Vinnlustodin HF and Another v Sea Tank Shipping as (formerly known as Tank Invest as)
| Jurisdiction | England & Wales |
| Judge | The Hon. Sir Jeremy Cooke,Sir Jeremy Cooke |
| Judgment Date | 14 October 2016 |
| Neutral Citation | [2016] EWHC 2514 (Comm) |
| Date | 14 October 2016 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2016-000070 |
[2016] EWHC 2514 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Jeremy Cooke
Sitting as a Judge of the High Court
Case No: CL-2016-000070
Mr Lionel Persey QC and Mr Benjamin Coffer (instructed by Clyde & Co LLP) for the Claimants
Mr Charles Debattista (instructed by Winter Scott LLP) for the Defendant
Hearing dates: 5th and 6th October 2016
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Hon. Sir Jeremy Cooke Sir Jeremy Cooke Introduction
There are two issues in this Part 8 claim, namely whether the package limitation provisions in Article IV r.5 of the Hague Rules ("Article IV r.5") apply to bulk cargoes and, if they do, how they apply to the damaged cargo of fishoil with which this action is concerned. Article IV r.5 provides that the carrier's liability for loss or damage to or in connection with goods shall not exceed £100 "per package or unit". The Defendant's case is that Article IV r.5 can be applied to bulk or liquid cargo by reading the word 'unit' as a reference to the unit used by the parties to denominate or quantify the cargo in the contract of carriage. The Defendant relies on the description of the cargo in the charterparty as "2,000 tons cargo of fishoil in bulk". The Claimants' case is that the word 'unit' can only refer to a physical item of cargo, or to a combination of physical items bundled together for shipment. Article IV r.5 does not apply to a liquid or other bulk cargo: when cargo is shipped in bulk, there are no relevant "packages" or "units".
Although, perhaps surprisingly, there is no English authority which has determined whether Article IV r.5 applies to bulk cargo, I was taken to a number of decisions where the point has been directly or indirectly referred to, to Commonwealth authorities, to many text books and commentaries discussing the issue and to the travaux préparatoires to both the 1924 Statute and the Scheduled Convention represented in the Hague Rules and the later Convention which contained the Hague-Visby Rules.
The undisputed facts
There was no issue as to the facts which were set out in the Claim Form and witness statement of Mr Jai Sharma, a partner in Clyde & Co LLP, the solicitors acting for the Claimants. I take those facts largely from the summary in the Claimants' Skeleton argument:
1) The dispute arises out of damage to a cargo of fishoil which was carried on board the tanker "AQASIA" pursuant to a charterparty contained in and/or evidenced by a 'Fixing Note' dated Reykjavik 23 August 2013 ("the Charterparty").
2) The Charterparty provided for the carriage of 2,000 tons of fishoil in bulk, 5% more or less in Charterers' option, from the Westmans Islands and Faskrudsfjordur in Iceland to Stokmarknes, Averoy and Stavanger in Norway on board the tanker "WEST STREAM" or a substitute, for freight of "Nok 817,500, — lumpsum".
3) The Fixing Note provided that the Charterparty was to be on the "London Form". The London Form is an old tanker voyage charter form, which has been replaced in common usage by Intertankvoy 76. The London form charter provides:
"… 26. – The Owners in all matters arising under this Contract shall also be entitled to the like privileges and rights and immunities as are contained in Sections 2 and 5 of the Carriage of Goods by Sea Act 1924 and in Article IV of the Schedule thereto …"
4) By clause 26, the Charterparty thus incorporated Article IV of the schedule to the Carriage of Goods by Sea Act 1924. The schedule to the 1924 Act contains the Hague Rules. Article IV r.5 provides:
"… Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding 100l per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading …."
5) The Fixing Note also incorporated ten rider clauses numbered 25 to 35 which included terms providing that the contract would be "governed by the Laws of the United Kingdom" (clause 27) and that disputes would be resolved by arbitration in London (clause 28).
6) The Defendant nominated the tanker "AQASIA" ('the Vessel') to perform the Charterparty in substitution for "WEST STREAM". The Defendant was the disponent owner of the vessel and was not party to the contract contained in or evidenced by the Bill of Lading signed by the Master.
7) On 6 September 2013, the Vessel loaded 2,056,926 kgs of the First Claimant's fishoil in bulk at Faskrudsfjordur and Vestmannaeyjar. About 550,000 kgs was loaded into tanks 1P, 2P and 5S. This parcel is referred to by Mr Sharma as 'the Subject Cargo'.
8) The Master (or his agent) signed a Congenbill bill of lading acknowledging shipment of the cargo in apparent good order and condition. The bill recorded the shipper's description of the goods as "Icelandic Fishoil in bulk — 2.056.926 kgs".
9) The bill of lading issued by the Owners, not the Defendant, named the First Claimant as the shipper of the cargo. It is common ground that it is the Charterparty which contains and/or evidences the contract of carriage between the First Claimant and the Defendant.
10) After loading the cargo, the vessel sailed to Lovund in Norway and there loaded a further cargo of fishoil. Part of this further cargo was loaded into tanks 1P, 2P and 5S. This caused it to become commingled with the Subject Cargo.
11) On arrival at the discharge port(s), 547,309 kg / 547.309 mt of the Subject Cargo was found to have suffered damage.
12) The First Claimant claims damages from the Defendant in respect of losses which it has suffered as the owner of the Subject Cargo and/or the party at whose risk the Subject Cargo was at the time the damage occurred. The First Claimant's claim is for US$367,836, together with interest and costs.
13) The Second Claimant was the insurer of the cargo. The Second Claimant has been joined in these proceedings out of an abundance of caution, in case it be alleged that title to sue has somehow passed from the First Claimant to the Second Claimant by virtue of the insurance of the cargo.
14) The Defendant accepts in principle that it is liable for the damage to the cargo but argues that it is entitled to limit its liability to the sum of £54,730.90 (i.e. to £100 per mt of cargo damaged) pursuant to Article IV r.5.
15) The parties agreed that, notwithstanding the arbitration agreement in the Charterparty, the Commercial Court should have jurisdiction to determine an agreed preliminary "Limitation Issue": namely whether the Defendant is entitled to limit its liability to £54,730.90.
The issues in dispute
The limitation issue gives rise to two questions:
1) Is Article IV r.5 of the Hague Rules capable in principle of applying to bulk cargo?
and
2) if so, is the applicable limitation figure £54,730.90 as the Defendant contends?
The approach to construction of the Charter and Article IV
There was some dispute between the parties as to the proper approach to construction of the Charterparty and the parts of the Hague Rules incorporated in it but I doubt if anything ultimately turns on this. Although the Charterparty does not per se incorporate all of the Hague Rules and provides that the Defendant is entitled to "the like privileges and rights and immunities as are contained in sections 2 and 5 of the Carriage of Goods by Sea Act 1924 and in Article IV of the Schedule thereto", the effect must be that the Defendant is entitled to rely on the package or unit limitation only in the same circumstances as it would be entitled to do, if there had been a full incorporation of the Hague Rules.
The Defendant argued that, when read as a whole as a contractual term in the Charterparty, Article IV was clearly intended by the parties to apply to a bulk cargo because there was no other type of cargo in prospect. My attention was drawn to the description of the cargo and the nature of the London form of charter which in various clauses makes it plain that a liquid cargo is envisaged. The effect of the Defendant's submission was that all of Article IV had to apply to the cargo carried under the Charterparty in order to give meaning to the parties' agreement that the Defendant had the privileges, rights and immunities afforded by Article IV.
I do not accept the Defendant's submission that the effect of Clause 26 is that the words of Article IV are written into the Charterparty with the result that every provision in that Article must be given meaning and effect in the context of carriage of the bulk cargo contemplated by the parties when concluding the Charterparty. The effect of the clause is to allow the Defendant the like privileges, rights and immunities as are contained in Article IV, where they apply. Although it is true to say that the Charterparty was expressly a charter for the carriage of a bulk cargo of fishoil in a tanker, the Defendant is entitled to rely on no more than what is provided by the limitation in Article IV, so that if the word unit, as used in Article IV, does not apply to bulk cargoes as a matter of construction of the Rules, it cannot change its meaning because of the nature of the contract of carriage. There may be parts of Article IV which are applicable and other parts which are...
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