 28 of the charterparty provides as follows:-
"In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lock outs of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost, mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to the terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime or time on demurrage or detention."
The issue in this case is whether the charterers have demonstrated, the burden being on them, that the delay in loading the vessel at Paranagua was caused by mechanical breakdown. There is no dispute that the mechanical breakdown, if there was one, was at a mechanical loading plant.
As is nowadays common in relation to a relatively modest claim for demurrage, the arbitration was conducted on the basis of written submissions and supporting documents without an oral hearing. The submissions on each side were prepared by experienced shipping solicitors, Messrs Waltons and Morse for the owners and Messrs Jackson Parton for the charterers.
At the time of the fixture the vessel was discharging at Abidjan. It was due to sail for Brazil on 10 or 11 June. The arbitrators made the following findings:-
"13. In an email dated 14 June 2010, namely a week before the vessel arrived at the loadport, the local agents (MARCON) advised the parties that a fire had occurred at the Compania Brasiliera Logistica S/A terminal (CBL) which, they later said, is the terminal normally used by the charterers and where, they stated, they had initially scheduled the vessel to load. The fire had destroyed the conveyor-belt system linking the terminal to the warehouse rendering it, in the opinion of local experts, inoperable for at least 3 months. They further expressed the view that charterers would need to transfer the cargo intended for the vessel to another terminal.
14. In an email dated 15 June 2010 the agents advised the parties that they were instructed to change the vessel's berthing programme to the Pasa terminal in Paranagua. On the same day the agents emailed the owners directly to say that they had spoken to the charterers and had persuaded them to change the berthing programme to said alternative terminal where " they also have enough cargo". The agents further informed the owners that the Pasa terminal had a long line up and that the contemplated berthing programme would be revised involving a long waiting time.
15. The vessel arrived on 20 June 2010 and tendered notice of readiness to load at 2330 hours. The Statement of Facts showed that in the absence of an available berth the vessel remained off the port until 14 July 2010, when she weighed anchor and entered the inner roads of the port awaiting berthing instructions.
16. In his written statement Mr Lemos, the agents' Operations Manager, explained that in fact, because the charterers " could not get sugar to the Pasa Terminal as quickly as hoped" yet another berth, the Centro Sul Serviços Marítimos (Centrosul) Terminal, which is adjacent, but unconnected to the CBL warehouse, was judged to provide the charterers with the fastest option to obtain replacement sugar for loading. An application for berthing at Centrosul terminal was accordingly made to the port authority and the vessel berthed there (and not at the Pasa Terminal) on 15 July 2010. In the event, berth 212, that was ultimately used, was one of the three (212, 213 or 214) where the vessel would have berthed had the fire not taken place. Loading commenced on 18 July 2010 and was completed on 20 July 2010 at which time the vessel sailed for the discharging port in the Black Sea.
17. In accordance with the charter party terms (recital 9) the owners contended that time began to count at 1400 hours on Monday 21 June 2010 and that allowing for rain periods and permissible laytime ( 23,500 metric tons @ 6,000 metric tons per weather working day = 3.91666 days) laytime expired at 23.53 hours on 25 June 2010. Thereafter the vessel was on demurrage continuously up to 1300 hours on 20 July 2010, when loading was completed."
In answer to the owners' claim the charterers relied upon Clause 28 of the charterparty. They contended that "as a result of the fire the mechanical breakdown of the conveyor belt system meant that loading of the vessel was delayed" — Jackson Parton submissions of 6 September 2011 at paragraph In the same document the charterers contended that "there are no restrictions on the nature of the breakdown or how it was brought about" — paragraph 7. The charterers pointed out that a mechanical breakdown could itself be a cause of a fire, or of the fire, but made no attempt to prove what had been the cause of this fire. Their submission was that "the result of the fire at the BCL terminal was that there was mechanical breakdown of the conveyor belt system at the load plant" — Jackson Parton submissions of 28 August 2011, paragraph 13. As to the precise nature of a mechanical breakdown, the charterers said this, at paragraph 9 of Messrs Jackson Parton's submissions of 6 September 2011:-
"It is submitted that if the relevant piece of machinery or equipment is unable to perform its required function then that is sufficient to establish mechanical breakdown and thereby bring the event within the ambit of Clause 28. This submission is supported in case law, namely The "Afrapearl", Portolana Compania Naviera Ltd v Vitol SA Inc [2004] EWCA Civ 864. [2004] 1 WLR 311, [2004] 2 Lloyd's Law Rep. In that case the test for breakdown was whether or not a sealine (a pipe) ceased to function as a pipe. Applying the same test here the fundamental question is, whether or not the conveyor belt system ceased to function as a conveyor belt system. The answer is irrefutable, it ceased to function as a conveyor belt system and therefore on any conceivable view there was mechanical breakdown."
As the judge records, in essence the tribunal concluded that the charterers were unable to rely upon Clause 28 of the charterparty for two reasons which are now relevant:
i) It was the obligation of the charterers, when the CBL terminal became unusable due to the fire, to nominate an alternative berth and the fact that the CBL terminal was unusable did not mean that the charterers were unable to perform their obligation to nominate "1–2 safe berths" for loading the contractual cargo. Clause 28 did not apply to that obligation unless the CBL terminal had been "named" in the charterparty so as to render the charterers unable (from a legal standpoint) to nominate an alternative berth. There were a number of alternative berths at which cargo could have been loaded. As it was not impossible for the charterer to nominate a "safe berth" where the cargo could be loaded, the only sense in which loading was "prevented or delayed" was that it was impossible to load at the berth originally intended. The arbitrators described this as "the short answer" to the charterers' reliance upon Clause 28;
ii) Clause 28 made no mention of "fires" as an excepted peril and "in common sense terms" the inoperability of the conveyor belt appeared to have been the result of physical...
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