Assignee’s right to damages for cargo claim. Title to sue is not the whole story.

 

In making a cargo claim, a party’s title to sue is separate to the question of whether it has suffered loss and is thus entitled to substantial damages. The issue arose in The Fehn Heaven [2018] EWHC 1606 (Comm) where charterers loaded a cargo of organic sunflower seeds and organic wheat, carried under two straight bills of lading which named Justorganic, as consignee. At some stage in the voyage the cargo had to be fumigated and as a consequence it could no longer be sold as organic. Charterers had to discount the price to their two Dutch buyers and sought to recover the amount of the discounts from the shipowner. They claimed in arbitration against the shipowner either as assignees of the consignee’s rights under the bills of lading or in their own right under the charterparty.

The tribunal awarded the charterers damages and found that charterers had title to sue, as assignee of the consignee’s rights under the bill of lading. However, the tribunal  made no express finding that Justorganic, the assignor, had suffered loss. This was a critical absence in the award because of the principle that an assignee could not recover more from the debtor than the assignor could have done had there been no assignment.(Chitty on Contracts (32nd edition at paragraph 19-075). The award could not be upheld on the alternative basis of charterers’ claim, that they had a right to recover their losses under the charterparty, as it was clear that the tribunal had decided that charterers’  title to sue was based on the assignment rather than on the charterparty. Owners’ appeal, therefore, succeeded and the matter was remitted to the tribunal.

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