Sevylor Shipping and Trading Corporation v Altfadul Company for Foods, Fruits & Livestock
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 23 March 2018 |
| Neutral Citation | [2018] EWHC 629 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000546 |
| Date | 23 March 2018 |
[2018] EWHC 629 (Comm)
Mr Justice Andrew Baker
Case No: CL-2017-000546
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Alistair Schaff QC & Andrew Carruth (instructed by Horn & Co) for the Claimant
Robert Thomas QC & Thomas Steward (instructed by Holman Fenwick Willan LLP) for the Defendants
Hearing dates: 15, 16 February 2018
Judgment Approved
Introduction
This case raises three questions of law concerning claims made by the lawful holder of bills of lading to whom and in whom rights of suit under the contract of carriage contained in or evidenced by the bills of lading have been transferred and vested as if he had been a party to that contract, under s.2(1) of the Carriage of Goods by Sea Act 1992 (‘COGSA 1992’). The case came before me for argument as an appeal under s.69 of the Arbitration Act 1996 against a final award of arbitration dated 7 August 2017, with leave to appeal granted by Bryan J on 31 October 2017.
The arbitration concerned bills of lading dated 4 January 2014 by which the master of the claimant's refrigerated cargo ship Baltic Strait acknowledged shipment at Guayaquil, Ecuador, in apparent good order and condition of 249,250 boxes of fresh bananas for carriage to and discharge in Libya. The cargo deteriorated during the carriage and was discharged at Tripoli in that damaged condition between 28 January and 11 February 2014. The first defendant (‘Altfadul’) was named as consignee in the bills of lading and received the cargo in its damaged state at Tripoli.
The arbitrators, Messrs Martin-Clark, Young QC and Rayfield, found in their award that the claimant bill of lading carrier was liable under the terms of the bills of lading for the damage to the cargo. There is no challenge to that part of the award. The arbitrators valued the damage to the cargo, measuring it as the difference between the value of the cargo as in fact discharged and its value had it been sound on arrival, at US$4,567,351.13. There is no challenge to that part of the award either.
The arbitrators further found that Altfadul “ were at all material times (and certainly were after the resolution of the disputed rejection) the lawful holders of the Bills of Lading and accordingly had … relevant rights of suit under section 2(1) [of COGSA 1992]”. There was some debate about the precise effect of that finding, if it matters to know when Altfadul became lawful holder of the bills of lading. There was however no dispute but that Altfadul was correctly held by the arbitrators to have contractual title to sue the claimant on the bills of lading under s.2(1) of COGSA 1992, subject to the assignments to which I refer below.
It appears from the award that on 30 January 2014, Altfadul purported to reject the cargo, under the contract pursuant to which it had paid its seller for it, and claimed a refund of the price paid. The seller, Co.Ma.Co. S.p.A. (‘CoMaCo’), was also the voyage charterer of the vessel under a voyage charter dated 14 December 2013 concluded between it and the claimant on the Gencon form with additional clauses. The bills of lading were on the Congenbill form issued for use with the Gencon form of charter. They referred to and incorporated the terms and conditions, liberties and exceptions of the voyage charter, including its arbitration clause. Hence the arbitrators' jurisdiction.
In due course – the award does not say when – CoMaCo agreed a credit of US$2,586,105.09 in favour of Altfadul, to be spread over three subsequent shipments. The arbitrators held that this was by way of settlement of a dispute over the validity of Altfadul's purported rejection so as to preclude or reverse that rejection. Hence the arbitrators' reference to a resolution of a disputed rejection. The arbitrators also found that the amount of this settlement credit was almost exactly the same as an amount paid under the cargo insurance on the consignment “ which apparently could not be made directly to Altfadul in Libya”. That amount was just US$0.16 less, namely US$2,586,104.93.
The second defendant (‘SIAT’) is the well-known Italian insurer. It seems likely that SIAT was the cargo insurer, at the instance of CoMaCo, although the award does not say so. Its relevant capacity, however, is as the effective claimant in the arbitration which it joined following an assignment to it by CoMaCo on 6 November 2014 of various rights. The rights assigned included Altfadul's rights under the bills of lading as assigned by Altfadul to CoMaCo by an assignment dated 3 November 2014.
Though SIAT is therefore the party entitled to payment of the sum awarded by the arbitrators, that entitlement is as assignee of Altfadul's rights. This appeal therefore concerns the nature and extent of those rights. The sum awarded by the arbitrators is the full value of the cargo damage, US$4,567,351.13, plus interest, with jurisdiction reserved in relation to costs. The arbitrators rejected the claimant's contention that in assessing damages credit had to be given for the US$2,586,105.09 promised by CoMaCo to Altfadul. That is the part of the award challenged on appeal.
Questions Arising
The defendants' first answer to the claimant's contention before the arbitrators was that the sum promised by CoMaCo was or represented an insurance recovery so as to be res inter alios acta. The arbitrators dismissed that answer, concluding that, despite the extreme similarity in amounts, the credit promised by CoMaCo was by way of settlement of the sale contract dispute and was not an insurance payment. That conclusion cannot now be reopened.
The defendants' second answer to the claimant's contention on the measure of damages was that Altfadul could recover CoMaCo's loss, incurred by way of the credit promised to Altfadul, by virtue of s.2(4) of COGSA 1992. The arbitrators accepted that answer. Leave was granted to appeal against that conclusion upon the following two questions of law:
i) Whether s.2(4) of COGSA 1992 operates where rights of suit under the bill of lading contract have not previously been vested in the party which has suffered loss, or whether it only operates where rights of suit were previously vested in that party but it has lost them by virtue of the operation of s.2(1) of the Act;
ii) Where the charterers of a vessel suffer loss and damage but no longer pursue a claim against the carrier under the charter party, can the lawful holder of the bill of lading claim for the charterers' loss under the bill of lading contract by virtue of s.2(4) of COGSA 1992, or can the lawful holder of the bill of lading only claim under that provision for losses suffered by parties which have no rights of suit under any relevant contract of carriage?
In relation to Question (ii), the reference to charterers no longer pursuing a claim was Bryan J's refinement to the question proposed by the claimant's application for leave which had referred to charterers not bringing a claim. In the course of argument, it became apparent that the charterers' bringing or not bringing, pursuing or not pursuing, their own claim was a red herring, at all events absent any suggestion that the charterers' loss had been compensated by the bill of lading carrier as the result of their making a claim. It also became apparent that the argument concerned exclusively head charterers, i.e. those chartering directly from the bill of lading carrier. Finally, the second half of Question (ii) seems to me unnecessary. The real question, therefore, and the further refined version of Question (ii) that I shall consider, is simply this:
ii) Whether the lawful holder of the bill of lading can claim by virtue of s.2(4) of COGSA 1992 loss suffered by the charterer of the vessel in respect of the bill of lading voyage whose charterparty was with the bill of lading carrier.
The third question of law arises by virtue of an argument by the defendants that the award is correct in law and so should be upheld even if it is wrong about s.2(4) of COGSA 1992. The defendants contend that at common law Altfadul was entitled to damages measured as the full value of the damage to the cargo irrespective of any recovery or entitlement to recover pursuant to its contractual arrangements for the sale and purchase of the cargo. That third answer to the claimant's contention on the measure of damages is not dealt with in the award. Mr Schaff QC for the claimant accepted, rightly, that if it raised only a point of law capable of being answered in the defendants' favour on the findings of fact in the award as it stands, then it was open to Mr Thomas QC for the defendants to seek to resist the appeal by reference to it as he did. Thus, the third question of law to be addressed is:
iii) Whether on the facts found in the award, Altfadul (and therefore SIAT) was entitled to damages equal to the full value of the cargo damage irrespective of any recovery or entitlement to recover from its seller, CoMaCo.
Mr Thomas QC contended, if he needed to, that if it were not possible to answer Question (iii) in the defendants' favour, as it stands and as a matter of law, then the award should be remitted to the arbitrators because, he said, the common law arguments were put to the arbitrators separately from and in addition to the insurance proceeds argument (paragraph 9 above) but were not addressed by them in the award. He also contended, as a final alternative, that if necessary the award should be remitted for reconsideration of the arbitrators' conclusion on the insurance proceeds...
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