Overseas Transportation Company v Mineralimportexport (Sinoe)
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE MEGAW,LORD JUSTICE STEPHENSON |
| Judgment Date | 07 December 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J1207-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 December 1971 |
[1971] EWCA Civ J1207-2
In The Supreme Court of Judicature
Court of Appeal
Appeal by Mineralimportexport (charterers) from judgment of Mr. Justice Donaldson on 19th March, 1971.
The Master of The Rolls (Lord Denning),
Lord Justice Megaw and
Lord Justice Stephenson.
In the Matter of the Arbitration Act, 1950
and
In the Matter of An Arbitration
Mr. KENNETH ROKISON (instructed by Messrs. Norton, Rose, Botterell & Roche) appeared on behalf of the Appellants Mineral import export.
Mr. A. J. LLOYD, Q. C., and Mr. J. COOKE (Instructed by Messrs. William A. Crump & Son) appeared on behalf of Overseas Transportation Co., Respondents.
This is a claim by shipowners against charterers for demurrage. On 7th June 1968, Overseas Transportation Co. of Monrovia, the owners of the steamer "Since", flying the Liberian flag, chartered the vessel to a Rumanian company, Mineral import export of Bucharest. The vessel was to go to Constantza in Rumania, load 10,00$ tons of cement in bags and to carry them to Chittagong in Pakistan. At the discharging port the cargo bad to be discharged at a minimum rate of 750 tons per weather working day of 24 consecutive hours. Demurrage was payable at £300 a day.
The vessel went to Constantza and loaded there some 10,000 tons of cement in bags. On 29th June 1968 a bill of lading was issued. It Incorporated the terms, conditions and exceptions of the charterparty. It named the shipper as Mineral import export of Bucharest (who were the charterers). It named the consignee as "to order of the National Bank of Pakistan". The receivers were the Government of Pakistan.
The vessel made the voyage to Chittagong and arrived there on 10th September 1968. Two days later the discharging began. The lay days expired on 28th September 1968, after which time the vessel was on demurrage.
Unfortunately there was gross delay in discharging the vessel. The dispute went to arbitration in London. The arbitrators appointed Mr. Clyde as Umpire. He has stated a case for the Court.
The Umpire put the blame for the delay on the stevedores. He said: "the stevedores were Incompetent, inexperienced, too few In number, unequipped with sweepers to clear the escaped cement from the undischarged cargo, supplied with the wrong gear, and allergic to all orders and directions of the Master." The bags got out and torn. Cement escaped In large quantities into theholds. It became knee deep. "The story of Incompetence ended on 31st October 1968 when the ship was empty and free to sail."
Owing to the delay, the shipowners claim a earn of 68,762. 10s. 0d. for demurrage. It was, of course, the obligation of the charterers to discharge the ship in due time or pay the demurrage for the delay. But the charterers rely on two clauses to exempt them. The first is the cesser clause. The whole of this charter was on the usual Gencon form, but with many alterations, several clauses struck out and others put in their place. The cesser clause here was as follows:-
"27. - Charterers' liability shall cease as soon as the cargo is on board Owners having an absolute lien on the cargo for freight, dead freight, demurrage and average."
Cesser clauses have frequently been before the Courts. It is well settled that the two parts of that clause are co-extensive. The charterers are only relieved of liability in so far as the owners are given a lien On the cargo. That was laid down by Lord Esher, Master of the Rolls, in the leading cases of Clink v. Bedford (1891) 1 Q. B. 623; and Hansen v. Harrold Brothers (1894) 1 Q. B. 612. But the present case has thrown up a new point. Mr. Rokison for the charterers said that they are relieved of liability if a right of lien Is given to the shipowners, even if that right turned out as be no good to them. Whereas Mr. Lloyd for the shipowners a says that the charterers are only relieved of liability if the lien turns out to be a good and effective lien when It comes to be exercised.
The award shows that the lien here was not effective at all. The reason was that this cargo was destined for the Government of Pakistan and the Government would not have allowed the shipowners to exercise a lien over it. The Umpire finds that at this time"the President of Pakistan had issued a proclamation of emergency. The proclamation was In wholly general terms, but in essence it meant that the President could suspend any lava and could forbid any enforcement of them." The Umpire finds "that at the material time no lien for demurrage could, legally or practically, have been exercised by or on behalf of the Owners on the cargo at Chittagong, either ashore or on board."
There are observations in two cases which support Mr. Rokison's argument that a right of lien is enough, even though it is not effective. In Brankelow Steamship Co. v. Canton Insurance Office (1899) 2 Q. B. 178 at page 189, Lord Justice Vaughan Williams said:- "nor do I think that it would have made any difference to the 'cesser' of liability even if the shipowners had no lien or no effective lien for the recovery of freight." But when that case reached the House of Lords under the name of Williams v. Canton Insurance Office 1901 A. C. 462, their Lordships expressly kept open the point, see pages 467, 476.
The other case is Fidelitas Shipping Co. Ltd. v. V/O Exportchleb, 1963 2 Lloyds List 113, in which Lord Justice Pearson referred to the cesser clause as containing a participial phrase ("the owner having a lien" &o.) and said (at page 124): "If the shipowners' argument were correct, the participial phrase would have to do double duty: It would still have to create the lien, and it would also have to mean 'If and in so far as the owners have a lien which is effective at the time of the discharge of the cargo'". Lord Pearson evidently thought that the clause should not be made to do double duty. In his view it was sufficient for the owner to have a right of lien – It was not necessary for it to be effective at the time of discharge of the cargo. But the other Judges did not go with Lord Justice Pearson. The case wasdecided on another point altogether. See the subsequent proceedings in 1 Q. B. 630.
The upshot of it all is that the point is open for us to decide today. It seems to me that, once it is accepted that the two parts of the clause are to be co-extensive, then it is sensible to require that the lien should be an effective lien. It is no use for the shipowner to be given a right of lien unless he can exerdise it so as to get the money due to him. A right without a remedy is a vain thing. So I would hold that the lien for demurrage must be effective at the time of discharge of the cargo – unless it is so, the charterers are not relieved of their liability.
Mr. Rokison also pointed out that, if the lien had to be an effective lien, it will give rise to practical difficulties. There would have to be enquiries to ascertain the facts at the port of discharge and as forth. I think this is true, but I do not think the difficulties would be too great: for I notice that the "lien clause" in the ordinary Gencon form seems to contemplate just such enquiries at the port of discharge. It is struck out in this particular charter, but looking at the print underneath, it runs:-
"Owner shall have a lien on the cargo for freight, deadfreight, demurrage and damages for detention. Charterers shall remain responsible for dead-freight and demurrage (including damages for detention), Incurred at port of loading. Charterers shall also remain responsible for freight and demurrage (including damages for detention) incurred at port of discharge" -
and these are the important words -
-"but only to such extant as the Owners have been unable to obtain payment thereof by exercising the lien on the cargo."
That shows that the usual lien clause in the Gencon form requires an examination into the effectiveness of the lien on the cargo, of course, I do not refer to that printed clause (which is struck out) to construe this cesaer clause. I only refer to it to show that it is considered practicable to enquire into the effectiveness of the lien.
Holding therefore that the lien must be an effective lien, it was not effective In this case. It was not effective because the Government of Pakistan would not permit it to be exercised. Not being effective. It means that the charterers are not relieved by this cesser clause of their liability for demurrage.
Now for the second point. It arises in this way: the shipowners are prima facie entitled to claim demurrage from the charterers, because the charterers were under an absolute obligation to unload the ship in the stated time. But, on the other hand, the charterers can resist that claim by showing it waa the shipowners' own fault that the unloading was delayed. Scrutton on Charterparties (17th edition) Article 134. In this case the charterers say it was the shipowners' fault because the stevedores were the owners' servants. The Umpire finds that in all probability the stevedores were appointed by the local agents for the receivers, who were the Government of Pakistan:...
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