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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”

Pacific Pearl Co Limited v Osios David Shipping Inc [2022] EWCA Civ 798

The Court of Appeal (“CA”) has overturned the decision of Justice Teare that security tendered under the Admiralty Solicitor Group form ASG 2 (Collision Jurisdiction Agreement) (“CJA”) needed to be subjectively acceptable to the offeree. Instead the CA has determined that it is sufficient that it be objectively acceptable.

The case

The decision followed the earlier ruling by Sir Nigel Teare (as reported in Lloyd’s Law Reports, [2022] 1 Lloyd’s Rep. 261) in an action brought by owners of the Panamax Alexander (“PA”) against the owners of Osios David (“OD”), with whom they collided, alleging breach of the CJA clause C. This clause provides that “Each party will provide security in respect of the other’s claim in a form reasonably satisfactory to the other.”

The owners of the PA proposed security which contained a sanctions clause (the scheme of the ASG 2 is that it is expected to be used with a plain security in the form of ASG 1). This was rejected by the owners of the OD on the basis that it was not reasonably satisfactory to them. In the first instance it was held that such security from a prominent International P&I Club must be objectively reasonable but that there was nothing in the CJA that compelled the recipient to accept it and that they were at liberty to seek better security elsewhere including by arrest.…

Continue Reading Court of Appeal overturns judgement on acceptable security in collision matter

In DHL Project & Chartering Ltd v. Gemini Ocean Shipping Co Ltd [2022] EWHC 181 (Comm), DHL (“Charterers”) succeeded in an application against Gemini (“Owners”) to set aside an arbitration award pursuant to section 67 of the Arbitration Act 1996 (the “Act”).

Mr Justice Jacobs held that a “subject” provision in a putative fixture requiring “shipper/receivers approval” was of an unqualified character. The Court found that the contract would not become binding unless and until Charterers lifted the “subject”, and on the facts, this had never occurred. Accordingly, no arbitration agreement came into existence and the Tribunal did not have substantive jurisdiction when it determined that Charterers had repudiated the charterparty.
Continue Reading To what are “subjects” subject?

Exemption clauses, including those purporting to exclude or limit liability for deliberate and repudiatory breaches, are to be construed by reference to the normal principles of contractual construction. There is no presumption in English law that exemption clauses do not apply to fundamental breaches. Nor is there a requirement for any particular form of words or level of language to exclude liability.…

Continue Reading Exemption clauses subject to contractual interpretation

We have previously dedicated blog posts to so-called “No Oral Modification” or “NOM” clauses. You can find our previous post focusing on the Supreme Court judgment in MWB Business Exchange Centres v. Rock Advertising [2018] UKSC 24 here.

The validity of contractual modifications is a recurring theme in commercial disputes. A recent English Court of Appeal judgment in Kabab‑Ji S.A.L (Lebanon) v. Kout Food Group (Kuwait) [2020] EWCA Civ 6 considered this issue.

The NOM clause in Kabab‑Ji was not unlike clauses often seen in commercial contracts. It read as follows: “The Agreement may only be amended or modified by a written document executed by duly authorised representatives of both Parties”. The contract also imposed good faith and fair dealing obligations on the parties.

In the underlying arbitration proceedings, Kabab‑Ji claimed against KFG, a company which was not (originally) party to the agreement out of which the dispute arose. Kabab‑Ji argued that KFG had become party to the agreement even though the parties failed to follow the NOM procedure for amending the contractual terms.
Continue Reading No Oral Modification clauses

In a late 2020 judgment (Aegean Baltic Bank SA v Renzlor Shipping Ltd and Ors [2020] EWHC 2851 (Comm)), the High Court provided important guidance on the position of a bank under security documents relating to a loan agreement, and its obligations when exercising its rights as assignee to the insurance policies over a vessel. The case also highlights the intricacies of disputes involving multiple applicable laws, and the difficulties faced by a party in breach of its disclosure obligations and subject to an order pursuant to which they are not entitled to adduce or rely upon any factual or expert evidence.
Continue Reading Assignment of insurances: The secured lender’s obligation to obtain proper recovery

Public today: an important judgment handed down by the English High Court this morning has re-opened the door to recovering damages in addition to demurrage for losses caused by exceeding laytime in cargo operations.

In today’s 43 page judgment in K Line Pte Ltd vs Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [2020] EWHC 2373 (Comm), Mr Justice Andrew Baker thoroughly surveys almost 100 years of law and commentary on a question that has never been properly resolved and which has divided the opinion of academics and practitioners alike.

In reaching the “firm and clear view” that The Bonde (1990), thought by some to have settled the issue 30 years ago, was wrongly decided the Court found that, quite apart from demurrage, damages can be also recovered for other losses caused by a failure to load or discharge within the allowable laytime. No separate breach of charter is required.
Continue Reading Damages in addition to demurrage – long standing debate settled in owners’ favour

In Sea Master Shipping Inc v Arab Bank (Switzerland) Ltd & Yousef Freiha & Sons SA [2020] EWHC 2030, Owners, in a situation where Charterers were in insolvent liquidation and unable to meet their obligations under a voyage charter, sought to hold receivers liable for delay at the discharge port under the bill of lading.

The decision by the arbitration tribunal that neither the financing bank nor the receivers were liable for discharge port demurrage was unappealable.

That left the Commercial Court considering the Owners’ attempt to introduce an implied term into the contract of carriage (contained in or evidenced by the bill of lading), that the bank and / or the receivers would: (i) take all necessary steps to enable the cargo to be discharged and delivered within a reasonable time; and / or (ii) discharge the cargo within a reasonable time.

In the usual way, the bill of lading included a clause incorporating the terms of the voyage charter and it was common ground that this meant that they were incorporated “insofar as they [were] appropriate and relevant for such incorporation”. …
Continue Reading Limits on Receivers’ obligations

There seem to be endless variations of the clauses in voyage charterparties requiring owners to provide copies of the relevant or supporting documentation with demurrage claims. We receive a surprising number of queries relating to what is required.

In Amalie Essberger, a Commercial Court decision of 11 December 2019, the charter was on an amended ASBATANKVOY form, and there were two rider clauses dealing with documentation.
Continue Reading Demurrage claims