Total Transport Corporation v Arcadia Petroleum Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STAUGHTON,LORD JUSTICE AULD,SIR JOHN BALCOMBE |
| Judgment Date | 18 November 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J1118-13 |
| Docket Number | QBCMF 96/0533/B |
| Court | Court of Appeal (Civil Division) |
| Date | 18 November 1997 |
[1997] EWCA Civ J1118-13
Lord Justice Staughton
Lord Justice Auld
Sir John Balcombe
QBCMF 96/0533/B
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE RIX
Royal Courts of Justice
The Strand
London WC2
MR R JACOBS (Instructed by Holman Fenwick & William, London EC3N 3AL) appeared on behalf of the Applicant/Respondent
MR S RAINEY (Instructed by Clifford Chance, London EC1A 4JJ) appeared on behalf of the Respondent/Appellant
Tuesday 18th November, 1997
For the reasons that have been handed down this appeal will be dismissed.
Despite the title to these proceedings, Arcadia Petroleum Ltd are the party claiming a remedy. They were charterers of a vessel called EURUS and Claimants in an arbitration, where they were awarded (by a majority) $681,934.05 and interest at 5 1/2 per cent. Whether that sum was technically debt or damages was part of the issue which the arbitrators decided. The Respondents in the arbitration, Total Transport Corporation, were disponent owners of the EURUS. I shall call them the Owners.
On appeal Rix J, set aside the award and dismissed the Charterers' claim. They now appeal to this Court.
The contract was a voyage charterparty dated 17th January 1992; It provided for the carriage of a minimum quantity of 122,000 metric tons of crude oil from one safe port Nigeria, in the Charterers' option, to one or two safe ports in a number of different ranges, again in Charterers' option. The freight was to be calculated under the New Worldwide Tanker Nominal Freight Scale, which no doubt has regard to the particular ports chosen for loading and discharge.
The critical clause in the contract was this, which I reproduce exactly as written:
"36. ADHERENCE TO VOYAGE INSTRUCTIONS
Owners shall be responsible for any time, costs, delays or loss suffered by Charterers due to failure to comply fully with Charterers voyage instructions. Owners shall be responsible for any time, costs, delay or loss associated with vessel loading cargo quantity in excess of voyage orders. Additionally, Charterers shall not be responsible for any deadfreight for Owner's failure to lift minimum quantity specified in voyage orders.
Provided such instructions are in accordance
with the Charter Party and custom of the trade
If a discrepancy arises at loading terminal, Master is to contact Charterers at once concerning said discrepancy, before loading to clarify situation. Terminal orders shall never supersede Charterer's voyage instructions. Delays if any are to be for Charterers account".
The explanation for this layout is that the clause in the original form was part of a group of 47 known as the Scanport Clauses. The parties evidently agreed that they should be incorporated in the Charterparty with some amendments; and for one reason or another showed both the original and the amended versions in their contract. That to my mind resolves conclusively the old question as to whether we can look at deletions for the purpose of interpreting the Contract. Indeed it is not disputed that we can.
The Charterers' case was that the Owners, in breach of contract, did not comply with the instructions which the Charterers gave. Their loss was claimed either as damages or as money payable under a contractual indemnity, that is to say clause 36. This claim for damages failed before the arbitrators because it was too remote; they found that the loss was not foreseeable. But the claim for an indemnity succeeded, by a majority comprising Mr Christopher Moss and Mr Mark Hamsher. Mr Alexander Kazantzis would have rejected the claim on the ground that the Charterers' instructions were not "in accordance with the custom of the trade", as required by clause 36.
The claim for damages, as opposed to an indemnity, was not renewed in this Court.
The Facts
The Charterers had a long term contract for the supply of oil by the Nigerian National Petroleum Corporation. The pricing mechanism of the contract provided:
"All crude oil liftings shall be paid for at the Price applicable as at the date on the Bill of Lading upon presentation by the Seller of the documents …."
In the ordinary way, a bill of lading is dated when the last of the cargo (or perhaps the last of the cargo to which it relates) is put on board.
On 23rd January 1992 the Charterers nominated the EURUS to lift a cargo under the supply contract, for loading between 29th and 31st January, with an ETA of 31st January at the port of Forcados. Then on 23rd January the Nigerian Corporation announced their prices for February. They were lower than the January prices, and so it was in the interest of the Charterers that the vessel should not complete loading before 1st February. On the following day the Charterers sent these orders to the Owners:
"A) Vessel to load at Forcados where to tender N.O.R. 1100 hrs local 31st earlies[t]. Charterers note that should vessel arrive earlier they are liable from commencement of laycan 0600 31st. Vessel to tender actual NOR to Charterers via broker. Then above NOR to terminal with copy to Charterers".
N.O.R. is, of course, notice of readiness; and "laycan" referred to (i) the date before which the vessel should not tender such notice, and (ii) the date after which the Charterers would be entitled to cancel if notice had not been tendered. In both cases the date was 31st January 1992. Clause 42 of the Scanport clauses provided:
"42. Vessel not to tender Notice of Readiness or proceed to berth prior 0001 hours on first layday unless otherwise instructed to do so by Charterer. Laytime shall not commence before 0600 hours local time on the commencing date specified in Part I (B), unless with Charterer's sanction. If the vessel has not given Notice of Readiness to load, by 1600 hours local time on the cancelling date specified in Part I (B),
Charterer shall have the option of cancelling this Charter Party within 24 hours".
Following the orders quoted above, there was some dispute between the parties as to whether time would count from 0001 on 31st, as from 0600 (assuming that the vessel had by then arrived at Forcados). The Charterers argued, correctly, that 0600 was the appropriate moment for time to begin to count; and the Owners agreed. They sent this telex on 27th January to the Charterers:
"Re NOR:
Owners confirm Vessel will tender theoretical NOR through brokers Shipmar and to Braemar and that real NOR will be tendered to terminal and agents in Forcados on 31st Jan 1100. Laytime to begin at 0601 thereafter and notwithstanding real NOR time. Likewise no further 6 hours NOR time will be due after 1100 and Charterers hereby accept theoretical NOR given thru brokers as valid which pse confirm.
Master instructed accordingly".
The Charterers' orders, accepted by the Owners, were thus that the Owners might tender notice of readiness to them at 0001 on 31st January, and if they did so time would count from 0600 on that day; but they were to tender a second notice of readiness to the terminal operators (who were a joint venture of Shell and the Nigerian Corporation) at 1100. The word "thereafter" is somewhat confusing.
The Master complied with those orders in their literal sense. He sent a notice of readiness to the Charterers at 0001. At 0030 the EURUS left the anchorage, and reached her berth at 0300. Loading commenced at 0636. The Master gave notice of readiness to the terminal operators at 1100.
What the Master, being Spanish as we were told, may not have understood was the true impact of the Charterers' orders. The arbitrators' finding on that was as follows:
"38. We were satisfied that in the shipping industry in general and in Nigeria in particular a notice of readiness amounts to a declaration of a readiness and a willingness to berth and be loaded. Properly understood an instruction not to tender a notice of readiness before a certain time and date amounts to an instruction not to present or berth for loading prior to that time. ………….We were satisfied that the only reasonable interpretation of Arcadia's voyage instructions was that the vessel should not have presented for loading prior to 1100 hours local time on 31st January, 1992".
A Parenthesis
I would regard it as open to question whether the Charterers were entitled to give those orders, either in their literal sense or with the addition of the arbitrators' interpretation. The Charterparty certainly contemplates that the Charterers may give some orders, such as the nomination of loading and discharging ports, the quantity of cargo, and whether it shall comprise one or two grades of oil. There is also an express term (Scanport clause 6) allowing the Charterers to divert the vessel during the voyage—at their expense. No doubt on many occasions a shipowner will be prepared to acquiesce in an order which the Charterer could not otherwise insist upon, provided that the shipowner is recompensed. But this was a voyage charterparty, not a timecharter. The Owners contracted for a voyage that was more or less defined in return for the freight specified. I can think of quite a number of reasons why in other circumstances they might not have wished to accept the Charterers' orders—delay to their next engagement, for example, or imminent bad weather on the voyage, war, or political interference.
The problem does not arise in the present case, and has not been argued before us. The Owner acquiesced in the orders that were given; and it was not argued before the...
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