Laemthong International Lines Company Ltd v Artis (the Laemthong Glory)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Clarke,the Vice-Chancellor |
| Judgment Date | 05 May 2005 |
| Neutral Citation | [2005] EWCA Civ 519 |
| Docket Number | Case No: A3/2004/2470 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 May 2005 |
[2005] EWCA Civ 519
[2004] EWHC 2738 (Comm)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERICAL COURT
The Hon Mr Justice Cooke
the Vice-Chancellor
Lord Justice Clarke and
Lord Justice Neuberger
Case No: A3/2004/2470
Mr S Males QC and Mr Henry Byam-Cook (instructed by Jackson Parton) for the Respondent
Mr S Berry QC and Miss P Hopkins (instructed by Shaw & Croft) for the Appellant
Introduction
This is the judgment of the court to which all members have contributed. The claimants in this action are or were the owners of the vessel LAEMTHONG GLORY ("the vessel"). We will call them "the owners". The first defendants are ARTIS and were the charterers of the vessel. We will call them "the charterers". The second defendants were the receivers of cargo shipped on board the vessel pursuant to the charterparty. We will call them "the receivers". The third defendant is Mr Mohammed Fahem and is the person behind the receivers. There is a live issue as to his personal liability, if any, with which we are not concerned. Both the charterers and the receivers issued letters of indemnity before the cargo was discharged. We will call them "the charterers' LOI" and "the receivers' LOI" respectively. The issue in this appeal is whether the owners are entitled to proceed directly against the receivers under the receivers' LOI by reason of the terms of the Contracts (Rights of Third Parties) Act 1999 ("the 1999 Act").
On 8 November 2004 Cooke J determined certain preliminary issues which had been ordered by Colman J on 22 October 2004. He held that the owners were entitled to enforce the terms of the receivers' LOI against the receivers and made a declaration to that effect. He also declared that the owners were entitled to an order that both the charterers and the receivers provide bail or other security required to secure the release of the vessel from arrest. As we understand it, he made those orders under the charterers' LOI and the receivers' LOI respectively. As between the charterers and the receivers he made the same order for bail or security, presumably under the receivers' LOI.
The judge refused the receivers permission to appeal. Potter LJ subsequently granted permission to appeal on paper but did so only because of an application to adduce fresh evidence before the Court of Appeal. He said that, if the state of the evidence had been as it stood before the judge, he would not have granted permission. He nevertheless granted permission to appeal generally.
The facts
The facts are for the most part not in dispute and are set out by the judge. We can state them shortly. The vessel was voyage chartered under an amended form of sugar charterparty dated 8 December 2003. It provided for the carriage of a cargo of sugar from a port in Brazil to Hodeidah or Aden in Yemen at charterers' option. By clause 7 it provided for owners to appoint, employ and be solely responsible for agents at the loading and discharging ports.
Clause 42 provided as follows:
"In the event of the Original Bills of lading are not being available at discharge port on vessel's arrival, if so required by Charterers, Owners/Master to release the cargo to Receivers on receipt of Faxed letter of Indemnity. Such letter of Indemnity to be issued on Charterers head paper, wording in accordance with the usual P&I Club wording, and signed by Charterers only always without a bank counter-signature."
It is common ground that but for that clause the owners would not have been entitled or obliged to deliver the cargo otherwise than against original bills of lading.
The charterparty provided for the issue of bills of lading signed by the master and on 21 January 2004 the master signed bills of lading in respect of the shipment of 14,000 metric tons of white crystal sugar in bags at Santos in Brazil for carriage to Hodeidah or Aden in Yemen. The shipper was named as Cargill Agricola SA ("Cargill") and the goods were consigned "to order", which means to order of the shipper. The receivers were named as the notify party. Thus in the ordinary course the shipper would be expected to negotiate the bills of lading to others, perhaps the receivers, who would be entitled to deliver the cargo on presentation of the original bills of lading. The bills of lading were thus owners' bills evidencing a contract of carriage between, on the one hand, the shipper and any indorsee of the bills of lading and, on the other hand, the owners. As between the owners and the charterers, the contract of carriage was governed by the charterparty.
Although we have not seen the contract of sale between Cargill and the charterers, it appears that Cargill sold the sugar to the charterers. It looks as if they did so on fob terms (or something similar) because the vessel was chartered by the charterers and not by Cargill. At some stage the sugar was sold by the charterers to the receivers. It is not clear from the available documents when that was. We have only seen a contract between the charterers and the receivers dated 30 January 2003 providing for the sale of a very much larger quantity of sugar in seven shipments. This was one of the shipments under that contract. The contract was on a C&F free out one or two safe berths Hodeidah or Aden basis.
The contract provided for a pricing sale back option which, we were told, led to disputes between the parties, but we were not told what those disputes were. The contract provided for payment by letters of credit opened by HSBC or a first class bank acceptable to the charterers. It specified the documents which were to be submitted to the bank under the letter of credit. They of course included the bills of lading. They also included a signed copy of the charterparty showing the nomination of El-Mokha Shipping and Trading Co Ltd at Hodeidah ("El-Mokha") "to attend agency of the vessel/owners" at the discharge port. The contract expressly provided for the receivers to nominate the owners' agents at the discharge port, which proved to be Aden. It thus appears that the receivers nominated El-Mokha as the owners' agents at Aden.
The banking arrangements in fact set up are far from clear, but it appears that the receivers opened a letter of credit with the Yemen Kuwait Bank for Trade Investment YSC ("the Yemen Bank") as the issuing bank. There was no confirming bank. Credit Agricole Indosuez Suisse SA ("CAI") was the advising bank. One of the two documents which the receivers wish to adduce by way of fresh evidence suggests that CAI sent the original documents, including presumably the bills of lading, to the Yemen Bank. It is not however clear when the Yemen Bank received them.
There is a dispute between the parties as to whether and when the charterers received payment for the sugar. The two documents upon which the receivers wish to rely as fresh evidence are said to be relevant to that question. For reasons which will appear below it is not necessary for us to resolve those questions or, indeed, to decide whether the fresh evidence should be admitted. We will not therefore lengthen this judgment by rehearsing the arguments, either on the question whether the evidence should be admitted, or on the questions whether and when the charterers were paid.
On 22 February the receivers sent a fax to the charterers saying that the latest information from the master of the vessel was that her ETA was 26 February and that
"in view of the original Bs/L … have not been received, kindly issue your LOI to owners and have them urgently instruct Master/Ship's agents allowing vessel to commence discharge and deliver cargo for us without production original bills of lading. …"
The next document available to the court is an email from the charterers to the receivers dated 25 February attaching "a new text". As the judge held in paragraph 13 of his judgment, it appears that there had been some communication between the charterers and the receivers requiring the receivers to produce a letter of indemnity in respect of the cargo and presumably as some backup (as he put it) for any letter of indemnity that the charterers might themselves issue to the owners.
The receivers replied to that email by fax to which they attached the receivers' LOI duly signed. It was in the form which had been attached to the email and was in the same form as the charterers' LOI. The fax was in these terms:
"In compliance with your request, we herewith return back to you the required LOI duly signed/stamped by us.
Kindly ensure to have Owners of the above vessel to instruct Master/ship's agent allowing vessel to commence discharge and deliver cargo to us without production original Bills of Lading in order avoid any delay berthing vessel.
Kindly confirm the attached LOI in a good readable order."
It is thus clear that the receivers' purpose in providing their LOI was to obtain delivery of the cargo. It seems a reasonable inference, as the judge held, that the charterers asked them for an LOI, not being willing to provide their own LOI without the receivers doing the same. It is clear from the receivers' faxes to which we have referred that, having provided their LOI, they expected the charterers to instruct the owners to deliver the cargo to them. Not only was their contract of sale with the charterers, but so was their LOI. It is common ground that the parties to the receivers' LOI...
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