Charter time bar not read  into charterers’ letter of indemnity.

 

In Navig8 Chemicals Pool Inc v. Glencore Agriculture BV (The Songa Winds) [2018] EWCA Civ 1901, the Court of Appeal had to consider whether a time bar clause in a voyage charter operated to bar claims under a letter of indemnity issued by charterers to owners in respect of delivery of cargo without production of bills of lading. Clause 38  of the charter required the owners to release the cargo  against charterers’ letter of indemnity  (LOI) if bills of lading were not available at the discharge port and the period of validity of any letter of indemnity was to be three months from date of issue. The LOI provided by charterers did not refer to any time bar and provided in clause 5 “. As soon as all original bills of lading for the above cargo shall have come into our possession, to deliver the same to you, or otherwise cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease.”

Two points arose. Was the LOI provided by charterers subject to the three month time bar provided in the charterparty? If so, how did that time bar run?  Andrew Baker J, [2018] EWHC 397 (Comm) ,had found that the LOI was not subject to the time bar, and that the effect of the time bar was that the period within which the requested delivery of the cargo must take place was three months from the date of delivery.

The Court of Appeal has upheld the first finding. Charterers had the contractual right to insist that the LOI incorporated the terms set out in cl.38 but they had failed to do so. Clause 5 of the  LOIs was a self-contained provision which confines charterers’ liability, and which containeds no reference to any extraneous term which might impact on the time limit of that liability.Their LOIs were distinct agreements to the voyage charter, setting out self-contained obligations and rights which could be relied on by third parties, such as owners’ agents, as against charterers.

On the second point, however, the Court of Appeal rejected the judge’s construction  of cl. 38 and found that cl.38 meant that there was a time limit of three months for making claims.

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

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