The Global Santosh: The Supreme Court provides guidance on a charterer’s responsibility for its agents

NYK Bulkship (Atlantic) NV (Respondent) v Cargill International SA (Appellant) (“The Global Santosh”) [2016] UKSC 20 (overturning the Court of Appeal [2014] EWCA Civ 403)

The Supreme Court last week handed down an important decision concerning the issue of when a charterer will be held responsible for its agents under a charterparty.

Contractual position

NYK was the disponent owner of the m.v. Global Santosh (“the Vessel”). NYK time chartered the Vessel to Cargill on an Asbatime form, which is a variation of the NYPE 1946 form. Cargill sub-chartered the Vessel to Sigma Shipping Limited under a voyage charter. The Vessel carried a cargo of cement in bulk from Sweden to Nigeria under a sale contract between Transclear SA (“Transclear”) and IBG Investments Ltd (“IBG”). It is likely that Transclear was a further sub-charterer of the Vessel.

Continue Reading

Res Cogitans – A Class of Its Own

Bunker Supply Contracts, Retention of Title Clauses, The Sale Of Goods Act 1979 and One Highly Publicised Insolvency Combine to Give Vessel Owners a Global Headache.

The Supreme Court’s ruling in this already notorious case may have a significant impact on the bunker supply industry and be somewhat unsettling for vessel owners and charterers (as purchasers of bunkers).

Its decision that bunker sale contracts on standard terms are not contracts for the sale of goods under the Sale of Goods Act 1979 (“SOGA”) means that an assumption that no-one had questioned prior to the Tribunal’s decision of April 2015 is now turned on its head. Its impact both on the many disputes which have been awaiting this decision and on the future of this industry may take some time to unfurl. We take a look at the decision and give some pointers as to what the future may hold.

The above is an executive summary from the Shipping Group’s client alert ‘Res Cogitans – A Class of Its Own’, dated 12th May 2016. Read the full Alert here.

Contractual amendments – “only in writing and signed by the parties”

We often see contracts containing wording along the lines of: “This Agreement may not be amended, except by the mutual written agreement of the Parties.”

The recent decision of the Court of Appeal in Globe Motors Inc., et al. v TRW Lucas Varity Electric Steering Ltd., et al. [2016] EWCA Civ 396, considered the impact of similar clauses, in that case one which provided “Entire agreement; amendment: This Agreement, which includes the Appendices hereto, is the only agreement between the Parties relating to the subject matter hereof. It can only be amended by a written document which (i) specifically refers to the provision of this Agreement to be amended and (ii) is signed by both parties.”

This is of particular interest because there were previously two inconsistent Court of Appeal decisions on this point, which the Court had to consider.

Purpose of such clauses

The starting point for the party seeking to rely on the clause was that it meant that any amendment had to be in writing and be signed by both parties, and that it was not open to the parties to amend the Agreement orally. It was said that the purpose of the clause was to promote certainty and avoid false or frivolous claims of an oral agreement. Such clauses can also prevent a person in a large organisation from producing a document which unwittingly and unintentionally is inconsistent with a contract to which the organisation is a party, and they therefore set an evidential threshold.

Continue Reading

Shelltime 4 – who bears risk of arrest?

In ST Shipping & Transport Pte Ltd -v- Space Shipping Ltd (“CV STEALTH”), the Commercial Court (“the Court”) heard an application arising out of an Arbitrator’s Award in respect of a dispute under a charterparty on an amended SHELLTIME 4 form.

The Charterers had sub-chartered the vessel on an amended BPVOY form to a company which had intended to export a cargo of crude oil unlawfully from Venezuela. Unaware of this, the Charterers gave orders for the vessel to proceed to Venezuela to load the sub-Charterers’ cargo. Suspicions were aroused when the documents were presented at the loadport and the vessel was detained in September 2014 in Venezuela, where she remained at the time of judgment.

Continue Reading

Maritime greenhouse gas emissions – update on the outcome of MEPC 69

In Reed Smith’s recent March alert on this subject, we looked ahead to the 69th meeting in London of the Marine Environmental Protection Committee (MEPC) of the International Maritime Organisation (IMO) (MEPC 69).

MEPC 69 has now taken place (from 18–22 April 2016). This article discusses the outcome of that meeting on maritime greenhouse gas (“GHG”) issues and its implications.

In particular, the alert looks at the detail of the agreed text of the proposed global monitoring, reporting and verification (“MRV”) scheme which proposes the agreed amendments to MARPOL Annex VI with a view to their adoption at MEPC 70 (24 – 28 October 2016).

Read the full Alert here.

 

Direct claims against insurers and anti-suit injunctions

In Shipowners’ Mutual Protection & Indemnity Association (Luxembourg) -v- Containerships Denizcilik Nakliyat ve Ticaret AS (The “Yusuf Cepnioglu”) [2016] EWCA Civ. 386, the Court of Appeal considered the juridical nature of a foreign statute which gives a victim (in this case, a charterer) the right to sue a defendant’s insurer (in this case, an owners’ club) directly without first suing the insured, and in the circumstances of the case, whether it was appropriate to uphold an anti-suit injunction (“ASI”) which had been made by the court below.

Reliance was placed on the previous decisions dealing with similar foreign legislation, such as The “Hari Bhum” (No. 1) [2004] 1 Lloyd’s Rep. 206; and [2005] 1 Lloyd’s Rep. 67, which considered the provisions of the Finnish Insurance Contract Act 1994 and The “Prestige” (No. 2) [2014] 1 Lloyd’s Rep 309 and [2015] 2 Lloyd’s Rep. 33 concerning the Spanish Penal Code.

In this case, the Court was looking at Turkish law, which provided, amongst other things, that “Article 1478 – the victim may claim its loss up to the insured sum directly from the insurer provided that the claim is brought within the prescription period to the insurance contract”.

Continue Reading

Shipbuilding Contracts – Limitation Periods and Sale of Goods Act

In Neon Shipping Inc. v. Foreign Economic 7 Technical Corporation Co. of China and another [2016] EWHC 399 (Comm) the Commercial Court dealt with an appeal from London arbitrators in a dispute arising out of a shipbuilding contract (“SBC”).

The time bar issue

The SBC provided in Article XI that:

Continue Reading

Don’t trip up – a warning for owners

The recently decided case of SBT STAR BULK & TANKERS (GERMANY) GMBH & CO KG V COSMOTRADE SA (THE “WEHR TRAVE”) [2016] EWHC 583 (Comm) in the Queen’s Bench Division of the Commercial Court and before The Hon Sir Bernard Eder will, perhaps, come as a surprise.

This was an appeal pursuant to section 69 of the Arbitration Act 1996 following an arbitration.

The question to be decided related to the interaction between the nature of a trip time charterparty for “one trip”, and the language of the contract governing the range of load and discharge ports. The question before the arbitrators, and then before the court, was whether the charterparty permitted the Charterers to load another cargo having discharged all its originally loaded cargoes. Once the vessel was free of cargo, could the Charterers load again? Furthermore, was the intended load port within the range of permissible ports?

Continue Reading

Mitigation and the assessment of damages on early redelivery – “The New Flamenco”

Mitigation and the assessment of damages on early redelivery – “The New Flamenco”[1]

Assessing the level of damages recoverable following the early redelivery of a vessel under a time charter can be a complex area of law to navigate, especially when there is no available market at the date of the termination of the charter. This Blog looks at the impact on owners and charterers of the decision in The New Flamenco[2].

The facts

On 13 February 2004, The New Flamenco was time chartered by the Claimant Owners to the Defendant Charterers. In August 2005, the charterparty was extended to 28 October 2007 by mutual agreement.  On 8 June 2007, the parties reached an oral agreement to extend the charter for another two years, to 2 November 2009.

The Charterers alleged that no such extension had been agreed and indicated an intention to redeliver the vessel at the end of October 2007, refusing to sign an addendum documenting the further extension. The Owners declared the Charterers to be in anticipatory repudiatory breach and accepted this breach as terminating the charterparty on 17 August 2007.

The vessel was redelivered by the Charterers on 28 October 2007. The Owners, having been unable to find an alternative employment for the vessel from October 2007, entered into a Memorandum of Agreement for the sale of the vessel for the sum of US$23,765,000 shortly before redelivery.

Continue Reading

Congenbill ‘Paramount Clause’ – Hague or Hague / Visby Rules?

In Yemgas FZCO & Ors v Superior Pescadores SA [2016] EWCA Civ 101, the Court of Appeal considered whether the standard ‘Paramount Clause’ wording in the Congenbill incorporates the Hague Rules 1924 (the “HR”) or the Hague/Visby Rules (the “HVR”).

The ‘Paramount Clause’ set out on the reverse side of the bills of ladings in the present case provided that “The Hague Rules contained in the International Convention for Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract…

The wording, with one immaterial change, was therefore identical to the wording included in the Congenbill.

Machinery and equipment, intended for use in the construction of a liquid natural gas facility in Yemen, was loaded on board the vessel “SUPERIOR PESCADORES” in Belgium. Owners issued six bills of lading in the Conline form for carriage from Antwerp, Belgium to Balhaf, Yemen.

Continue Reading

LexBlog