The Owners of the Cargo Lately Laden on Board the Ship "david Agmashenebeli" v The Owners of the Ship "david Agmashenebeli"
| Jurisdiction | England & Wales |
| Judgment Date | 31 May 2002 |
| Neutral Citation | [2002] EWHC 104 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | 1995 Folio No: 1613 |
| Date | 31 May 2002 |
[2002] EWHC 104 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
The Hon Mr Justice Colman
1995 Folio No: 1613
Mr T Saloman QC and Ms K Maxwell instructed by Ince & Co, on behalf of the Claimants.
Mr S Hofmeyr QC and Mr P MacDonald Eggers instructed by Richards Butler on behalf of the Defendant.
JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)
The Hon. Mr. Justice Colman
29 May 2002
Introduction
This action arises out of a dispute between cargo and shipowners relating to the nature of the duty of a master into whose vessel goods are loaded for carriage under a bill of lading contract as to the issue and clausing of bills of lading. In particular, it raises the question in what circumstances is a master entitled to decline to sign clean bills of lading.
The answer to that question is of considerable importance to the shipping industry. Clean bills of lading are essential documents for the purpose of triggering the right to receive payment under documentary credits issued in respect of contracts for the international sale of goods. If claused bills of lading are presented under such documentary credits they will ordinarily be rejected by the buyers' banks and sellers will be unable to obtain payment in the absence of special agreements with the buyers to permit the banks to make payment. Indeed, the inability of sellers to present clean bills of lading may operate as a repudiatory breach of the sale contract.
Conversely, if clean bills of lading are issued in respect of goods received by the vessel otherwise than in apparent good order and condition, the shipowners will be estopped as against an indorsee for value or against a person taking delivery against the bills from asserting that, at the time of loading, the goods were not in apparent good order and condition. In cases where the Hague-Visby Rules apply, and nowadays there are very few cases where they do not, a clean bill of lading is, by operation of Article III rule 4, prima facie evidence of the receipt of the cargo by the carrier in apparent good order and condition and when the bill has been transferred to a third party acting in good faith it is conclusive evidence of the apparent order and condition. Consequently, issue of a clean bill when the goods are not in truth in apparent good order and condition will in many cases expose the shipowners to a high risk of liability for defects in the order or condition of the goods which existed at the time when they were received by the vessel.
It may therefore fairly be said that the statement in bills of lading as to the apparent order and condition of the goods will in many cases be of fundamental importance to the operation of international contracts for the sale of goods carried by sea and to the operation of contracts for the carriage of goods by sea. Whereas it is common enough to encounter an allegation that a master has issued clean bills of lading notwithstanding the apparent condition of the goods when they were received on board, it is relatively uncommon to encounter an allegation, like that in the present case, that the master has claused bills of lading when he had no basis for doing so.
The issues which arise in this case can be divided into three groups as follows.
1. The Clausing Issue This divides into the following sub-issues.
(a) What duty, if any, does the law impose upon shipowners or other carriers in respect of the master's clausing of bills of lading?
(b) Was the actual apparent order and condition of the goods at the time of loading such as to justify the description of the goods which the master inserted in the bills of lading?
(c) Did the master's clausing of the bills of lading amount to a breach by the shipowners of the contract of carriage?
(d) If the shipowners were in breach, what loss was caused by that breach?
2. Title to sue The defendant shipowners contend that the claimants have no title to sue. As finally formulated, the defendant's case is that the ultimate receivers or their buyers had title to sue.
3. The Berthing Claim The claimants contend that the master unjustifiably declined to take the vessel into its discharging berth at Beihai, China, at the time when the Harbour Master had indicated that this should be done, in consequence of which the claimants suffered additional expenses by way of payments to the port authority.
Although title to sue is logically the first issue, I have listed and propose to determine the Clausing Issue first since that has occupied by far the greater part of this trial and because it raises an issue of the widest importance.
Outline of the Facts
On 13 January 1995 there was entered into a time charter of the Maltese vessel DAVID AGMASHENEBELI ("the Vessel") by its owners, Georgian Shipping Company of Valetta, to Meezan Shipping and Trading Inc of Toronto for minimum 9 months/maximum 11 months in charterers' option. The charter was subject to the Harter Act, 1893, and the USA Clause Paramount. Clause 8 of the time charter which was on the amended NYPE form provided that the Master would prosecute the voyages with the utmost despatch and further that the charterers were "to load, stow and trim and discharge the cargo at their expense under the supervision and responsibility of the Captain, who is to sign, if required to do by charterers, Bills of Lading for cargo as presented, in conformity with Mate's or Tally Clark's receipts".
On 4 April 1995 Transmarine Ltd of Columbus, Ohio sold to Agrosin Pte Ltd of Singapore 35,000 metric tons of urea in bulk at $180 per metric ton FOB Kotka, Finland. The goods specification was "white colour, free flowing, free from contamination, prilled form, treated against caking, free from harmful substances, production of Novgorod Acron, Russia who is supplied". Buyers were to insure the cargo. The goods were to be paid for by:
1. prepayment of a partial (but as yet unspecified) amount of the FOB value before shipment;
2. the balance on a bill of collection basis payable in 5 days from the date of receipt of a telex or fax from the supplier that the shipping documents specified had been sent from Murmansk, Novgorod or Moscow to Agrosin by courier at a stated date. The specified documents included a bill of lading or mate's receipt issued to the order of the buyers (Agrosin) and a certificate of quality issued by Independent Inspection at the port of loading.
The goods were to be shipped 20 April�5 May 1995, the date of the bill of lading or mate's receipt to be considered the date of shipment.
On 10 April 1995 the sale contract was amended to provide that the prepayment was to be made by 13 April to Acron directly. The invoice was stated to have been sent on 6 April 1995.
Also on 10 April 1995 Agrosin sold to Grand Prestige Enterprises of Hong Kong 35,000 metric tons urea in bulk at a price of US$238.75 per metric ton C&F Free Out CQD one safe berth, one safe port South China for delivery during May 1995. Payment was to be by letter of credit 90 days at sight. Amongst the documents to be presented under the letter of credit were a full set of clean on board bills of lading and a certificate of quality to be issued by Independent Inspection or their agents.
On 13 April 1995 Agrosin instructed its bank, the Hong Kong and Shanghai Banking Corporation Ltd, Beach Road, Singapore branch to pay Moscow Narodny Bank, London US$3.15 million for AD Acron, Novgorod. This was the contractual prepayment under its amended contract with Transmarine.
Agrosin, consistently with its obligations as FOB purchaser, commenced negotiations for the charter of the Vessel from Baff Shipping, Riga. The latter company on 19 April 1995 entered into a voyage charter under which it chartered the vessel from Meezan who in turn had time-chartered it from Georgian Shipping as already described. Under that charter the vessel was to load 35,000 metric tons 10% more or less in Owners' option of bulk prilled urea at 1/2 safe berths Kotka, and to discharge at 1/2 safe berths, 1 safe port China, charterers guaranteeing 11.5 metric tons draft summer and winter. Clause 45 provided:
"Under supervision of independent surveyor together with Master's/Officers' assistance no damaged cargo to be loaded into the holds. If such fact will take place Master has the right to stop loading but Charterers and Shippers to be immediately informed to arrange removing of any contaminations for Charterers' expenses/time.
Quantity/quality of cargo as determined by an International Independent Surveyor (SGS or another neutral international organisation) together with Master to be final and binding for both parties. Owners to be responsible for quantity of cargo taken on board."
By clause 49 Meezan was engaged to authorise their Singapore agents or representatives to sign and release "clean on board" bills of lading upon confirmation that charter freight had been paid to Meezan.
On the same day Agrosin appear to have sub-chartered the vessel from Baff on substantially the same terms as those of the Meezan�Baff charter. One document which evidences this sub-charter describes Georgian Shipping as the "owners", Baff as "charterers" and Agrosin as "Re-charterers". It included clauses worded similarly to clauses 45 to 49 of the Meezan-Baff voyage charter. The document which is unsigned and apparently incomplete cannot be an accurate record of any such sub-charter in as much as it introduces Georgian as owners and Baff as charterers as distinct from disponent or sub-chartered owners or head charterers. However, it is...
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