Trafigura Beheer v Navigazione Montanari - the Valle de Cordoba
Trafigura Beheer BV v Navigazione Montanari SPA  EWHC 129 Comm
English High Court: Queen’s Bench Division: Andrew Smith J.: 30 January 2014
CHARTERPARTY: CARRIAGE OF GOODS BY SEA: VESSEL CARRYING CONSIGNMENT OF MOTOR OIL ATTACKED BY PIRATES: WHETHER QUANTITY OF OIL TAKEN BY PIRATES CONSTITUTED "IN-TRANSIT LOSS" OR "LOST CARGO" FOR PURPOSES OF IN-TRANSIT LOSS CLAUSE IN CHARTERPARTY
Jeffrey Gruder QC and Claudia Renton, instructed by Eversheds for the claimants, Trafigura
Michael Ashcroft QC, instructed by Ince & Co, for the respondent shipowners
In this case, the Court determined that the theft of cargo from the carrying vessel by pirates did not fall within the terms of the In-transit loss clause of the charterparty and, even if it did, Owners’ liability for such loss would not be absolute but subject to the defences and limitations of certain Articles of the Hague-Visby Rules incorporated into the charterparty
Navigazione Montanari, the Owners of the “Valle de Cordoba” (the “Vessel”), chartered her to the claimants, Trafigura, to transport a cargo of premium motor spirit from the port of Abidjan in the Ivory Coast to Lagos, Nigeria. The fixture, which was dated 4 November 2010, was on the Beepeevoy 3 form with Trafigura chartering clauses (the Trafigura terms) as amended, attached.
On 24 December 2010, while she was offshore south-west of Lagos, awaiting orders from Trafigura, the Vessel was attacked by a group of armed men. They took control of her and, on 26 December, transferred a large quantity of the oil, some 5,300mt, (the “transferred cargo”), by STS to another vessel, which then left with the transferred cargo. The following day, the Vessel was released by the pirates.
Trafigura brought a claim for loss of the cargo under an "in-transit loss clause" (ITL) in the Trafigura terms. This read as follows:
“In-transit loss clause In addition to any other rights which Charterers may have, Owners will be responsible for the full amount of any in-transit loss if in-transit loss exceeds 0.5% and Charterers shall have the right to deduct from freight claim an amount equal to the FOB port of loading value of such lost cargo plus freight and insurance due with respect thereto. In-transit loss is defined as the difference between net vessel volumes after loading at the loading port and before unloading at the discharge port.”
The preliminary issues for determination were whether the Owners were liable under the charterparty to Trafigura for the FOB port of loading value of any proven difference between the net vessel volumes after loading at the loading port and the net vessel volumes before unloading to Trafigura's order at the discharge port, plus freight and insurance. In particular, whether, on the true construction of the ITL clause, the transferred cargo constituted "in transit loss" or "lost cargo" and, if it did so, whether the ITL clause imposed strict liability on the Owners in respect of the transferred cargo or whether the exceptions in clause 46 of the charterparty –those set out in Articles III, IV, IVbis and VIII of the Hague-Visby Rules - applied to exclude that liability.
The judge noted that the commercial background to clauses of this type is that:
“claims for shortage on the carriage of large quantities of oil are frequent occurrences. It is part of the practice in the trade generally to recognise that there is no absolutely correct measurement and to make allowances of about ½ per cent to account for discrepancies which inevitably take place when measurements are made” (fn.1)
and added that ITL clauses seek to cut through these difficulties. They stipulate a cut-off point above which the owners may not explain or excuse differences in volumetric measures simply on the basis that they reflect such incidents of carriage (or transit) that are not attributable to fault on their part.
The judge concluded that, this being the commercial background to provisions of this kind:
“... it seems to me that such expressions as “in-transit loss” connote loss that is incidental to the carriage of oil products, and does not extend to losses such as those that occurred in this case because of the action of the pirates."
Given his decision of the first issue, there was strictly no need for the judge to decide the second issue, namely whether any liability of the Owners pursuant to the ITL clause was absolute or subject to the Hague-Visby Rules exceptions set out in clause 46.
In the event, the court rejected Trafigura's contention that the ITL clause imposed strict liability in respect of the transferred cargo. Owners’ responsibility was subject to the exceptions in clause 46 – including loss or damage arising or resulting from “Act of public enemies” (fn.2) (an expression which includes pirates). The clause provided that Owners were entitled to the protection of the relevant articles of the Hague-Visby Rules "in respect of any claim made" under the charterparty, and there was no good reason to limit the natural meaning of "any claim" by excluding claims under the ITL clause.
In the circumstances, Owners were not liable under the charterparty for the loss of the transferred cargo.
Fn.1 per Parker J. in The “Olympic Brilliance”  2 Lloyd’s Rep 176 at p.178
Fn.2 Article IV Rule 2 (f)