MVV Environment Devonport v NTO Shipping The MV Nortrader
MVV Environment Devonport Ltd v NTO Shipping GMBH & Co KG MV Nortrader  EWHC 1371 (Comm); Queen’s Bench Division (Commercial Court); Judge Pelling QC; 6 June 2020
Simon Rainey QC and Thomas Steward, instructed by Simmons & Simmons LLP, for the Claimant
Charles Debattista, instructed by Winter Scott Solicitors, for the Defendant
CHALLENGE TO JURISDICTION OF ARBITRATION TRIBUNAL: CLAIMANT NAMED AS SHIPPER IN BILL OF LADING INCORPORATING CHARTERPARTY ARBITRATION CLAUSE: WHETHER CLAIMANT WRONGLY NAMED AS SHIPPER IN BILL OF LADING PREPARED BY AGENT: WHETHER AGENT HAD EXPRESS OR IMPLIED ACTUAL AUTHORITY OR OSTENSIBLE AUTHORITY TO ACT FOR CLAIMANT: EFFECT OF CLAIMANT’S SILENCE
In an application under s.67 of the Arbitration Act 1996, the Claimant successfully challenged the jurisdiction of an arbitration tribunal that had decided that it was a party to a contract of carriage evidenced by a bill of lading, in which it had been wrongly named as the shipper.
The Case Note has been contributed by Candice Lau, BBA (Law), LLB (HKU), LLM (Cantab), a barrister at Alan Leong SC’s Chambers, Hong Kong.
The Claimant was a company specializing in the converting of waste products to energy in the form of electricity. The Claimant entered into a contract (“IBA Contract”) with RockSolid BV (“RS”), under which RS agreed to transport a waste product known as “unprocessed incinerator bottom ash” (“UIBA”), disposed of by the Claimant, to the Netherlands for treatment by RS. In return, RS received a fee for its service. The IBA Contract was a principal-to-principal contract.
Pursuant to the IBA Contract, once the UIBA was loaded onto RS’s lorries at the Claimant’s plant in Plymouth, the UIBA became the property of RS. RS was then responsible for transporting the UIBA from the Claimant’s plant to Victoria Wharf, Plymouth, for onward transport to the Netherlands.
By a separate contract between RS and Victoria Wharves Limited (“VW”), VW provided port facilities to RS to store and load the UIBA prior to its shipment to the Netherlands (“VW Agreement”). Under the VW Agreement, RS appointed Sanders Stevens Limited (“SS”) as its shipping agent at the port to co-ordinate its shipping requirements. The Claimant was not a party to the VW Agreement.
Prior to the present case, the above arrangements had been repeated 33 times. In each case, the Claimant had been copied into an email attaching a bill of lading (drawn up by SS) which named the shipper as the Claimant (rather than RS) and RS as the consignee. The Claimant was never asked to approve the bills of lading and never expressed objection to the same.
The present dispute arose when an explosion occurred on 13 January 2017 on board a vessel (“Vessel”), which had been chartered by RS under a voyage charterparty (“Voyage Charterparty”) with the disponent owners of the Vessel. As with the previous 33 transactions, a bill of lading was issued (“Bill of Lading”) naming the Claimant as shipper and RS as consignee. The information naming the Claimant as the shipper in the Bill of Lading could only have come from RS. The Bill of Lading incorporated by reference the terms and conditions of the Voyage Charterparty, including an arbitration agreement.
As a result of the explosion, said to have been caused by the cargo during transit, the Defendant owner of the Vessel claimed damages in compensation for losses from the shipper named in the Bill of Lading.
The Claimant denied liability. The Claimant contended that it was not the shipper or a party to the contract of carriage, and was erroneously named as such in the Bill of Lading. It followed that no arbitration agreement existed between the Claimant and the Defendant. On these bases, the Claimant challenged the jurisdiction of the arbitral tribunal (“Tribunal”). The Tribunal, however, dismissed the challenge.
The Claimant then brought the matter before the Commercial Court. At issue was whether the Claimant was a party to the contract of carriage evidenced by the Bill of Lading, which in turn depended on whether RS or SS had express or implied actual authority or ostensible authority to enter into the contract as agent for the Claimant.
Judge Pelling QC set aside the Tribunal’s award on jurisdiction, holding that the Claimant was not a party to any contract of carriage and that the, Tribunal lacked jurisdiction as against the Claimant.
The Court first recited the general principles that, whilst the starting point must be that parties to a contract of carriage evidenced by a bill of lading are the persons named in the bill of lading as respectively shipper and carrier, it is open to the party who is ostensibly a party to a contract of carriage (evidenced by a bill of lading) to show that it has been wrongly identified as a party.
It was common ground that (i) at the material time there was no contract other than the Bill of Lading between the Claimant and the Defendant and (ii) SS entered into the contract of carriage with the Defendant only as agent. The question for the Court was one of agency, namely whether SS or RS had express or implied actual authority or ostensible authority from the Claimant to enter into a contract of carriage with the Defendant.
First, the Court dismissed the contention that RS or SS had express actual authority from the Claimant. As noted above, the IBA Contract was a principal-to-principal agreement but not an agency agreement. Also, the fact that RS approved the Bill of Lading drawn up by SS did not have the effect of conferring express actual authority on SS to enter into the contract of carriage on behalf of the Claimant, unless RS was so authorized by the Claimant. There was, however, no evidence of any agreement under which RS was so authorized.
Second, the Court ruled out implied actual authority. Implied actual authority can only arise where the agent has been given some express authority to which the implied authority is appurtenant. The Claimant gave no express authority to RS or SS. Further and in any event, silence without more could not give rise to implied actual authority. The fact that the Claimant did not object to being named as a shipper in the previous bills of lading was not sufficient to infer assent, unless there was further indication that the putative principal had acquiesced in the agency. Silence or inactivity is inherently equivocal, and nothing in the circumstances negatived such equivocality.
Finally, the Court rejected the contention that the Claimant had by its words and conduct to the Defendant held out SS as being ostensibly authorized to act as its agent in entering into a contract of carriage. The Defendant could not have relied on any of the previous 33 bills of lading as they were not known to the Defendant prior to these proceedings. Nor could the Defendant rely on the Bill of Lading itself, as it only came into existence after the subject contract of carriage was entered into. In any event, a representation of authority by an agent (allegedly SS who drew up the bills of lading) is generally never sufficient to give rise to apparent authority.
This is a rare case where a challenge against the jurisdiction of an arbitral tribunal succeeded in the English Court. In setting aside the Tribunal’s award, the Commercial Court reiterated some of the most fundamental principles on agency. The Court also restated the basic principle that a bill of lading is only evidence of a prior contract of carriage. Where appropriate, as in this case where information in the bill of lading was erroneous, the Court would be concerned to ensure that only the right parties were bound by the contract.