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At first instance, Glencore successfully sued MSC for breach of contract and bailment and in conversion. MSC appealed to the Court of Appeal, but its appeal was dismissed.
'''Judgment'''
MSC raised 5 grounds of appeal, each of which Sir Christopher Clarke’s leading judgment rejected for the following reasons.
- The “key to the warehouse” example assumes that when the key is used the goods will be present. Here, when the code was used, only 1 of the 3 containers was present.
- Discharge is not delivery. Delivery involves the carrier relinquishing possession of the Cargo to the person so contractually entitled. However, under the ERS, MSC was technically able to recall the pin codes generated, denying Glencore possession of the Cargo, and so did not divest itself of "all powers to control any physical dealing with the goods". MSC did not, therefore, make delivery.
- As a “buyer should as far as possible obtain control over the goods by means of the document against which he parts with his money”, the delivery order should confer upon the buyer a right against the party in possession of the goods.
- The provision of a Release Note instructing release of the Cargo against pin codes, which were provided to Glencore’s agents, was not the same as a delivery order.
- Glencore’s local agent had authority to make arrangements to ensure delivery, but did not have authority to represent for Glencore that delivery against pin codes was acceptable even if, in fact, delivery was not given to Glencore or its agents.
5. MSC later allegedly found indications that Glencore’s agent had been hacked, namely that Glencore’s agent had received 3 rogue emails in the two weeks before attempting to take delivery of the Cargo. MSC alleged this evidence had been suppressed, and that if Glencore’s agent had reacted appropriately to the rogue emails, measures would have been implemented to avoid the incident. MSC sought remission for trial on causation.
The Court’s findings:
- A Release Note sent by email could constitute a delivery order, the focus being whether it contained an undertaking to deliver to a particular party, and not on whether it was in email or in some other written form. [at paragraph 61]
'''Comment'''
The implementation of ERS and similar systems is, from an efficiency standpoint, a positive and probably inevitable development. Carriers may wish to ensure, via contractual provision, that (a) their bill of lading terms are sufficiently wide to cover their release of cargo under ERS and/or (b) the ERS arrangements are secure.
