Clearlake Shipping Pte Ltd v Privocean Shipping Ltd (15 May 2018. QB D (Com Ct) is an unreported decision of Cockerill J on the effect of cl.2 of NYPE 1946 form and s.4(2)(a) of US COGSA 1936 which is applied as a paramount clause. Charterers incurred extra expenses due to unnecessary strapping insisted on by the master with a view to the ship’s stability. The master insisted on the strapping in order to ensure the stability of the vessel. In the arbitration the charterer produced expert evidence that the cargo strapping had been unnecessary and that adequate stability could have been achieved by distributing the cargo differently or by ballasting. The arbitrators found that the master had been negligent and in breach of cl. 8. However, they rejected charterer’s contention that the cost of strapping was for owner’s account by virtue of cl.2 of the charter which provided that “Charterers are to provide necessary dunnage and shifting boards, also any extra fittings requisite for a special trade or unusual cargo…” The shipowners, though, had a defence to the claim under s.4(2) of the incorporated US COGSA 1936, since the neglect or default of the master was “in the management of the ship”.
On appeal Cockerill J upheld both findings.(i) Clause 2 said nothing about the position where the charterer had paid for a fitting that turned out to have been unnecessary. (ii) The master’s default was in the management of the ship and owners had a defence under s.4(2) of the incorporated US COGSA 1936. The master’s breach was not any lack of care for the cargo during loading or discharge. His intervention came before loading. Since his action in requiring the cargo to be strapped was directed at the safety of the ship it was an act in the management of the vessel within the s.4(2) exemption. It was also clear that safe stowage without strapping could have been achieved by ballasting, and the same result should be reached whether the issue was one of different distribution of the cargo or of ballasting. Ballasting would be a matter in the management of the vessel and it followed that for that reason also the exemption from liability applied.
The case provides a salutary reminder to time charterers that they may be getting more than they bargained for with a clause paramount. The US COGSA exceptions in s4(2) and the Hague Rules exceptions in art IV(2), are not limited to breaches in respect of the activities listed in s2/art II. As stated by Robert Goff LJ in The Satya Kailash [1984] 1 Lloyd’s Rep 588, 596.
“[o]n the approach of the majority of the House of Lords in the Adamastos case, even such general words of incorporation can be effective to give an owner the protection of the statutory immunities in respect not merely of those matters specified in s. 2, but also of other contractual activities performed by him under the charter.”