Union of India v E B Aaby's Rederi A/S (Evje)

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Reid,Lord Morris of Borth-y-Gest,Viscount Dilhorne,Lord Simon of Glaisdale,Lord Salmon
Judgment Date13 June 1974
Judgment citation (vLex)[1974] UKHL J0613-2
Date13 June 1974

[1974] UKHL J0613-2

House of Lords

Lord Reid

Lord Morris of Borth-y-Gest

Viscount Dilhorne

Lord Simon of Glaisdale

Lord Salmon

Union of India
and
E.B. Aaby's Rederi A/S

Upon Report from the Appellate Committee, to whom was referred the Cause Union of India against E. B. Aaby's Rederi A/S, That the Committee had heard Counsel, as well on Monday the 25th, as on Tuesday the 26th, Wednesday the 27th and Thursday the 28th, days of March last, upon the Petition and Appeal of the Union of India, of New Delhi, in the Republic of India, praying. That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 19th of March 1973, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of E. B. Aaby's Rederi A/S, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 19th day of March 1973, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Lord Reid

My Lords,

1

For the reasons given by my noble and learned friends, Lord Morris of Borth-y-Gest and Lord Salmon, I would dismiss this appeal.

Lord Morris of Borth-y-Gest

My Lords,

2

The questions which arise in this appeal can best be stated after narrating the relevant facts. By a Charter-party which was dated London 14th January, 1966, and which was the Form C approved Baltimore Berth Grain Charter Party, the Chief Controller of Chartering, Ministry of Transport, New Delhi, Government of India, chartered the Norwegian motor vessel Evje from her owners. The Charter was for a voyage with a cargo of wheat in bulk. The voyage was to be from one North Pacific United States safe port to Bombay or at the charterers' option to Kandla (India).

3

Clause 2 of the Charter Party began with the words "General Average shall be payable according to York/Antwerp Rules 1950 and to be settled in London." These words were followed (some words in the printed form in relation to an average bond and to security having been deleted) by words setting out the Jason clause. The clause deals, in the terms set out, with the entitlement of the owners to general average contributions even if a general average act has resulted from unseaworthiness provided that they have exercised due diligence to make the vessel in all respects seaworthy and to have her properly manned, equipped and supplied.

4

By Clause 6 the vessel was to have a lien on the Cargo for all freight, dead freight, demurrage or average. The Charter-party was further to include special provisions as clauses numbers 7 to 38 inclusive. The incorporated "Centrocon" Arbitration Clause (Amended) has the two following opening sentences:—

5

"All disputes from time to time arising out of this contract shall, unless the parties agree forthwith on a single Arbitrator, be referred to the final arbitrament of two Arbitrators carrying on business in London, who shall be Members of The Baltic and engaged in the Shipping and/or Grain trades, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire. Any claim must be made in writing and Claimant's Arbitrator appointed within twelve (12) months of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred."

6

The vessel went to Portland, Oregon, and there loaded a full cargo of wheat. It was in bulk about 17,600 tons. On the 23rd January she set out to proceed to Bombay or Kandla. The owners say that when she left Portland the vessel had adequate bunkers (plus a normal surplus) to enable her to reach Yokohama. She was to call at Yokohama for bunkers. On the 12th February when partly across the Pacific on her way to Yokohama she ran out of fuel oil and stopped. It is said that she had encountered severe weather and as a consequence had consumed an excessive quantity of bunkers. It became necessary to arrange by cable for the services of a tug. The vessel was presumably in a position of some peril. In due course a tug arrived (probably on the 15th February) and began to tow the vessel towards Yokohama. Here was the general average act resulting in expenditure in respect of which there was a later claim for general average contribution.

7

The tug towed the vessel for some period and then was able to supply her with some fuel and so enable her to reach Yokohama. That she did on the 18th February, 1966. Having refuelled she sailed for Bombay. She reached Bombay on the 8th March, 1966. The cargo was then discharged. That discharge was completed on the 12th March, 1966.

8

After the vessel had come to a stop (on the 12th February) and before she reached Yokohama, her owners, considering the case to be of a General Average nature, communicated with their London agents and asked them to get into touch with Messrs. William Richards & Son as Average Adjusters. The owners desired to leave the average adjustment in Messrs. Richards' hands and also wished them to make suitable arrangements which would secure the contribution of the proportion of General Average attaching to the cargo. Both the owners' agents and Messrs. Richards knew that it was not the practice of the Government of India to give either a General Average Bond or a cash deposit.

9

Having been instructed, Messrs. Richards wrote to the Director-General of the India Supply Mission in London. By their letter dated the 17th February, 1966, Messrs. Richards explained all that had happened and concluded with the words:

10

"We shall therefore be obliged if you will let us have the usual undertaking by the Indian Government to pay their cargo's proportion of General Average when this has been determined."

11

A reply came dated the 23rd February, 1966. It was in these terms:

12

"I have for acknowledgment your letter No. G/MP dated 17th February 1966 and I am to say that the High Commissioner for India in London hereby gives an undertaking that any General Average contribution which may be legally due from the Government of India as cargo owners will be paid by this Mission.

13

In view of the above undertaking you are requested to contact the shipowner's agents in India, by cable if necessary, to release government cargo immediately the vessel arrives at an Indian port."

14

Messrs. Richards on the 25th February, 1966, gave instructions that the cargo was to be released to the consignee on the vessel's arrival in India without further security being obtained. On the same date they wrote to the Director General of the India Supply Mission in these terms:

15

"We thank you for your letter of the 23rd February and note that we may apply to you for settlement when our Adjustment of General Average is completed." There was in the letter also a request to be furnished in due course with particulars of the value of the Indian Government cargo.

16

Messrs. Richards proceeded with their work and in due course prepared their General Average Adjustment. It was dated the 24th February, 1967.

17

It is to be noted that a period of 12 months from the final discharge of the cargo at Bombay expired on the 12th March, 1967. On the 30th March, 1967, the owners' agents sent a copy of the General Average Adjustment to the Director General of the Indian Supply Mission. Request was made for the sum of £5,995 4s. 7d. which was the amount shown in the adjustment as being due from the cargo. That sum was therefore what the average adjusters considered was the appropriate contribution which was payable towards the total general average expenditure incurred which was some £12,070.

18

The Solicitors acting on behalf of the Appellants (the Government of India) wrote in reply on the 7th June, 1967. No suggestion was made that any time bar operated to defeat the claim, but, while reserving rights to question any other aspect of the claim it was, at least "initially", repudiated on the ground set out in this sentence:

19

"We have examined the Average Adjustment Statement and we have come to the conclusion that the incident alleged to give rise to General Average arose due to the poor quality of the fuel oil by virtue of the presence of impurities in the same and as such we contend that the vessel was unseaworthy at or before the commencement of the relevant voyage and that it was the said unseaworthiness that caused the alleged incident giving rise to General Average." In reply to this it was stated on the 31st July, 1967, on behalf of the owners that they had ordered oil of a particular quality from reputable suppliers and that there had been no failure to exercise due diligence to provide a seaworthy vessel.

20

Further correspondence followed in 1968 in reference to proceedings and the acceptance of service but between October 1968, and April, 1971, there was a complete interval. After the claim was renewed in April, 1971, the point was for the first time raised on behalf of the Appellants that any claim for a contribution towards General Average would be by way of arbitration in London and that as no arbitrator had been appointed within 12 months of the final discharge of the cargo the claim had been waived and was absolutely barred.

21

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