Unicredit Bank A.G. v Euronav N.v
| Jurisdiction | England & Wales |
| Judge | Lord Justice Popplewell,Falk LJ,Asplin LJ |
| Judgment Date | 04 May 2023 |
| Neutral Citation | [2023] EWCA Civ 471 |
| Docket Number | Case No: CA-2022-001001 |
| Court | Court of Appeal (Civil Division) |
[2023] EWCA Civ 471
Lady Justice Asplin
Lord Justice Popplewell
and
Lady Justice Falk
Case No: CA-2022-001001
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
KING'S BENCH DIVISION
COMMERCIAL COURT
Mrs Justice Moulder
Royal Courts of Justice
Strand, London, WC2A 2LL
John Russell KC and Gemma Morgan (instructed by Holman Fenwick Willan LLP) for the Appellant
Robert Thomas KC and Paul Toms (instructed by Preston Turnbull LLP) for the Respondent
Hearing dates: 28 and 29 March 2023
Approved Judgment
This judgment was handed down remotely at 10.00am on 4 May 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This case raises a novel issue as to the status of a bill of lading in the hands of voyage charterers after they have ceased to be the charterers as a result of a novation of the charterparty. BP Oil International Ltd (‘BP’) sold a cargo of oil to Gulf Petrochem FZC (‘Gulf’) on terms delivery ex ship Fujairah or Singapore. BP voyage chartered the vessel SIENNA (‘the Vessel’) from the defendant (‘Owners’). Owners issued a bill of lading to BP on shipment. The claimant (‘the Bank’) had financed the purchase by Gulf on terms which conferred a security interest in the cargo. Before completion of the carriage, the Bank paid BP the purchase price, and the charterparty was novated to Gulf. The oil was discharged on Gulf's instructions in Oman. It had been envisaged at the time of the novation that BP would indorse the bill of lading directly to the Bank, but as result of COVID restrictions the indorsement had not taken place by the time of discharge. Owners discharged the cargo against Gulf's letter of indemnity. After discharge the bill of lading was indorsed by BP to the Bank. The Bank brought a claim against Owners for the value of the cargo alleging breach of the contract of carriage contained in or evidenced by the bill of lading in delivering the cargo without production of the bill. Following a trial, Moulder J dismissed the claim on the grounds that there was no contract of carriage contained in or evidenced by the bill of lading at the time of discharge, and therefore no breach; alternatively that if there had been any such breach, it did not cause the loss, because the Bank was aware of the intended delivery without presentation of the bill, and would have authorised or permitted Owners to do so.
The Bank appeals on both points. Owners seek to uphold the judgment on the grounds relied on by the Judge, and on three additional grounds advanced in a Respondent's Notice.
Chronology
On 30 January 2020 BP sold to Gulf minimum 110,000 m.t. maximum 150,000 m.t. very low sulphur fuel oil for delivery ex ship at one safe berth Fujairah in one full cargo lot, with an option for Gulf to nominate Singapore as an alternative discharge port. The contract provided for payment against a letter of credit no later than 5 calendar days after notice of readiness (‘NOR’) at the discharge port, against a commercial invoice and a warranty of title in agreed form, by which BP would warrant that it had, and was conferring, good title in return for payment. There was no requirement for presentation of bills of lading.
The sale contract also provided that should Gulf request a charterparty novation, BP would request such a novation from the owners, and assist where possible to obtain it; and BP agreed that in the absence of a novation, Gulf's declared discharge port, or declared discharge vessel in the case of ship to ship (‘STS’) discharge, would always be acceptable to BP.
On 6 February 2020, BP entered into the charterparty with Owners on the BPVOY5 form (‘the Charterparty’). The discharge port was named as Fujairah or, in charterers' option, Singapore/Vietnam range. Lumpsum freight was payable immediately upon completion of discharge, at three different rates dependent on the discharge port.
Clause 30 was a standard term of the BPVOY5 form, which is one of the forms in common use by participants in the tanker trade. It provided that bills of lading were to be signed as charterers directed without prejudice to the Charterparty. Clause 30.7 provided:
“If an original Bill of Lading is not available at any discharge port to which the Vessel may be ordered by Charterers under this Charter, or if Charterers require Owners to deliver cargo to a party or at a port other than as set out in the Bill of Lading, then Owners shall nevertheless discharge such cargo in compliance with Charterers' instructions, upon presentation by the consignee nominated by Charterers (“the Receiver”) of reasonable identification to the Master and in consideration of Charterers indemnifying Owners in the manner prescribed in the form of letter of indemnity agreed and published from time to time by the International Group of P&I Clubs addressing the relevant circumstances. Such indemnity shall be deemed to have been given when Charterers issue instructions to Owners pursuant to this Clause. Charterer's liability under such indemnity shall a) in no case exceed twice the CIF value of the cargo at the discharge port on completion of discharge; b) cease three years after disconnection of hoses at the discharge port unless beforehand Charterers have received from Owners written notice of a claim under it.”
This clause, and the payment terms under the sale contract, reflected the fact that it is common in this trade for bills of lading not to be available for presentation to the vessel at the time of delivery. Indeed the evidence of the Master of the Vessel at trial was that in his 20 years of tanker experience, presentation of bills of lading had occurred on only a handful of occasions; and that discharge would almost always be against a letter of indemnity (‘LOI’). BP's chartering manager, Mr Van de gaer also confirmed in his evidence that it was standard in the large tanker trade to discharge against an LOI. One reason which has been suggested for this practice is that there are often chains of contracts which, especially for voyages of shorter duration, do not allow time for the bills to work their way through the contractual chain to the receiver by the time of discharge. This is not unique to the tanker trade. Moreover, there are other reasons why bills of lading are sometimes not available to the receiver at the time of discharge. The Law Commission Report No 196 of 19 March 1991 (‘the Law Commission Report’), which followed very wide market consultation and gave rise to the Carriage of Goods by Sea Act 1992 (‘COGSA’), recorded at paragraph 2.42 that a bill of lading may sometimes take as much as a year to reach the ultimate holder.
Mr Russell KC suggested that another reason for discharge against LOIs without presentation of bills was that commodity trade financing typically involves the buyer's bank taking a security interest over the bill, by way of pledge, and becoming the lawful holder of the bill, which it retains following discharge as security for payment by the buyer (or by sub-buyers directly to the bank). Retaining the bill whilst permitting the discharge against an LOI is an essential aspect of such trade financing, he submitted, because the way in which it is understood to provide security against non-payment by the buyer is that as holder, the financing bank is able to sue the carrier under the bill for having delivered the cargo without its production. This is the liability against which the carrier requires indemnification under the LOI.
I will return to the significance of the issues in this case to commodity trade financing. There can be no doubt, however, that the practice of carriers discharging against an LOI from the charterer or receiver, in the absence of presentation of bills of lading, is widespread and of long standing, and is not confined to the tanker trade.
On 19 February 2020 a bill of lading was signed by the Master of the Vessel, acknowledging shipment on board by BP Europa SE-BP Nederland on behalf of BP of 101,693.093 m.t. at Europoort Rotterdam (‘the Bill of Lading’ or ‘the Bill’). It provided that delivery should take place at “Fujairah for orders” and that delivery should be made to the order of BP. It contained a clause paramount by which it incorporated the Hague-Visby Rules, and many typical contractual provisions dealing, for example, with liberty to deviate, war risks, strikes, ice, quarantine, general average, collisions, and a Himalaya clause. It provided for English law and jurisdiction. It did not purport to incorporate any of the terms of the Charterparty. It had the usual rubric at the bottom: “In witness whereof the Master or Agent of the said vessel has signed bills of lading all of this tenor and date, one of which being accomplished the others will be void.”
On 11 March 2020, Owners sought from BP's brokers, Poten, “any extra details regarding the discharge orders”, to which Poten responded the following day that they were awaiting instructions, “however, in the meantime and just to ensure mutual understanding, can you confirm that LOI is an invocation in line with CP clause 30.7”. Owners replied the same day, 12 March 2020, “We agree that LOI is an invocation in line with CP clause 30.7.” This appears to be an agreement that the discharge instructions when given would be for discharge without presentation of a bill of lading, and BP would thereby be invoking its right under clause 30.7 to require delivery against its indemnity in the terms set out in that clause, which would be deemed to be given without the need for a separate letter of indemnity. Later on the same day BP gave instructions to Owners for the Vessel...
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