Societe De Distribution De Toutes Merchandises En Cote D'Ivoire Trading as "Sdtm-Ci" and Others v Continental Lines N.v and Another
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux |
| Judgment Date | 18 June 2015 |
| Neutral Citation | [2015] EWHC 1747 (Comm) |
| Docket Number | Case No: 2013 FOLIO 734 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 June 2015 |
[2015] EWHC 1747 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
The Honourable Mr Justice Flaux
Case No: 2013 FOLIO 734
Robert Thomas QC and Benjamin Coffer (instructed by Clyde & Co) for the Claimant
Timothy Young QC(instructed by Lax & Co) for the First Defendant
Hearing date: 20 May 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This action involves a cargo claim by various claimants in respect of two consignments of some 453,089 bags of rice carried on the vessel SEA MIROR ("the vessel") from Karachi in Pakistan to Abidjan in the Ivory Coast pursuant to two bills of lading. The first defendant (to which I will refer as "the carrier") was the carrier under those bills of lading. The claim against the second defendant has not been pursued. It is common ground that the bills of lading contained and/or evidenced contracts of carriage incorporating the Hague Rules and some of the terms of a Booking Note dated 15 March 2012 between the carrier and Louis Dreyfus Commodities limited which in turn incorporated the terms in so far as germane of a voyage charterparty on the Synacomex 90 Form dated 9 June 2011 for the vessel MOHAVE MAIDEN.
Cargo claims have arisen in respect of alleged moisture damage during the voyage and loss through (i) bags allegedly becoming torn during loading and/or carriage and/or discharge and (ii) alleged short delivery of the number of bags stated to have been shipped in the bills of lading. The principal issues between the parties on the pleadings concern whether the loss and damage was caused by inadequate or improper loading and/or stowage and/or discharge of the cargo and, if so, whether the carrier is responsible for that loss and damage under the terms of the contracts of carriage or is entitled to rely upon one or more of the defences under Article IV rule 2 of the Hague Rules.
By a consent Order at the Case Management Conference, the following preliminary issue was ordered to be tried:
"Whether on the proper construction of the contract of carriage contained in or evidenced by the bill of lading dated 7 April 2012 the First Defendant is liable for loss or damage to the cargo caused by improper loading, stowage or discharging of the cargo."
This judgment is in respect of that preliminary issue.
Terms of the contract and background
The dispute raised by the preliminary issue concerns primarily clause 5 of the standard Synacomex 90 Form charterparty as incorporated in the contracts of carriage, which provides as follows:
"Cargo shall be loaded, spout trimmed and/or stowed at the expenses and risk of Shippers/Charterers at the average rate of 1,500 metric tons per weather working day … Cargo shall be discharged at the expenses and risk of Receivers/Charterers at the average rate of 1,500 metric tons per weather working day ……Stowage shall be under Master's direction and responsibility…Charterers and Owners are allowed to work overtime, such expenses shall be for the account of the party ordering same. If ordered by Port Authorities, overtime shall be for Charterer's account. Overtime services rendered by ship's crew shall be in all cases for Owners' account".
Other terms of the charterparty incorporated in the contracts of carriage which were alleged by one party or the other to be relevant to the dispute I had to decide are as follows:
" Clause 2
…At Load Owners shall provide and install at their risk and expense and on their time all that is required for safe stowage of grain according to local and international regulations.
Clause 10
If ordered to be loaded or discharged at more than one berth and/or port, the vessel to be left in seaworthy trim to Master's reasonable satisfaction for the passage between berths and/or ports at Owners' expense at loading and at Charterers'/receivers' expense at discharging ports, and time used for placing vessel in seaworthy trim shall count as laytime or time on demurrage.
Clause 31
Any stevedore damage during the discharge to be settled directly between the Owners and Stevedore. Time lost for repairing such damage not to count as laytime provided vessel's class or seaworthiness is not affected by the damage. If necessary, Charterers will endeavour to assist Owners with the same.
Clause 32
Cargo to be properly protected against influence of engine and boilers.
Clause 43
Materials and dunnage to be for Owners' account and time – Owners option to use those on board or craft paper if allowed by port authorities.
Clause 45
Owners to guarantee all holds / hatches, cranes workable simultaneously and to instruct master to have all holds / hatches worked all the time at each port."
The vessel arrived at Abidjan on 15 May 2012 and completed discharge on 26 May 2012. The cargo claimants' case is that on discharge loss and damage was ascertained consisting of (i) wet and mouldy bags; (ii) loss of cargo from torn bags and (iii) short delivery of bags. To the extent that any wetting or mould damage was caused by the way in which the bags were stowed, it is accepted by the carrier that, by virtue of the sentence in clause 5: "Stowage shall be under Master's direction and responsibility", it is responsible for such bad stowage. Equally, the issues raised by the alleged short delivery are factual issues with which the preliminary issue is not concerned and which are for another day. The question raised by the preliminary issue is in essence whether, if it is established that there were shortcomings in the loading or the discharge, that is the responsibility of the carrier or of the shippers/charterers/receivers (and thus the cargo interests) under clause 5 of the charterparty incorporated into the contracts of carriage.
It is common ground that, at common law, responsibility for loading, stowage and discharge is upon the carrier, but that responsibility for those functions can be transferred to the cargo interests: see per Lord Steyn at [11] of his opinion in Jindal Iron and Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (" The Jordan II") [2004] UKHL 49; [2005] 1 WLR 1363. Both at common law and under Article III rule 2 of the Hague Rules, it is possible for the carrier and the cargo interests to enter an express agreement that the carrier will not be responsible for loading, stowage or discharge operations: see per Devlin J in his classic judgment in Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 at 417–8, followed and applied by the majority of the House of Lords in Renton v Palmyra Trading Corporation [1957] AC 149 (per Lord Morton of Henryton at 169–170; Lord Cohen at 173 and Lord Somervell of Harrow at 174), which was in turn followed and applied by the House of Lords in The Jordan II.
However, it is also common ground that for a term in a contract of carriage to have the effect of transferring responsibility for the functions of loading, stowage or discharge to the charterers or the cargo interests, it must be in clear terms: see per Tuckey LJ in the Court of Appeal in The Jordan II [2003] EWCA Civ 144; [2003] 2 Lloyd's Rep 87 at [14]:
"I have already referred to the position at common law and the need for clear words if the contract is to transfer the obligation to load, stow and discharge from owners to charterers. There are three facets of the cargo operation which have to be considered. Who is to pay for it; who is to carry it out; and who is liable for it not being done properly and carefully? The judge decided and I agree that there is no presumption that each of these responsibilities should fall on the same party. In other words, if the charterer has agreed to pay for the cargo operation, there is no presumption that he has also agreed to carry it out or be liable if it is done badly."
Both parties relied upon a passage in Cooke on Voyage Charters 4 th edition at [14.55] as a useful summary of the law and of the correct approach to construction of clauses concerned with responsibility for loading, stowage and discharge:
"In The Jordan II it was emphasised that each case would depend upon the terms of the charter in question and the context in which it has been made. Nevertheless, the following guides to construction may be deduced:
1. Since the responsibility for loading and discharging operations within the ship, and for stowage, is normally that of the owner, clear words are necessary to transfer the responsibility for these operations to the charterer.
2. A clause which confers upon the charterer the right to appoint stevedores does not, without more, transfer to him the responsibility for their acts or omissions.
3. A clause which makes the charterer responsible for the expense of employing stevedores to perform loading, stowage or discharging does not, without more, transfer responsibility.
4. A clause which provides that the charterer shall perform loading, stowage or discharging does transfer responsibility for those operations. It was said to have been rightly conceded in The Jordan II that if all cargo work had to be performed by the charterer, he would be liable if it was not properly and carefully carried out."
The central dispute raised by the preliminary issue in the present case is whether clause 5 transferred responsibility for loading and stowage from the carrier to the...
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