Who are the parties to the contract to the contract contained in or evidenced by the bill of lading?

 

This question has usually focussed on identifying the carrier, but what about the other party to the contract? Surely that’s the named shipper in the bill? Not so fast. In a recent s.67 Appeal from an arbitration award HH Judge Pelling QC in MVV Environment Devonport Ltd v NTO Shipping Gmbh & Co. KG [2020] EWHC 1371 (Comm) has held that one needs to broaden the enquiry from the bill itself to identify the contracting parties.

A Plymouth firm, MVV, converted waste into energy and sent its waste product to a waste management company Rock Solid BV who in turn sent it to their  recycling plant in the Netherlands. The waste became RS’s property from the moment it was loaded onto their vehicles at MVV’s plant. On 33 occasions bills of lading were issued which mistakenly named MVV as the shipper. SS had drawn up a draft bill of lading for the first shipment of waste that named the claimant as shipper on the basis that the claimant was identified as “exporter-notifier” in the notification document required to be produced in order to comply with European legislation concerning the cross-frontier movement of waste, which was in fact erroneous given the terms of its contract with MVV. That draft then formed the template for the bills of lading for the following shipments.  The first draft bill was sent in draft by SS to RS for approval and that RS approved its terms, wrongly in the light of the terms of its contract with MVV.  Copies of the bills were sent to MVV who raised no protest.

And then an explosion occurred on board the vessel carrying the waste to the Netherlands as a result of which her Chief Engineer was injured and in consequence the carrier suffered losses of €676,561.46, €45,000 and US$840. The carrier sought to recover these losses from the MVV as shipper named in the bill of lading and commenced arbitration. MVV challenged the tribunal’s jurisdiction but the tribunal concluded that it had jurisdiction.

HH Judge Pelling QC referred to observations of Hobhouse LJ in Cho Yang Shipping Company Limited v. Coral (UK) Limited [1997] 2 Lloyds Rep 641 at 643: “ … the shipper may be shipping as the agent of the consignee in which case the contract will be with the consignee …” and a little later on the same page, in English law “… the bill of lading is not the contract between the original parties but is simply evidence of it … (I)ndeed, … it may in the hands of a person already in contractual relations with the carrier (e.g. a charterer) be no more than a receipt.”. It was clear that MVV had not directly contracted with the carrier. The carrier’s contractual counterparty was whoever was represented by its agent, SS, which had entered the contract as agent.  SS was neither expressly or implied authorised by or had ostensible authority from MVV to enter a contract of carriage on its behalf. The same was true as regards Rock Solid BV. No authority could be spelled out of MVV’s silence as regards the preceding 33 bills naming it as shipper and it had no duty to speak.

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