Siskina (Owners of cargo lately laden on board) v Distos Compania Naviera S.A.

JurisdictionEngland & Wales
Judgment Date01 June 1977
Judgment citation (vLex)[1977] EWCA Civ J0601-1
Docket Number1976 O. No. 3163
CourtCourt of Appeal (Civil Division)
Date01 June 1977
Owners of Cargo Lately On Board The Vessel "Siskina" and Ors
Distos Compania Naviera S.A.

[1977] EWCA Civ J0601-1


The Master of The Rolls (Lord Denning)

Lord Justice Lawton (not present) and

Lord Justice Bridge

1976 O. No. 3163

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court Justice Queen's Lwch Division

Commercial Court

(Mr. Justice Kerr)

MR. A.H. EVANS, Q.C. and MR. B. RIX (instructed by Messrs. Sinclair, Roche and Temperley, Solicitors, London) appeared an behalf of the Plaintiffs (Appellants).

MR. A. LLOYD. Q.C. and MR. N. LEGH-JONES (instructed by Messrs. Holman, Fenwick and Willan, Solicitors, London) appeared on behalf of the defendants (respondents).


The "Siskina" is now sunk to the bottom of the Mediterranean Sea. In her lifetime she was a motor-vessel owned "by a one-ship Panamanian Company: but she was managed by Greeks in Piraeus. Early last year she was chartered by an Italian firm for a voyage from North Italy to the Red Sea. She arrived at the port of Carrara on the Gulf of Genoa and took on a cargo of general merchandise. Six-thousand tons of it. We are much concerned with this cargo. It came from the industrial north of Italy and was destined for the rich land of Saudi Arabia. There were marble slabs and tiles for the wealthy homes. Refrigerators and gas cookers for the kitchens. And blankets in thousands for the cold nights. All to be carried to the port of Jeddah on the Red Sea. So the cargo was a very mixed bag. Many different parcels from many different sellers for many different consignees.


The buyers in Saudi Arabia had paid for all this cargo in advance. They had bought it from the sellers in North Italy on c.i.f. terms by means of irrevocable letters of credit. So they had not only paid the price of the goods themselves. They had in addition paid the freight for the voyage and also the insurance to cover it. All the documents were in order. The shipowners, or someone on their behalf, had given bills of lading to the shippers acknowledging the receipt of the goods on board. They had stamped them boldly in large letters "Freight pre-paid". These documents, including the bills of lading, had been handed by the Italian shippers to the bank and they had obtained cash against documents. The shippers duly endorsed the bills of lading to the consignees in Saudi Arabia: and sent them on to the buyers there. Then, in the ordinary course, when the ship arrived at Jeddah, the buyers would present the bills of lading to the ship and obtain the goods. If the goods had been delayed or damaged in transit,the consignees would have to resort to' the Italian Courts in Genoa: "because there was a clause in the Bills of Lading giving exclusive jurisdiction to those Courts.


The vessel, however, never got to Jeddah or anywhere near it. She went through the Mediterranean till she was near the entrance to the Suez Canal. There she stopped. The ship-owning company said that the charterers - the Italian firm-had not paid them the freight due under the charterparty. That was, of course, very different from the freight under the Bills of Lading. The cargo owners had already paid the bill-of-lading freight, and got the bills of lading marked "Freight pre-paid". But the charterers had not paid the charter freight to the shipowning company. It should have been paid to the shipowning company in Piraeus as soon as the bills of lading were signed. The charterers had not paid it; or, at any rate, not all of it. So the shipowning company said that they were not going to take the vessel through the Sues Canal-with all the dues and expense that that entailed-unless they were paid the full balance of the charter freight. So the "Siskina" waited outside the entrance to the Canal. She waited there for over four weeks-from 6th March, 1976 to 6th April, 1976. The charterers paid two instalments amounting to a large sum and said it was all that was due. But the shipowning company said it was not enough. Not being enough, they ordered the Master to turn back and go to Cyprus and unload the cargo there. This was not the first occasion of the kind. We are told that during the last year there have been about twenty cases in which vessels, due for discharge in the Middle East, have been diverted to Cyrus. They have there discharged their cargoes rather than carry them to their proper destinations. They pay scant regard to their obligations to the cargo owners.


See what happened in this very case. The vessel went back to the port of Limassol in Cyprus. As soon as she got there the shipowning company issued a writ in rem against the cargo-although the cargo owners were not in fault at all. The shipowning company applied to the Supreme Court of Cyprus for a warrant for the arrest of the cargo and for an order for it to be discharged and placed in warehouse. This writ and application were not served on the owners of the cargo. They knew nothing about it. It was only served on the cargo itself like the arrest of a ship. It was supported by an affidavit by a lawyer saying that he had got his information from the Master. It said that the bills of lading had been marked "Freight prepaid" owing to the fraudulent misrepresentation of the charterers: and that the shipowning company were entitled to charter freight, of which a considerable sum was still outstanding; and that they were entitled to a lien on the cargo for the balance. So they sought to make the cargo owners pay for the misdeeds of the charterers.


On 10th April, 1976, the Supreme Court of Cyprus made the order asked. It issued a warrant for the arrest of the cargo. It appointed a company called Cyprian Seaways Agencies limited to discharge the cargo from the vessel to a safe place of storage, the cost to be a first charge on the cargo. CypriSeaways Limited put up a bond of £10,000 as security. Soon afterwards the cargo was unloaded. The marble tiles and slabs were left in the open and suffered a lot of breakage and chipping. Machinery was left out and was damaged by rain. Other goods were taken to warehouse. The value of the cargo was, we are told, some $5,000,000.


Soon after the discharge, the vessel about 20th April, 1976, left Limassol in ballast with no cargo. She has neverbeen heard of since. All that we are told is that six weeks later, on 2nd June, 1976. she sank near Astipalaia Island and became a total loss. That island is one of the Dodecanese on the way from Cyprus to Greece. We know of no reason why she sank. All we know is that the shipowning company have made a claim on the London Underwriters: and that the sum payable for the loss of the vessel will be more than $750,000.


The cargo-owners knew nothing of all this. They were merchants in Saudi Arabia, not well-versed in the intricacies of transport by sea. They made enquiries of the shippers, who enquired of the charterers. It was only on 31st May, 1976, that their lawyers in Genoa first heard that the goods had been taken to Cyprus, unloaded there and arrested by the shipowning company alleging a lien for freight. They immediately instructed lawyers in Cyprus: but by that time the vessel had disappeared without trace. They also instructed lawyers in London.


In Cyprus in June and July, 1976, the cargo-owners did all they could to get their goods released. The shipowning company refused to release them unless each cargo-owner paid them his "proportion"-so-called - of the charter freight and demurrage expenses. The shipping company had no right whatever to claim any such sum: because each of the cargo-owners had paid for his goods and had paid the freight to Jeddah for his parcel: and none was liable for this sum. Yet they were so anxious to get their goods that some of them submitted. They paid the sums demanded, whereupon the shipowners asked the Cyprus court to release the goods to them: and the court did so. In this way the shipowners collected sums amounting to over $75,000. That was much more than the balance outstanding to the shipowners (even if they had carried the goods all the way to Jeddah). So the shipowning company made a good profit.


The unfortunate cargo-owners, in order to get their goods to Jeddah, had, in addition, to pay the storage charges and the expenses of re-loading the goods on other vessels and carrying them on to Jeddah - very substantial sums indeed.


The rest of the cargo-owners did not agree to pay their "proportion". They applied to the Court in Cyprus for the release of the goods: and for higher security as a condition of their continued arrest; and for the shipowners to be answerable in damages in connection with the arrest of the cargo.


In England the cargo-owners were anxious about the insurance moneys which were payable in London to the shipowners for the loss of the "Siskina". The shipowning company had no assets except these insurance moneys: and the cargo-owners (or their insurers) did not want these moneys paid over to the shipowners, because they would then be beyond reach. So the cargo-owners on 2nd July, 1976, drafted a writ in the Commercial Court against the shipowners. They asked for leave to issue it and to serve notice of it on the shipowners in Greece out of the jurisdiction. The writ was endorsed with "claims for loss in respect of cargo lately carried on the defendant's vessel Siskina from Carrara in Italy and bound for Jeddah in Saudi Arabia under specified bills of lading, but wrongfully divertedto and detained at Limassol in Cyprus, as follows:


"(i) Damages for breach of duty and/or contract. (ii) An injunction to restrain the Defendants by themselves, their servants or agents or otherwise from disposing of their assets within the jurisdiction, and in particular the insurance proceeds in respect of the vessel 'Siskina' or their claims there to or removing the...

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