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Trading companies that seek to insulate their shipping risk by allocating their chartering activities to a separate entity will be reassured by a recent judgment of the English Court, in which it was decided that a letter of indemnity was enforceable only against the entity which had issued it, and not against a connected entity (or their exporter clients) as supposed undisclosed principals.Continue Reading Keeping Risk at Arm’s Length – The Xing Zhi Hai [2024] EWHC 2371 (Comm)

Despite living in an age of instantaneous correspondence and fast contractual negotiations, parties may still assume that promises as important as parent company guarantees, require detailed written documents, wet-ink, or e-signature signatures in order to be enforceable. The English Courts have recently reaffirmed that this is not the case.

SFL Ace 2 Co Inc v DCW Management Ltd (formerly Allseas Global Management Ltd) (the “M/V Green Ace”)Continue Reading The importance of email sign offs: the formalities of executing a parent company guarantee under the Statute of Frauds 1677

The recent Court of Appeal decision in Smit Salvage BV & Ors v Luster Maritime SA & Anr (The ‘Ever Given’), illustrates the challenges of negotiating contracts in rapidly changing environments, particularly within the maritime domain. …
Continue Reading The Ever Given Court of Appeal decision unveils contractual complexities in salvage agreements 

The question of whether demurrage liquidates all or just some of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime will no longer be decided by the UK Supreme Court following a commercial settlement. The parties have therefore consented to the appeal not proceeding.Continue Reading The Eternal Bliss – Court of Appeal has the final say

Introduction

In Perusahaan Perseroan (Persero) Pt Pertamina v Trevaskis Ltd and Others [2023] HKCFA 5, the Appeal Committee of the Court of Final Appeal (“CFA”), upon hearing submissions from both parties on 16 February 2023, granted leave to Perusahaan Perseroan (Persero) Pt Pertamina (“Plaintiff”) to appeal to the full court of the CFA on the following question of great general or public importance (“GGPI”) relating to the Convention on Limitation of Liability for Maritime Claims 1976 (“LLMC”):

“Where a Contracting State has enacted LLMC Article 2(1) in full into local law but has, by a provision of local law (pursuant to Article 18), disapplied (permanently or temporarily) head (d), is a shipowner nonetheless entitled to limit its liability for a Private Recourse Claim under head (a), or does the existence and/or suspension of head (d) exclude the shipowner’s reliance upon head (a) for such claims?”

(the “Question”)

In broad and practical terms, the issue in dispute is whether the Wreck Removal Claim was subject to limitation under LLMC article 2(1)(a) (“Head (a)”) in Hong Kong notwithstanding that LLMC article 2(1)(d) (“Head (d)”) has been suspended by way of local Hong Kong legislation as permitted by the LLMC.  The two heads are quoted below:-

Head (a): “claims in respect of … loss of or damage to property … occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;”

Head (d): “claims in respect of the raising, removal, … of a ship which is sunk, wrecked …;”Continue Reading Hong Kong team takes novel LLMC case to Court of Final Appeal

Can Charterers withhold hire without Owners’ consent, even if the vessel was off hire on the hire due date and where they had agreed deductions from hire would not be allowed without Owners’ written agreement?

Key facts

Under a charterparty dated 13 April 2021 on a heavily amended NYPE 1993 form, Bulk Trident Shipping Ltd (”Owners”) trip time chartered the “Anna Dorothea” (the “Vessel”) to Fastfreight Pte Ltd (“Charterers”) for the carriage of a bulk cargo from East Coast, India to China (the “Charterparty”).Continue Reading To have and to (with)hold – Fastfreight Pte Ltd v Bulk Trident Shipping Ltd [2023] EWHC 105 (Comm) The “Anna Dorothea”

There have been several decisions in 2022 about carrier’s defences to misdelivery claims under bills of lading.

Carriers face misdelivery claims when they deliver cargo without production of original bills of lading, but then someone else claiming to be the ‘lawful holder’ of the bills complains the cargo should have been delivered to them instead. A common scenario is where a bank has financed the import of a cargo, but the finance has not been repaid. The bank then looks to the bills of lading it holds as a form of security. Unfortunately, the bank often finds the financed cargo has already been discharged from the ship (usually under a letter of indemnity) and cannot be traced. The bank finds it has no security for its claim against its defaulting customer, and brings a claim against the carrier for misdelivery under the bills of lading, arguing the carrier should not have discharged the cargo without the production of the original bills of lading. The carrier in turn looks to the letter of indemnity under which it agreed to discharge the cargo without the original bills.Continue Reading Misdelivery claims: not an open goal for financing banks

With thanks also to Counsel, Charles Holroyd at 7KBW.

In DHL Project & Chartering Ltd v. Gemini Ocean Shipping Co Ltd 2022-000247 [EWCA], the Court of Appeal, in a judgment upholding the High Court’s judgment of Mr Justice Jacobs, clarified the scope of the separability principle in relation to arbitration clauses in contracts, including the scope of s 7 Arbitration Act 1996.

A “subject” provision in a putative fixture requiring “shipper/receivers approval” was held to be of an unqualified character such that the contract would not become binding unless and until DHL (“Charterers”) lifted the “subject”, which, on the facts, had never occurred. That meant that not only the fixture, but also the arbitration agreement contained therein, was never concluded.Continue Reading Subjects and separability

The question of whether demurrage liquidates all or just some of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime has divided practitioners and academics for decades and, more recently, the English Court in K Line Pte Ltd  v. Priminds Shipping (HK) Co Ltd [2021] EWCA Civ 1712 (The Eternal Bliss). Now, in granting permission to appeal to the shipowners, it is a question which the Supreme Court has said it will answer.Continue Reading The Eternal Bliss – Permission to appeal granted by the UK Supreme Court

It is settled law that a carrier who delivers goods without production of the bill of lading is typically liable for any consequential losses suffered by the bill of lading holder. In the course of prosecuting its claim against the carrier, the bill of lading holder may seek to obtain summary judgment without trial on the basis that there is plainly no defence to its claim.

In the recent case of The “STI Orchard” [2022] SGHCR 6 where the plaintiff bank (“Plaintiff”) sought summary judgment against the defendant shipowner (“Defendant”), the General Division of the High Court of Singapore granted the Defendant unconditional leave to defend the Plaintiff’s claim for misdelivery. A key issue identified by the Court was whether the bills of lading were intended to be relied on as security for the Plaintiff’s financing in the underlying transaction.Continue Reading Claims for misdelivery of cargo without presentation of B/Ls: “good faith” and “consent”