Seven Seas Transportation Ltd v Pacifico Union Marina Corporation (Oceanic Amity, Satya Kailash)

JurisdictionEngland & Wales
Judgment Date07 February 1984
Judgment citation (vLex)[1984] EWCA Civ J0207-5
Date07 February 1984
CourtCourt of Appeal (Civil Division)
Docket Number84/0027

[1984] EWCA Civ J0207-5







Royal Courts of Justice


Lord Justice Oliver

Lord Justice Robert Goff


Seven Seas Transportation Limited
Pacifico Union Marina Corporation

MR. K. S. ROKISON Q.C. and MR. J. R. L. THOMAS (instructed by Messrs. Richards, Butler & Co.) appeared for the Appellants.

MR. N. A. PHILLIPS Q.C. and MR. J. P. C. SUMPTION (instructed by Messrs. Ince & Co.) appeared for the Respondents.


This is the judgment of the court.


There is before the court an appeal from a decision by Staughton J. on a consultative case stated by an arbitrator, Mr. John Franklin Willmer Q.C. The appellants, Seven Seas Transportation Limited, who were the claimants in the arbitration, were the charterers of a vessel called "Oceanic Amity" from the respondents, Pacifico Union Marina Corporation, who were the respondents in the arbitration.


The matter arises in the following way. The appellants were the owners of another vessel called "Satya Kailash". That vessel had carried a cargo of grain from the United States to India. She was due to discharge her cargo at an Indian port, Tuticorin; but she was too deeply laden to enter the port. So the appellants chartered the "Oceanic Amity" from the respondents for the purpose of lightening the "Satya Kailash" to enable her to enter Tuticorin. The "Oceanic Amity" was chartered under a timecharter in the New York Produce Exchange form, dated 26th June 1975. We will refer to the relevant terms of that charter in a moment. It is enough to record at present that it was for a period of "20/40 days lightening operation in Charterers' option", and that it was stated in the charter that "it is understood Charterers intend use vessel to lighten grain from mother ship to Indian ports".


The lightening operation took place as planned. But, in the course of coming alongside, and during the lightening operation, the two vessels came into contact on a number of occasions. We are concerned with three of these occasions, in the course of which both vessels suffered damage. This damage led to claims and counterclaims which were the subject of an ad hoc arbitration before Mr. Willmer. We need not go into the full details of the arbitration. For present purposes, it is enough to record the arbitrator's conclusion that, on each of the three relevant occasions, the contact between the two vessels was caused by negligent navigation by the Master of the "Oceanic Amity". There then arose the question whether the respondents were exempted from liability for the damage so caused to the "Satya Kailash". There were two provisions of the charterparty upon which the respondents relied—clause 16, a mutual exceptions clause, and clause 24, a clause paramount. The arbitrator indicated that, in his opinion, the respondents were not protected by clause 16, but were protected by clause 24. He then posed the following question for the opinion of the court:

"Whether, upon the true construction of the time charterparty dated the 26th June, 1975, the Respondents are exempt by reason of the provisions of either clause 16 or clause 24 thereof from liability for physical damage to the Claimants' vessel 'SATYA KAILASH' and consequential loss caused by the negligence of their master in the navigation or management of the "OCEAN AMITY' while coming alongside or departing from the 'SATYA KAILASH'."


Staughton J., in agreement with the view of the arbitrator, answered this question:

"Not exempt by virtue of clause 16, but exempt by virtue of clause 24".


From his decision that the respondents are exempt by virtue of clause 24, the appellants now appeal to this court; the respondents cross-appeal in order to challenge the judge's decision that they are not exempt by virtue of clause 16.


So on this appeal we are concerned with the construction and effect of these two clauses, set in their context in the charter-party. We shall now set out the text of these two clauses. They are both printed clauses, and read as follows:

"16.…The act of God, enemies, fire, restraint of princes, rulers and people, and all dangers and accidents of the Seas, Rivers, Machinery, Boilers and Steam Navigation, and errors of navigation throughout this Charter Party, or with mutually excepted.

"24. It is also mutually agreed that this Charter is subject to all the terms and provisions of and all the exemptions from liability contained in the Act of Congress of the United States approved on the 13th day of February, 1893, and entitled 'An Act relating to Navigation of Vessels; etc.' in respect of all cargo shipped under this charter to or from the United States of America. It is further subject to the following clauses, both of which are to be included in all bills of lading issued hereunder:

U.S.A. Clause Paramount

This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading be repugnant to said Act to any extent, such term shall be void to that extent, but no further."


There was then a "Both to Blame Collision Clause" in the printed form, forming part of clause 24; that was deleted in the present charter, but a new Both to Blame Collision Clause was incorporated elsewhere in the charter, by a typed clause, clause 40.


There are very few other provisions of the charter which are relevant. We have already recorded that the charter was a timecharter in the New York Produce Exchange form. It contained a London arbitration clause; it is common ground that the charter is governed by English law. The only other clause we need set out is clause 39, which provides as follows:

"39. The vessel on delivery and during Charter Party is classed B.V., fully seaworthy, ready, clean and suitable to receive and carry food grains. The ship's holds/tweendeck shall also be free from loose scale."


Before the learned judge four issues were canvassed. The first three issues related to clause 24, and the fourth to clause 16. These issues, and the judge's decision on them, were as follows:


(1) Was the Carriage of Goods by Sea Act of the United States effectively incorporated in the charterparty? The judge held that it was.


(2) If so, was its effect confined to voyages to and from United States ports? The judge held that it was not.


(3) Did the damage to the "Satya Kailash" fall within the exception of "loss or damage" arising from act neglect or default of the Master in the navigation of the ship within section 4(2) of the United States Act? The judge held that it did.


(4) Were the respondents exempted from liability for the damage to the "Satya Kailash" by reason of the exception of errors in navigation in clause 16? The judge held that they were not.


On the appeal before this court Mr. Rokison for the appellants advanced two submissions. First, while accepting that clause 24 was effective to incorporate the United States Act into a charter in this form, nevertheless, he submitted that, on a true construction, section 4 of the Act (on which the respondents relied for protection) was not incorporated into this charter in relation to the adventure as contemplated and performed. Second, if (contrary to his first submission) section 4 was so incorporated, nevertheless the damage suffered by the "Satya Kailash" was not "loss or damage" arising or resulting from the act neglect or default of the Master in the navigation of the ship within section 4(2) of the Act, because (1) the damage was not "in relation to the loading, handling, stowage, carriage, custody, care or discharge of the goods" as provided in section 2 of the Act, and (2) the damage suffered by the appellants by reason of the damage to the "Satya Kailash" was not suffered by them in their capacity as charterers of the "Oceanic Amity", and such damage did not therefore fall within the protection of section 4(2) of the Act as incorporated into the charter.


In order to consider these submissions, we must first refer to the relevant provisions of the United States Act. This is, of course, the Act of Congress which, to the extent there provided, incorporated the Hague Rules into the law of the United States. In the preamble to the Act, it is provided that "every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of this Act." Section 1 then sets out the definitions in Article I of the Hague Rules. Section 2 provides, as in Article II, that:

"Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth."


Section 3 then sets out (as in Article III) the responsibilities and liabilities of the carrier; and section 4(as in Article IV) his rights and immunities. Section 4(2), which contains 17 immunities in sub-paragraphs lettered (a) to (q), provides in respect of (a) that:

"(2) Neither the carrier nor the ship shall be responsible for loss or damage arising...

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