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.

A new tort in the common law world. Corporations in Canada can be liable for aiding and abetting violations of customary international law.

 

Eritrea is a new country, having only been in existence since 1993. It is also a very poor country, ranking 164th out of the world’s 194 states. 80% of its population are engaged in subsistence agriculture. Eritrea’s major source of foreign currency is its Bisha mine at Asmara. Construction began in 2008 and by 2013 gold exports amounted to US$143m, almost all derived from the Bisha mine. The mine is owned by the Bisha Mining Share Company (BMSC) in which a Bermudan subsidiary of a Canadian mining company, Nevsun, holds a 60% share.

However, all that glitters is not gold. Eritrea has a national service programme requiring its adult citizens to serve in the military for 18 months. In 2002 this was extended to an indefinite period of service. Conscripts in the national service programme (NSP) have provided the labour for the Bisha mine. Three Eritrean refugees, Gize Yebeyo Araya, Kesete Tekle Fshazion, and Mihretab Yemane Tekle, brought an action against Nevsun in the courts of British Columbia. They allege that they were conscripted into the NSP and then forced to provide labour to two for profit construction companies, Segen and Mereb, the latter allegedly owned by members of the Eritrean military. They allege that Nevsun and/or its Eritrean subsidiary, BMSC, engaged Segen and Mereb for the construction of the Bisha Mine.

As well as framing their claims under domestic tort law, the plaintiffs also brought the action against Nevsun for violations of customary international law (CIL) as incorporated into the law of Canada, for: the use of forced labour; torture; slavery; cruel, inhuman or degrading treatment; and crimes against humanity. Nevsun mounted a jurisdictional challenge to the claims on three grounds: forum non conveniens; Act of State; denial of the existence of a cause of action based on CIL.

At first instance, Abrioux J dismissed the application to stay proceedings on grounds of forum non conveniens finding that Nevsun had not established that Eritrea was the more appropriate forum. He also dismissed the Act of State application and decided that the CIL claims were not bound to fail and should proceed to trial. The case then proceeded to the Court of Appeal of British Colombia  which upheld the decision on forum non conveniens, decided that in the light of the UK Supreme Court’s decision in Belhaj v Straw [2017] UKSC 3; [2017] A.C. 964. the Act of State doctrine would not bar the claims against Nevsun and that there was enough plausibility to the existence of a cause of action base on CIL to allow those claims to proceed.

In January 2019 the Canadian Supreme Court heard Nevsun’s appeal on the Act of  State and CILissues. It has now decided (1) 7-2 that the Act of State doctrine does not form part of the law of Canada and (2) 5-4 that a cause of action based on CIL exists. The trial judge will now have to decide whether Nevsun breached customary international law and—if it did—how it should be held responsible.

So is Canada the new frontier for claims against transnational corporations of the sort that we have seen in the US under the Alien Tort Statute? And if Canada, why not the UK? Maybe, but some unanswered questions remain. The claim is against the parent corporation, but the mine was operated by a subsidiary? How is the parent corporation implicated in the alleged aiding and abetting of the Eritrean State’s violations of CIL? What is the mens rea of this new tort – knowing assistance or purposive assistance? What is the applicable statute of limitations for such a tort?

In the meantime, a useful corrective to the excitement that this decision will inevitably provoke may be found by looking at the 2009 decision of Judge Shira Schiendlin in the South African Apartheid claims brought under the Alien Tort Statute in New York.  The basis of the claim was aiding and abetting  by foreign corporations of violations of CIL by the apartheid regime in South Africa in the 1980s. The mens rea of the tort was knowing assistance. Companies who had supplied military vehicles to the regime which were used to suppress civilian protests, and companies who had supplied IT systems which were then used in the denationalisation of South African citizens could potentially be liable, but not banks who had provided finance to the South African government. Merely doing business in the apartheid state was not enough to constitute aiding and abetting. To supply a violator of the law of nations with funds, even funds that could not have been obtained but for those loans, was not sufficiently connected to the primary violation.

Sounds a bit like the relationship of Nevsun and the Bermudan subsidiary to the Bisha mine project.

 

[1] Araya v Nevsun Resources Ltd  2016 BCSC 1856

[2] Araya v. Nevsun Resources Ltd., 2017 BCCA 401

Yes Minister. The 2015 Paris Agreement is part of government policy and you do have to take account of it.

 

In Plan B Earth v Secretary of State for Transport [2020] EWCA Civ 214 the Court of Appeal has decided that the government’s policy in favour of a third runway at Heathrow was not produced lawfully. The policy is contained in the “Airports National Policy Statement: new runway capacity and infrastructure at airports in the South East of England” (“the ANPS”), designated by the Secretary of State for Transport (“the Secretary of State”) under section 5 of the Planning Act 2008 (“the Planning Act”) on 26 June 2018. The designation of the ANPS was unlawful because the Secretary of State, in breach of section 10(3)(a) of the Planning Act, failed to have regard to the desirability of mitigating, and adapting to, climate change in the light of the United Kingdom’s commitment to the Paris Agreement, the non-carbon dioxide (“non-CO2”) climate impacts of aviation, the effect of emissions beyond 2050, and to the ability of future generations to meet their needs. In making the designation the Secretary of State had acted on legal advice that consideration should be given only to existing domestic legal obligations and policy commitments in relation to the mitigation of, and adaptation to, climate change, which did not include the 2015 Paris Agreement.

Section 5(8) of the Planning Act requires that the ANPS should explain how the Secretary of State has “taken into account” government policy and it was necessarily implicit in that obligation that the Secretary of State must indeed first have taken that government policy into account. The Paris Agreement represented firm government policy on climate change and ought to have been taken into account by the Secretary of State in the preparation of the ANPS, but was not – which was legally fatal to the ANPS in its present form. The Court of Appeal stressed that they were not making any finding that there will be no third runway at Heathrow, nor that a national policy statement supporting this project is necessarily incompatible with the UK’s commitment to reducing carbon emissions and mitigating climate change under the Paris Agreement. What the Government now had to do was to reconsider the ANPS in accordance with the clear statutory requirements that Parliament has imposed, including taking account of government policy – and its international commitments under the Paris Agreement.

The Court of Appeal also found the Divisional Court erred by failing to give reasons for rejecting Friends of the Earth’s argument on the non-CO2 climate impacts of aviation and the effect of emissions beyond 2050, having regard to the ability of future generations to meet their needs. In line with the precautionary principle, which was well established under international law, these impacts also needed to be taken into account by the Secretary of State.

 

 

Reconteurs IP Report 2020

Readers of the latest Raconteurs IP Report may be sobered to learn that 28% of IP, Cyber and risk professionals say their “company has experienced a material IP incident over the past two years” – with 42% of those involving trade secrets, as compared to 26% copyright and 24% patents.



Image by pasja1000 from Pixabay

The Report goes on to cite the case of Uber acquiring the self-driving startup Otto in 2016. Ben Edwards notes, “[I]t thought it was hiring some of the industry’s smartest engineers; what Uber also purchased was a lesson on the importance of intellectual property.” It transpired Otto’s founder, Anthony Levandowski, had downloaded files from his previous employer, Waymo, before his leaving – a fact Uber had overlooked as part of their acquisition due diligence. Whilst Uber claimed not to have received or used any of Waymo’s trade secrets it ended up paying $245 million in legal settlement.

Image by Tomasz Mikołajczyk from Pixabay

Tilman Breitenstein (IP Group Leader, BASF) comments in the Report, “There are not many companies that do have a solid trade-secrets programme in place; even if they know they have something, they lack the skills and knowledge of how to protect it…Startups and smaller companies often have a higher fluctuation of staff and that makes it much more difficult for those businesses to protect their trade secrets. They also need to attract investors, which means going out and talking about their business, which also puts them at higher risk.”

Image by S. Hermann & F. Richter from Pixabay

The growing importance of considering trade secrets as part of a wider IP strategy for the business is amplified by Maria Anassutzi (IP Lead European Counsel at Canon) in the Report,”[S]ometimes an IP strategy is just thought of as a patent strategy, but it is much more than that.” The Report goes on recognise one common mistake companies make is, “not aligning their IP strategy with their overall business strategy.”

England v Spain grudge match. Appeal against registration of ‘Prestige’ judgment against London Club likely to be heard in December 2020.

 

Following the break up of ‘The Prestige’, Spain brought proceedings for compensation for the resulting pollution against various defendants, including the owner’s P&I Club. The Club got its response in early by obtaining an arbitration award against Spain which declared that, as a result of the “pay to be paid” clause in the policy the Club had no liability to Spain. The arbitrator’s jurisdiction was challenged unsuccessfully in the English Courts and the award was converted into a judgment. London SS Mutual v Kingdom of Spain, [2015] EWCA Civ 333; [2015] 2 Lloyd’s Rep. 33

In 2016 the Spanish Supreme Court held that the owners and their club were liable for the damage caused and in execution proceedings in La Coruna the court held that the club would liable in respect of the claims up to a global limit of liability in the sum of approximately €855 million. Spain has obtained an order in England registering the Spanish judgment to enable its enforcement here in England. The Club have appealed against that order, principally on the ground that, under art 34.3 of the Brussels Regulation the judgment is irreconcilable with the previous decisions of the English courts converting the award into a judgment.

In a Case Management Conference before Teare J [2020] EWHC 142 (Comm) it was ordered that the trial be after 1 December 2020. It is estimated that it will last 5-6 days. Disclosure has been ordered of documents held by Spain which relate to the alleged refusal of the Spanish Courts  to allow the master to participate in an underwater investigation of the strength of the vessel’s hull and to disclose the results of the investigation (so that there was a breach of the master’s right to equality of arms and to be able to prepare a defence) or whether the results were disclosed to the master in sufficient time to allow him to prepare his defence.

The Club were also given permission to adduce evidence of a naval architect on the question whether the results of the underwater inspections enabled conclusions to be drawn as to the strength of the hull and if so what those conclusions were. On both issues the Club is to provide its evidence first.

English multi-national not liable for conduct of Sierra Leone police.

 

Kalma & Ors v African Minerals Ltd & Ors is a case reported in this blog last March https://iistl.blog/2019/03/06/a-fair-cop-transnational-torts-and-trouble-at-the-mine/.

The claims arose out of violent police suppression of protests in 2010 and 2012 by a local community in Sierra Leone against a mine created and operated by the defendant, African Minerals Ltd (“AML”), a UK company, and its two Sierra Leonean subsidiaries. The protests prompted a significant overreaction from some members of the Sierra Leone Police (“SLP”) whose response to disruptive protests and threats against the personnel, property and business of AML soon degenerated into violent chaos during the course of which many villagers were variously beaten, shot, gassed, robbed, sexually assaulted, squalidly incarcerated and, in one case, killed. After an extensive review of the law of tort on vicarious liability, joint tortfeasors, direct liability for breach of a non-delegable duty Turner J found that AML were not liable in tort.

The Court of Appeal have now upheld the decision of Turner J, [2020] EWCA Civ 144. Coulson LJ, who gave the principal judgment, found as follows.

 

  1. The judge found that there was no relevant intention on the part of the respondents. The common design case therefore failed on both its required ingredients: assistance and intention.

 

  1. A new case was raised based on ‘inferred intention’. The appellants argued that could foresee that the SLP might use excessive force and that, by providing them with money, vehicles, and accommodation, they intended that the protests should be quashed, if need be by the use of unlawful force. In this way, he sought to infer the necessary intent, presumably as a way round the judge’s express findings that there was no actual intent on the part of the respondents. In addition, the appellants also suggested that the judge’s findings confused intent with desire: they argued that, although the respondents may not have wanted violence to be used, their intent could still be conditional (“to quash protest if need be by violent means”). The new case was held to be unsustainable. It took what were, on the judge’s findings, neutral acts of assistance to the SLP – the provision of money, vehicles and accommodation – and uses the foreseeability that (regardless of that assistance) the SLP might over-react to the unrest, in order to disregard the judge’s findings as to actual intent and found an entire case based on inferred, conditional intent. The new case was also based on foreseeability but on its own this was never enough to create a legal liability. To establish tortious liability for common design, there needs to be something more than the foreseeability that, in certain circumstances, a tort might be committed by a third party.

 

  1. As regards the creation of a duty of care by AML, this was a case where the underlying complaint was an omission: that the respondents had failed to protect the claimants from the harm caused by the SLP. Here the conclusion must be that the respondents were not carrying out any relevant activity, and the damage was not caused by anything which the respondents did. The case did not fall within the creation of danger exception. The respondents could not be said to have created the danger or assumed any liability simply because they had called in the SLP. The provision of money, vehicles and accommodation to the SLP did not create a danger, and, without them, the situation might have been even worse.

 

  1. There was no freestanding duty of care owed by AML. Applying the three stage criteria set out in Caparo there was no proximity. this was a case in which a large commercial concern called in the police of the host country to restore law and order in degenerating circumstances of lawlessness and unrest. The police overreacted but sadly that is not uncommon in cases of this sort. There are no unique factors here which would justify a finding of proximity. The relationship with the police was not a close one, but one based on necessity. Nor would it be fair, just or reasonable to impose a duty of care. The judge had expressly found that the respondents’ employees were not involved in the unlawful acts and did not encourage or incite those unlawful acts. The assistance they provided was reasonable and proportionate in all the circumstances and did not cause the alleged or any loss.

 

  1. The position was not changed by reference to the Voluntary Principles on Security and Human Rights produced by the United Nations which were general in nature and primarily concerned with the need for liaison with the local community and the like. Coulson LJ concluded [151]:

“More significantly, there is nothing in the Voluntary Principles which make companies operating abroad generally liable for the unlawful acts of the police forces of the host countries in which they are operating: on the contrary, the Voluntary Principles are drafted on the basis that, whilst companies operating abroad may properly help to facilitate the law and order expected to be provided by host countries, it is the governments of those countries (and not the companies) who have “the primary responsibility to promote and protect human rights.”

Anti-suit injunctions in Singapore. The ‘quasi-contractual’ ground recognised.

 

Hai Jiang 1401 Pte. Ltd v. Singapore Technologies Marine Ltd. [2020] SGHC 20 involved an anti-suit injunction granted by Quentin Loh J on the ‘quasi-contractual’ ground under which a claim made in foreign proceedings is based on a contract subject to an arbitration or exclusive jurisdiction clause although the claimant is not a party to that contract.

A yard in Singapore had done work upgrading cranes on the ‘Seven Champion’ which was at that time on demise charter. The contract was with the demise charterer who were later wound up by the vessel owners who then concluded a new demise charter with another company. The yard subsequently arrested the vessel at Sharjah for unpaid sums due under the contract to upgrade the cranes and sought to have the substantive claim against the vessel owners  heard there. Owners sought an anti-suit injunction before the courts of Singapore on two grounds. First, they were the assignees of the former demise charterer’s arbitration clause in its contract with the yard. There was held to be a prima facie case of assignment to the shipowner of the arbitration clause in its contract with the yard to justify remission to the tribunal. Second, the yard’s claim was based on a contract with an exclusive Singapore law and arbitration clause. They sought to enforce the contract against third parties to that contract, the shipowner, and were bound by the arbitration clause in it. The proceedings in Sharjah were vexatious and oppressive. This was a situation recognised by the English courts as the ‘quasi-contractual’ ground for granting an anti-suit injunction and this ground was also recognised under the law of Singapore.

UK withdraws accession to 2005 Hague Convention on Choice of Court.

As expected, 31 Jan 2020 saw the following

 

31-01-2020
With reference to depositary notification Choice of Court No. 01/2019, dated 2 January 2019, regarding the accession to the Convention by the United Kingdom, and with reference to depositary notifications Choice of Court No. 03/2019, dated 29 March 2019, Choice of Court No. 04/2019, dated 12 April 2019, and Choice of Court No. 07/2019, dated 31 October 2019, regarding the suspended accession of the United Kingdom to the Convention, the depositary communicates that the Instrument of Accession, Note Verbale and Declarations were withdrawn by the United Kingdom on 31 January 2020.

 

In the meantime the UK keeps riding along in the Convention due to the EU’s accession.

Don’t worry, another UK accession will probably be along later in the year as the UK approaches ‘third party state’ day (TPS day) on 31 December 2020 – possibly to be followed by another ‘withdrawal’ in the event that the UK and the EU conclude an agreement on judgments and jurisdiction before the end of the implementation period.

A right royal battle for distinctiveness

Intellectual property is the area of law used by commercial entities to differentiate their goods and services in the marketplace. One of the ways this differentiation can be achieved is through branding, protected via trademarks. Indeed, one of the essential criteria for a trademark is a sign capable of distinguishing goods and services as a “badge of origin” for consumers.

Image by Pexels from Pixabay

Richard and Maurice McDonald from San Bernardino, California may have been experts at churning out hamburgers and French fries quickly, cheaply and consistently under their “Speedee Service System”, but they had little if any regard for intellectual property. Working with local craftsmen they invented a new spatula, dispenser (squirting the same amount of ketchup and mustard every time) and rotating platform to speed up the assembly of the burger, bun and condiments, none of which enjoyed patent protection or were appreciated for their trade secrets potential. It was left to the more IP astute Ray Kroc, their milkshake machines salesman, to encourage and expand their domestic franchising operation under the protection of trademarks. After purchasing the McDonald brothers’ equity in the company, Kroc used his control over the trademarking portfolio as the springboard for the global franchising operation we all know today. Ultimately driven out from the fast-food industry by the very business that bore their family name, the McDonald brothers’ story is a salutary lesson in IP astuteness.

Image by Alfred Derks from Pixabay

UK company number 07033553 tells the tale of two even more famous brothers. Incorporated in 2009 as “The Foundation of Prince William and Prince Harry” following the marriage of Prince William it went on to become “The Royal Foundation of the Duke and Duchess of Cambridge and Prince Harry” in 2012, and following the marriage of Prince Harry “The Royal Foundation of the Duke and Duchess of Cambridge and the Duke and Duchess of Sussex” in 2018. But after Prince Harry disclosed in an ITV documentary that he and his older brother were on “different paths” the company has since reverted to “The Royal Foundation of the Duke and Duchess of Cambridge” (from the 6th September 2019). This company has been IP astute in applying for/registering trademarks to protect its name, as well as “The Royal Foundation” brand. In addition to the UK, trademark protection has been secured as far afield as Australia, Canada and Europe.

Image by Steve Watts from Pixabay

The recent decision of the Duke and Duchess of Sussex to withdraw from royal duties may have created a “mini-abdication crisis” but with speculation now turning towards likely future commercial dealings, their trademarking activities are now coming to the fore. So what insights do these trademarking activities offer?

Distinguishing features

The Duke and Duchess of Sussex have been Directors of “Sussex Royal the Foundation of the Duke and Duchess of Sussex”, a private limited company by guarantee (Company Number 12077679) since its date of incorporation on 1st July 2019. Two UK trademark applications have been made on behalf of this company for “Sussex Royal” as well as protecting the company name.

International coverage

Following the announcement of the withdrawal from royal duties, two further applications have also now been made under the Madrid system (the system for registering international trademarks in up to 90 countries) in respect of the company name and the brand “Sussex Royal”. It is reported that international trademark applications have been filed under these applications for Australia, Canada, Europe and the United States.

Comprehensive monopoly rights are being claimed

Legal protection has been sought and registered for the Duke and Duchess of Cambridge under “The Royal Foundation” for:-

  • Clothing, footwear, headgear.
  • Charitable fund raising; management of charitable funds; financial grant making.
  • Educational activities; cultural activities; organising of events; publishing, including electronic publishing.
  • Licensing of intellectual property.

In comparison “Sussex Royal” seeks to duplicate all of these and far more:-

Goods

  • Printed matter; instructional and teaching materials; printed educational materials; printed publications; books; educational books; textbooks; magazines; newspapers; newsletters; periodicals; printed reports; fact sheets; brochures; programmes; booklets; pamphlets; leaflets; manuals; journals; diaries; calendars; posters; art prints; notebooks; postcards; greeting cards; paper and cardboard; photographs; stationery and office requisites, except furniture; artists materials; pens; pencils; book marks; activity books.
  • Clothing; footwear; headgear; t-shirts; coats; jackets; anoraks; trousers; sweaters; jerseys; dresses; pyjamas; suits; sweatshirts; hooded tops; caps; hats; bandanas; headbands; socks; scarves and neckwear; gloves; sportswear.

Services

  • Campaigning; promotional and public awareness campaigns; marketing and promotion of charitable campaigns; promoting charitable fundraising events; developing charitable campaigns for others; developing and coordinating volunteer projects for charitable purposes; providing volunteering opportunities and recruitment of volunteers; organising and conducting community service projects; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
  • Charitable fund raising; management of charitable funds; financial grant services; financing of projects; charitable foundation services, namely, providing fundraising activities, funding, scholarships and/or financial assistance to those in need; charitable collections; management of charitable funds; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
  • Education; providing of training; sporting activities; cultural activities; arranging and conducting educational events; arranging and conducting of conferences, conventions, exhibitions, classes, lectures, seminars and workshops; organisation of webinars; health and wellness training; education and training relating to nature, conservation and the environment; organising youth training schemes; career and vocational counselling; training relating to employment skills; personal development training; team building (education); organising sporting events and competitions; sports coaching services; providing sports facilities; training of sports coaches; arranging and conducting cultural events; arranging and conducting of entertainment events for charitable purposes; social club services for entertainment purposes; arranging and conducting award ceremonies; publishing; electronic publishing; non-downloadable electronic publications; news reporting; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
  • Social care services namely organising and conducting emotional support groups; counselling services; emotional support services; provision of personal support services to help, care for and support persons in need, namely companionship services; charitable services, namely mentoring and personal care services; licensing of intellectual property; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.

We await the outcome of these applications, but for the time being at least in those areas (as underlined above) where the work of the respective Foundations overlap consumers should view “The Royal Foundation” as the brand of the Duke and Duchess of Cambridge and “Sussex Royal” the new future brand of the Duke and Duchess of Sussex.

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.