Transpacific Discovery SA v Cargill International SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Morison J. |
| Judgment Date | 27 April 2001 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 April 2001 |
Queen's Bench Division (Commercial Court).
Morison J.
Michael Coburn (instructed by Barlow Lyde & Gilbert) for Transpacific Discovery.
Andrew W Baker (instructed by Middleton Potts) for Cargill International.
The following cases were referred to in the judgment:
Hawk, TheUNK [1999] 1 Ll Rep 176.
Sunrise Maritime Inc v Uvisco Ltd (“The Hector”) [1998] CLC 902.
Holstencruiser, TheUNK [1992] 2 Ll Rep 378.
Starsin, The [1999] CLC 1769; [2001] CLC 696 (CA).
Strathnewton, TheUNK [1983] 1 Ll Rep 219.
Shipping — Cargo claim — Bills of lading — New York Produce Exchange inter-club agreement — Whether cargo claims were for owners' account under inter-club agreement — Whether inter-club agreement rendered inapplicable by alleged irregularity in bills of lading.
This was an appeal by owners from a decision of arbitrators dismissing owners' claim against charterers on the basis that the New York Produce Exchange inter-club agreement applied and under it damage to cargo caused by unseaworthiness was for owners' account.
Owners chartered a bulk carrier to charterers on an amended New York Produce Exchange form for a one time charter trip from the Black Sea to the east coast of Mexico. En route a fire occurred and damage was caused to the cargo of cotton bales. Owners settled proceedings by cargo interests and commenced arbitration proceedings against charterers. The charterparty, by cl. 59, provided that cargo claims were to be apportioned in accordance with the latest edition of the NYPE inter-club agreement (“ICA”). Under the ICA damage to cargo caused by unseaworthiness was for owners' account but owners alleged that the bills of lading signed by the captain were ante-dated and not claused in accordance with mate's receipts and that since the bills of lading were not properly issued under the charterparty the ICA did not apply. Arbitrators held that the alleged ante-dating of the bills and the issuance of clean and not claused bills had no bearing on the particular cargo claims in question and concluded that the ICA therefore applied in accordance with its terms. Therefore since the cause of the damage to the cargo was unseaworthiness, owners' case failed. Owners appealed.
Held, dismissing the appeal:
1. The ICA only applied to cargo claims which had been brought under bills of lading which contained the Hague-Visby Rules or their equivalent governing the carriage. If the goods were never shipped so that the bills never applied to the cargo then the claim could not be within the ICA. If the goods were shipped but the bills were not issued in accordance with the charter, provided the cargo claim was not affected, i.e. provided the claim was still a claim under the bills and subject to the regime of the rules, then the ICA applied. The ICA only ceased to apply if the cargo claim was not made under the bill for any reason or alternatively for any reason the protections and limits in the rules were lost.
2. Where a shortage claim was concerned it was for charterers to prove that the bill of lading was authorised in the sense that it was a bill which the master would have the authority of the owners to sign. The requirement for charterers to prove that the bill of lading was authorised should be confined to shortage claims. Otherwise any omission in the bills should not of itself constitute a bar to recovery under the ICA. If it were necessary to prove in each case that the bills of lading were properly issued the ICA would fail to achieve its purpose. ( The HolstencruiserUNK [1992] 2 Ll Rep 378 considered; The HawkUNK [1999] 1 Ll Rep 176 followed.)
3. The arbitrators' award would be upheld but it was not necessary for them to have asked whether there was a causal connection between the matters relied upon and the settlement since the causal connection might often not be possible to ascertain. Once it was established that the cargo claims were based on bills of lading which incorporated the necessary limitations that was sufficient to cross the threshold to the application of the ICA.
Morison J:
1. This is an owner's appeal against an arbitral award dated 27 May 1999, whereby the owner's claim against charterers was dismissed. Leave to make this appeal was granted by Cresswell J. After the hearing of argument, the court awaited the decision of the Court of Appeal in the case of The Starsin[2001] CLC 696. The parties considered it possible that the decision might affect their arguments. In the event, the Court of Appeal said nothing of relevance to the issues in this case.
2. The facts can be shortly stated, and are taken from the award. The ELPA is a bulk carrier, chartered by the owners to charterers on an amended New York Produce Exchange form for a one time charter trip from the Black Sea to the east coast of Mexico. En route a fire occurred and damage to the cargo, cotton bales, was caused. Proceedings against owners were commenced by the cargo interests in the Louisiana state courts and were settled by owners for US$521,000. Owners then commenced arbitration proceedings against the charterers contending that the charterers were liable to them under the charterparty for the amount of the settlement and various costs and expenses totalling a further $250,000-odd. The charterparty, by cl. 59, provided that cargo claims were to be apportioned in accordance with the latest edition of the New York Product Exchange inter-club agreement.
3. The issue in this case is the effect of the inter-club agreement (“ICA”) upon the owners' claim. If it operates, then the owners' case fails, because under it damage to cargo caused by unseaworthiness is for the owners' account, and, for present purposes, that was the cause of the damage to cargo. But the owners say that it does not operate so as to deprive them of a claim, because the bills of lading signed by the...
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