In London Arbitration 3/20 the Tribunal considered the effect of the time bar provision in cl.6 of the Inter-Club NYPE Agreement 2011 (the ICA) .

“(6) Recovery under this Agreement by an Owner or charterer shall be deemed to be waived and absolutely barred unless written notification of the Cargo Claim has been given to the other party to the charterparty within 24 months of the date of delivery of the cargo or the dates the cargo should have been delivered, save that, where the Hamburg Rules or any national legislation giving effect thereto are compulsorily applicable by operation of law to the contract of carriage or to that part of the transit that comprised carriage on the chartered vessel, the period shall be 36 months. Such notification shall if possible include details of the contract of carriage, the nature of the claim and the amount claimed.”

The vessel was time-chartered on the NYPE form. Clause 27 of the charter expressly incorporated the ICA and contained a Clause Paramount. Under a booking note on the charterer’s house form dated 19 December 2014 between the charterer as carrier and G as merchant, the charterer contracted to carry a cargo of engine equipment (the Cargo) from a United States port to a North African port. During the voyage the vessel’s crew accidentally pumped water into No 2 cargo hold.  G gave notice to the charterer of its intention to pursue a cargo claim against it as contractual carrier, although no claim had yet been formally presented. By various emails, information was passed by G to the charterer and by the charterer to the owners, and extensions of time were given by the charterer to G, and by the owners and their P&I Club to the charterer.

The issue before the Tribunal was whether, following the expiry of 24 months from the date of delivery of the cargo, the charterer was now precluded by the time bar provision in clause (6) of the ICA from bringing any claim against the owners in respect of G’s intended cargo claim.

The Tribunal found that the “notification” did not have to refer to the ICA, either expressly or impliedly. Clause (6) required simply “written notification of the Cargo Claim” to be given to the other party. It was not in itself the claim for recovery under the ICA but was a notice required if a claim over was later to be made, which could only happen when the cause of action accrued, which necessitated the proper settlement or compromise and payment of the third-party claim under the terms of clause (4)(c).

To be an effective “notification”, the written notice did not have to comply with the requirements of the second sentence, namely to include details of the contract of carriage, the nature of the claim and the amount claimed, so far as it was possible to do so. The intention of the draftsman was to distinguish between the absence of a written notification which would bar the recovery claim and the absence of details to be included within it, if possible, which would not have that effect. The words “if possible” suggested that the provision of details was not essential to the giving of notification. The breach of such an obligation would give rise to a right to damages if any loss could be established, which appeared unlikely in most situations.

In consequence, as the tribunal had found that a notification was valid, even if details which could have been provided were not provided, and the recourse claim which the charterer wished to pursue was not deemed waived or barred.

Clause (6) of the ICA operated in an entirely different way from a conventional time bar for a cargo claim. The period allowed for notification ran from the date of delivery and not from the date when the cause of action accrued which, in the case of an indemnity might not be for a number of years, as and when the liability to cargo interests crystallised. To stop time running, the prospective claimant did not have to commence proceedings but merely to give notification of the claim under clause (6), with the six-year time bar operating from the date of accrual of the cause of action.

 

INTERTANKO Covid-19 Clause- Tailor Made Solution to the Pandemic in Voyage Charters

One of the main legal challenges emerging from the ongoing Covid-19 pandemic for shipowners in the context of voyage charterparties is whether a valid NOR can be tendered to enable the running of laytime clock before a “free pratique” certificate is obtained from authorities. Reports suggest that there are significant delays in some ports in obtaining this certificate. Some charterparties might include a “WIFPON” clause (Whether in free pratique or not) and some commentators believe that such a clause removes the need for obtaining a “free patique” certificate so a vessel which is physically ready becomes an “arrived ship” in legal sense of the word. However, as discussed by my colleague Professor Simon Baughen (https://www.youtube.com/watch?v=1wcjbGYwW7o&t=52s) this position has been doubted in a number of authorities (e.g. The Delian Spirit [1971] Lloyd’s Rep 64) although such a finding seems to contradict plain meaning of a “WIFPON” clause.

The most recent clause released by INTERTANKO seems to offer a clarification and much needed certainty for shipowners. If incorporated into the contract, under Clause 2© of the INTERTANKO Covid-19 Clause for Voyage Charterparties, ship owners are able to serve a valid and effective NOR whether or not free pratique certificate has been granted, thereby passing the risk of any delay on to charterers who ordered the chartered vessel to that particular port.

covid
It needs to be noted that the Clause deals with other issues that can arise in ports that are affected from the current situation. Clause 1 enables the shipowner to refuse an order to proceed to a port affected from the pandemic. An interesting point here is that the right to refuse to proceed is left to the reasonable judgment of the owners or master by taking into account whether there is a risk of exposure of the crew or other personnel on board to Codivid-19. From legal perspective, this subjective test means that owners and masters are likely to be given the benefit of any doubt as to the state and condition of the port in question if the matter becomes the subject of litigation at a later stage. Clause 2 is designed to protect the interest of the owners further. For example, by virtue of Clause 2(a) if the chartered vessel sails towards a Coronavirus-affected port, the master can request fresh orders should the level of risk become unacceptable prior to arrival at the load or discharge port. Similarly, Clause 2(b) provides that the chartered vessel may still depart and proceed to a safe waiting place if the risk escalates after the arrival of the chartered vessel at the port and even after the tendering of NOR. Clause 2(d) addresses the issues which arise due to the Coronavirus risk, e.g. quarantine and any delay thereby caused, and indicates that such expenses are passed to charterers.

In addition to risks associated in a port that has been directed by the charterer, the clause goes on to allocate the risk of losses that the vessel might suffer after the completion of the voyage (i.e. in the course of its future employment). Clause 3, therefore, provides:

“Should the Vessel be boycotted, refused admission to port, quarantined, or otherwise delayed in any manner whatsoever by reason of having proceeded to a Coronavirus Affected Area, for all time lost Owners to be compensated by Charterers at the demurrage rate and all direct losses, damages and/or expenses incurred by Owners shall be paid by Charterers. In the event that the Vessel is boycotted, refused admission, or otherwise delayed as stated above within 30 days after having completed discharge under this charterparty, then Charterers are to compensate Owners for all time lost as a result at the demurrage rate in addition to compensating Owners for all direct losses, damages, and or expenses which may arise as a result of the above.”

Front-Shanghai

This is a very bold provision and it essentially offers a protection for owners for a period of 30 days after the completion of discharge under a previous fixture so that any delays or expense under a subsequent fixture will fall to the previous charterer.

Needless to say, the INTERTANKO Covid-19 Clause is rather owner friendly and is designed to apply to this particular pandemic unlike BIMCO Infectious or Contagious Disease Clause for Voyage Charter Parties 2015 which has a much wider application, i.e. the latter can apply in any instance when there is “a highly infectious or contagious disease that is seriously harmful to humans”. That said, the INTERTANKO Covid-19 Clause offers a tailor made solution to the legal and practical problems facing the sector at the moment and no doubt some owners might be able to slip it in their charter agreements!

The murky world of anti-suit injunctions — with a new twist

When it comes to remedies in international litigation, what matters in most cases is not whether the court can give them, but when it will. The point is nicely illustrated in a decision yesterday from Cockerill J about anti-suit injunctions (see Times Trading Corporation v National Bank of Fujairah [2020] EWHC 1078 (Comm)). Essentially the issue was this. A person who sues abroad in blatant breach of an arbitration or jurisdiction agreement will be enjoined almost as of course on the basis of The Angelic Grace [1995] 1 Lloyd’s Rep 87 and Donohue v Armco Inc [2002] 1 All ER 749. But what if this is not so (for instance, where the injunction defendant is an assignee, or where the existence of a direct contract between the two is controverted)? Jurisdiction is not in doubt: but does the ASI run almost as of course as before, or does the person seeking it have to jump the fairly high hurdle of showing oppression? Cockerill J plumped for the former solution.

To over-simplify, a cargo of coal carried in the 57,000 dwt bulker Archangelos Gabriel was delivered without production of the bills of lading, which were held by NBF, a Fujairah bank financing the buyer. It was common ground that the bills incorporated a London arbitration clause. NBF, mindful that the twelve-month Hague-Visby time-bar expired in June 2019, intimated a claim to the vessel’s owners R in December 2018; they issued in rem proceedings in Singapore in January 2019 and served them ten months later. In addition they issued arbitration proceedings in London against R in June, just within the time-bar. Then came a bombshell: after some procedural skirmishing R alleged with considerable plausibility that the vessel had actually been bareboat chartered to T, with which it seemed to have fairly close relations, and that the relevant bills, issued on behalf of the master, were charterers’ bills and not theirs.

Caught on the hop, and with a claim against T now out of time, NBF made it clear that they would add T to the Singapore proceedings and attempt to add them as a respondent to the London arbitration. T, fairly confident that it could resist the latter attempt, sought an ASI to prevent continuation of the Singapore proceedings against it, relying on the arbitration clause.

Had it been admitted that T and NBF were both party to a contract containing the arbitration clause, the case would have been easy: but it was not. However incongruously given its claim against T in Singapore under the bill of lading, in London NBF put in issue the question whether T was party to that document at all. Was this a case where the ASI should normally run as of course? T said it was: NBF that it was not. Having discussed the authorities, Cockerill J fairly unhesitatingly supported T’s position. The claim for the ASI here was “quasi-contractual” in the same way as if the injunction defendant were an assignee of some sort seeking to enforce an obligation without respecting an arbitration clause in it (as in cases like The Yusuf Cepnioglu [2016] 1 Lloyd’s Rep 641); true that here the claim was that T rather than NBF was a technical third party, but that was irrelevant. And in all such cases, she said, the rule in The Angelic Grace [1995] 1 Lloyd’s Rep 87 applied. And rightly so in our view; what should matter in international litigation cases is a clear illegitimate attempt to make an end-run around a clear contractual arbitration or jurisdiction clause, not technical questions of rights to enforce, or duties to perform, a particular contractual obligation.

Not that this mattered in the event. Had push come to shove, her Ladyship would, in a no-nonsense way reminiscent of Bertie Wooster’s Aunt Agatha, have decided T was the carrier under the bill of lading and so applied The Angelic Grace anyway (see at [80]). But that is beside the point for our purposes.

We should add the final twist to the story. In the event T’s victory on this point was for another reason entirely Pyrrhic, the only gainers being the lawyers. NBF had acted fairly reasonably in proceeding against R, and T’s merits were not entirely sparkling. In the circumstances the judge, while clearly willing to injunct NBF, did so only on terms that T would not take any time-bar points in the London arbitration. Ironically these were exactly the terms on which NBF had offered to discontinue the Singapore proceedings in the first place. But at least we now know that their judgment was right; and in addition we have some very useful clarification on the subject of ASIs generally.

What is an ‘international case’ in Denmark? Indemnity claim for cargo damage heard in Denmark despite exclusive jurisdiction in favour of High Court in London.

 

An interesting decision from Denmark, noted recently by WSCO Advokatpartnerselskab https://www.lexology.com/library/detail.aspx?g=6d6b72da-f890-4cf3-9075-21752902d70e

 

Pursuant to a contract to carry containers from China to Denmark, the Danish importer booked carriage with Danish freight forwarder who sub contracted to a Danish shipping company under an agreement made in Shanghai by the parties’ respective Chinese subsidiaries. The shipping company issued a waybill naming the forwarder as consignee. This contained an exclusive jurisdiction clause in favour of the High Court in London. The importer sued the forwarder and its insurers in the Danish High Court for loss of three containers in rough weather during the voyage, and the forwarder then sought an indemnity under the waybill from the shipping company. The Danish shipping line sought to a have the indemnity dismissed by reference to the exclusive jurisdiction clause.

One would have thought the shipping line’s application for dismissal would be a dead cert under Article 25 1 of the 2012 Brussels Regulation (Recast) which provides.

If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.

The agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

The Danish Court held that the jurisdiction agreement would prevail over the mandatory rules in the Danish Merchant Shipping Act if the contract of carriage were international in nature. But this was not the case here, given that both the shipping company and the freight forwarder are Danish companies with their head offices in Denmark and that the place of delivery of the goods is in Copenhagen where the importer was domiciled. So the case proceeds in the Danish High Court

 

US Supreme Court Rules- Warranty of Safety in Charterparties is an Absolute Obligation (Citgo Asphalt Refining Co v. Frescati Shipping Co Ltd)

The tanker, Athos I, was directed to a berth by her charterers at a terminal in Philadelphia in 2004. As the vessel was approaching the berth, she struck a submerged anchor. As a result, the vessel’s hull was damaged and some 263,000 gallons of crude oil spilled into the Delaware River. The cost of the clean-up operations was around US$180m.

The owners of the Athos I brought an action against the voyage charterer contenting that the charterer was in breach of its warranty to provide a safe port/safe berth for the ship to discharge the cargo and was therefore liable to reimburse the ship owner for the costs of the clean-up paid by them. The relevant provision in the charterparty provided:

‘…the vessel shall load and discharge at any safe place or wharf… which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage being at the expense, risk and peril of the Charterer….’

safeport

The district court gave the judgment against the owners of the Athos I on the basis that the obligation of the charterer under the charterparty was to exercise due diligence in providing a safe berth/safe port and that was satisfied in the case. On appeal, the US Court of Appeals for the Third Circuit reversed the district court’s decision. In doing so, the Third Circuit aligned itself with the Second Circuit ignoring a case decided in 1990 by the Fifth Circuit (whereby it was held that a due diligence standard should be read into a charterer’s warranty of a safe berth/safe port).

The US Supreme Court (7-2) came to the conclusion that such a form clause commonly used in the industry must be construed as an express warranty of safety and imposes on the charterer an absolute duty to select and provide safe berth. The majority emphasized that the safe berth clause in the charterparty was clear and unambiguous.

The majority (an opinion delivered by Justice Sotomayor) rejected charterer’s that the safe berth clause imposes simply a duty to exercise due diligence. In their view, such a due diligence standard resonates more in tort, rather than contract. The parties could have adopted a due diligence standard explicitly in the safe berth clause, as they did elsewhere in the contract. The absence of similar language in the safe berth clause provides further evidence that the parties did not seek to imply such a limitation on the duty of the charterer.

The Supreme Court’s decision follows the traditional approach adopted by the English law with regard to warranty of safety of a port/berth (The Eastern City [1958] 2 Lloyd’s Rep 127) and will certainly be welcomed by the industry (i.e. shipowners) and, their hull underwriters who in most cases will end up pursuing charterers when a chartered vessel is damaged in a port/berth which turns out to be unsafe. It is worth to note that the judgment does not prevent this obligation from being watered down by a due diligence standard in a charterparty as long as clear and apposite wording is employed to this end.

Switch bills. Initial shipper off the hook for freight due under bill of lading.

 

The effect of switch bills with a new shipper in the second set has the effect of a novation of the initial contract contained or evidenced in the initial bill with the shipowner as carrier under the bill. So held Stevenson J in the Supreme Court of New South Wales in The Illawarra Fortune [2020] NSWSC 183. Both sets incorporated the freight payable under a voyage charterparty with the time charterer of the vessel. The initial shipper, whose parent company was the voyage charterer, ceased to be liable for unpaid freight once the second bills were issued naming a different shipper. Had the original bills not been switched the time charterer, as assignee of the shipowner’s rights under the bills of lading,  would have been able to sue the original shipper for freight due under the voyage charter with the shipper’s parent company.

When does time start to run for an indemnity claim?

 

 

In London Arbitration 1/20 owners claimed an indemnity from voyage charterers in respect of payment of funds by their P&I Club to satisfy a judgment on a cargo claim brought against them in Brazil. The owners’ claim was brought under an express indemnity provision in the charterparty, clause 10, which read:

“Bills of Lading shall be presented and signed by the Master as per the ‘Congenbill’ Bill of Lading form, Edition 1994, without prejudice to this Charter Party, or by the Owners’ agents provided written authority has been given by Owners to the agents, a copy of which is to be furnished to the Charterers. The Charterers shall indemnify the Owners against all consequences or liabilities that may arise from the signing of bills of lading as presented to the extent that the terms or contents of such bills of lading impose or result in the imposition of more onerous liabilities upon the Owners than those assumed by the Owners under this Charter Party.”

The relevant time line was that discharge took place in 2006, with a first instance decision in the Brazilian courts in August 2010 which held owners liable. In September 2017 this was upheld on appeal and in October 2017 funds were remitted to cargo interests to satisfy the judgment. Owners commenced arbitration proceedings against charterers in August 2018.

There were various competing dates for starting the firing gun for the running of the six years under the Limitation Act 1980. If time started when the claim arose, or after the first instance judgment, then owners’ arbitration would be clearly barred. However, if the relevant time were that of the appeal decision or the payment of the judgment soon after, then owners would be in time.

The tribunal, by a majority, declined to follow the decision of McNair J in Bosma v Larsen [1966] 1 Lloyd’s Rep 22 in which McNairJ held that the cause of action under clause 9 of the Baltime form arose at the date when the facts came into existence which created a liability of the owners to the cargo owners or their insurers. That date was the date when the cargo was discharged damaged. The case had not been overruled but had not been followed on two subsequent occasions at first instance, in particular in The Caroline P [1984] 2 Lloyd’s Rep 466, where Neill J said:

“I have therefore come to the conclusion, though not without hesitation, that the … indemnity … did not become enforceable by action until at the earliest the liability of the owners to the receivers had been ascertained by the court of first instance …”

In the majority’s view, Neill J was saying that he preferred to run time from the date of the court adjudication at the earliest rather than from the time of discharge. In their view time started running when owners paid the judgment in favour of cargo interests sometime between 27 September and 6 October 2017.

Unseaworthy ship, or just a careless crew?

If you were mown down by a car, you would presumably think it a tad surreal if the driver got out, looked you over, and walked away, saying “I don’t have to pay you a penny. There was nothing wrong with my car. I merely drove it very badly.” Unless, of course, you were a lawyer dealing with carriage of goods by sea. In that case you would understand perfectly; after all, this merely reflects the distinction you will have imbibed with your mother’s milk between Article III r 1 and Article IV r 2(a) of the Hague-Visby Rules. The one says that anyone’s failure to show due diligence to make your vessel seaworthy makes you liable even when it’s not your fault; the other, that negligence in navigation excuses you from liability even where it was your fault.

Drawing the distinction between these has never been easy. The latest episode comes in the Court of Appeal’s decision today in The CGM Libra [2020] EWCA Civ 293. A sizeable container ship sailed from Xiamen in China (a pleasant subtropical spot which older readers may remember as Amoy) in the wee hours and grounded, rather expensively, a shortish distance outside. The reason she grounded was that when preparing the passage plan the owners had indolently failed to transcribe a Notice to Mariners indicating that outside the strict boundaries of the fairway the soundings on local charts were completely unreliable.

In a general average claim by owners against cargo, the issue arose: was this a matter of navigational fault (owners not liable and hence entitled to contribution) or unseaworthiness (owners liable and thus barred)? Teare J held for unseaworthiness. Owners appealed, on the basis that failing to make a note of possible shallows so as to avoid them was a clear navigational error. But the Court of Appeal was having none of it. Even if the failure to prepare an adequate passage plan was a navigational sin, there was no reason why it could not also amount to unseaworthiness in so far as it was due to someone’s negligence before the voyage began.

The holding itself is pretty unexceptionable. If lack of proper charts on board at the start of the voyage is unseaworthiness, it would be odd if the same did not apply to the absence of a proper passage plan, this having been regarded as more or less as essential for a dozen years or so at the time of the events in question.

On the other hand, cases like this do begin to raise the question: have we now reached the point that where there is any negligence before the voyage, there will be a case of unseaworthiness so as to leave the Article IV(2)(a) defence in effect a dead letter? Some incautious words suggest we might have. At [61] Flaux LJ was sceptical whether unseaworthiness had to stem from an attribute of the vessel at all, and Haddon-Cave LJ seems to have suggested that the distinction was simply temporal: negligence before departure is unseaworthiness, for owners’ account, and later negligence for cargo’s account.

But this would look odd, apart from being for obvious reasons unwelcome to P&I interests. Does it make sense to say that a vessel is unseaworthy even though we cannot say what it is about it that makes it unseaworthy? It seems doubtful. One strongly suspects that The CGM Libra will not be the last word, and that we may well see more litigation before too long aimed at clearing up the awkward distinction between bad ships and careless crews.

No indemnity for loading of damaged goods when clean bill of lading issued.

 

 

There is no right to an indemnity to be implied into a voyage charter in relation to the accuracy of a statement in the draft bill presented to the master that the good are loaded clean on board, in the event that they turn out to be pre-damaged. The Tai Prize  [2020] EWHC 127 (Comm) involved a cargo claim under the bill of lading for which the shipowner received 50% contribution from the disponent owner who then sought to recover that sum from the voyage charterer under a charter which incorporated the Hague Rules.

The shipper presented a draft bill of lading to the shipowner at the loading port which described the cargo, under the heading “Shipper’s description of Goods”,  as being “63,366.150 metric tons Brazilian Soyabeans Clean on Board Freight pre-paid”. The bill of lading that was issued noted that the cargo was loaded in apparent good order and condition. On discharge charred cargo was found in two of the vessel’s holds and discharge was suspended. The remaining cargo was discharged without complaint and the cargo in the affected holds was discharged but the receiver maintained that the cargo in those holds had suffered heat and mould damage. The disponent owner commenced arbitrationto recover from the voyage charterer the contribution paid to the owner. The arbitrator found that the cargo had been loaded in a pre-damaged condition and the shipper as agent for the voyage charterer had impliedly warranted the accuracy of any statement as to condition contained in the bill of lading and had impliedly agreed to indemnify the defendant against the consequences of inaccuracy of the statement

HHJ Pelling QC found that

(1) By presenting the draft bill of lading for signature by or on behalf of the master, in relation to the statement concerning apparent good order and condition, the shipper was doing no more than inviting the master to make a representation of fact in accordance with his own assessment of the apparent condition of the cargo.

(2) The bill of lading was not inaccurate as a matter of law because the master did not and could not reasonably have discovered the relevant defects because they were not reasonably visible to him or any other agent of the claimant at or during shipment.

(3) No guarantee or warranty was to be implied into the voyage charter. It would be wrong in principle to imply into the contract a provision making the claimant liable to indemnify the defendant, when the drafters of the Hague Rules,which were incorporated into the voyage charter,  could have but decided not to provide expressly for such a provision in relation to statements by the shipper as to the apparent order and condition of the cargo. Under Art. III, Rule 5 a warranty is deemed to have been supplied by the shipper to the carrier in respect of the information “… furnished in writing by the shipper” pursuant to HR, Art. III, Rule 3, which relates to the “… leading marks necessary for identification of the goods …” and “… the number of packages or pieces or the quantity or weight …” However,  there is no such guarantee deemed to be given in respect of the apparent order and condition of the goods , This information in the bill is exclusively an assessment by the carrier.

The Judge concluded:

 

[35] The Arbitrator’s concern that the defendant would be left without recourse was misplaced because its liability did not and could not arise as a result of the wrongs of anyone on the charterer’s “… side of the line” because its liability to the Shipowner was the result of its decision to pay the Shipowner rather than defend the claim by reference to the true condition of the goods. There is nothing unfair, unjust, uncommercial or unconscionable about an outcome that leaves ultimate liability with the defendant because there was no misrepresentation, no evidence or finding that the Master had acted on the alleged misrepresentation rather than, or even as well as, attempting to and/or being unable reasonably to verify the condition of the goods before his agents signed the B/L and because it decided to pay the Shipowner.

 

Demurrage due to delays in discharge due to damaged condition of cargo.

Alianca Navegacao E Logistica LTDA v Ameropa SA (The Santa Isabella) [2019] EWHC 3152 (Comm)

A vessel carried a cargo of white corn/maize from Mexico to South African Ports under a Synacomex form charter incorporating the Hague Rules.  On arrival the cargo was found to have suffered extensive damage and that led to a delay in discharge resulting in demurrage becoming due. Voyage charterers claimed that they were not liable for demurrage due to delays resulting from fault of the disponent owners. They alleged that the damage to the Cargo, and the delays at Durban and Richards Bay, were caused by (a) the Vessel taking the Cape Horn route rather than the Panama Canal route from Topolobampo to Durban, (b) failure by the Vessel to ventilate the Cargo in accordance with a sound system, (c) failure by the Vessel to disinfest areas of the Vessel outside of the cargo holds following loading at Topolobampo and/or (d) the Vessel proceeding to Durban at less than her warranted speed.

Andrew Henshaw QC (sitting as a Judge of the High Court) found that the owners’ obligation was to proceed on the usual and reasonable route to the discharge port and that where there were more than one such routes they were entitled to choose one rather than the other and that choice did not require owners to calculate the effect of taking that route on the cargo being carried. Both the Cape Horn route and the Panama Canal routes were usual routes to Durban and the owners committed no deviation, nor breach of art. III(2) of the Hague Rules, in taking the former. In determining which route to take the judge stated[91]:

“cargo considerations may be relevant in the elementary sense that a much longer voyage is likely to be detrimental to a perishable cargo. However, the case law does not in my view require shipowners to undertake the far more refined analysis urged by Ameropa, which would involve (in the present case) considering in detail how predictable climactic conditions on the Cape Horn and Panama Canal routes would impact on the need to ventilate the cargo and the vessel’s ability to do so.

However, the owners were found to have been in breach of art III(2) of the Hague Rules in failing properly to ventilate the cargo on the voyage and this had resulted in the delays experienced at Durban and Richards Bay. It was common ground that as owners were not bailees the legal burden of proof in showing breach of art III(2) fell on charterers. Charterers argued that the arrival of the cargo in a damaged condition  gave rise to an inference of breach. The judge rejected this, stating [52]:

“As a matter of common sense, the arrival in a seriously damaged condition of a cargo loaded in apparent good order and condition calls for an explanation, and a want of care on the part of the shipowner is a possible inference. In the present case, Alianca’s explanation is that the length and/or route of the Voyage made damage inevitable. On that basis, I am inclined to the view that it is for Ameropa to show, on the balance of probabilities, that the damage suffered in fact arose from a breach of contract by Alianca.”

Ameropa succeeded in showing that the damage did arise from a breach of contract by disponent owners.

The owners were also in breach of their obligation to proceed at the warranted speed but it was not possible to identify any particular element of damage or loss caused by that breach.