https://www.onlinedmc.co.uk/index.php?title=Special:NewPages&feed=atom&hideredirs=1&limit=50&offset=&namespace=0&username=&tagfilter=&size-mode=max&size=0DMC - New pages [en-gb]2024-03-29T02:39:29ZFrom DMCMediaWiki 1.29.1https://www.onlinedmc.co.uk/index.php?title=MSC_Mediterranean_Shipping_S.A._v_Conti_11_Container_Schiffarhts_GmbH_KG_MS_%26_Others_-_The_MSC_Flaminia_No.2MSC Mediterranean Shipping S.A. v Conti 11 Container Schiffarhts GmbH KG MS & Others - The MSC Flaminia No.22024-03-02T10:34:48Z<p>Dmcadmin: </p>
<hr />
<div>DMC/SandT/24/05<br />
<br />
'''England'''<br />
<br />
'''MSC Mediterranean Shipping Company S.A. v Conti 11. Container Schiffahrts – GmbH & Co KG MS & Others (The “MSC Flaminia” (No. 2))'''<br />
<br />
'''English Court of Appeal: Males and Falk LJJ and Sir Launcelot Henderson: [2023] EWCA Civ 1007: 1 September 2023'''<br />
<br />
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWCA/Civ/2023/1007.html<br />
<br />
Julian Kenny KC and Michal Hain (instructed by Mills & Co Solicitors Ltd) for MSC (Time Charterers)<br />
<br />
Christopher Smith KC and David Walsh (instructed by HFW LLP) for Conti (Head Owners)<br />
<br />
'''TIME CHARTER: 1976 CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS: WHETHER TIME CHARTERERS ENTITLED TO LIMIT THEIR LIABILITY UNDER ARTICLE 2 OF 1976 CONVENTION AGAINST HEAD OWNERS FOR CONSEQUENCES OF EXPLOSION LEADING TO FIRE ON BOARD VESSEL, DESTROYING HUNDREDS OF CONTAINERS, CAUSING EXTENSIVE DAMAGE TO VESSEL AND INCURRING SUBSTANTIAL EXPENSES RELATED TO REPAIRS TO VESSEL: APPEAL ON A QUESTION OF LAW'''<br />
<br />
'''Summary'''<br />
<br />
The Court of Appeal, in dismissing Time Charterers’ appeal from an Admiralty Court judgment, held that Head Owners’ claims against Time Charterers – awarded in their favour in arbitration for the breach of a time charter that had caused extensive damage to containers, cargo and the vessel and significant resulting expenses – did not fall within Article 2 of the 1976 Limitation Convention. As a result, Time Charterers were unable to limit their liability for the USD200m. or so, awarded to Head Owners in the arbitration.<br />
<br />
<br />
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Registered Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes<br />
<br />
Background<br />
<br />
The case involved an appeal by MSC, Time Charterers of the containership “MSC Flaminia”, against a decision by the Admiralty Court that they were not entitled to limit their liability to Conti, Head Owners, for losses arising from an explosion on board the vessel in July 2012.<br />
<br />
The explosion was caused by dangerous cargo carried in breach of the time charter. Head Owners were awarded about USD200m damages in arbitration. Time Charterers sought to limit their liability under the 1976 Limitation Convention. The Admiralty Court held that Time Charterers could not do so.<br />
<br />
Consequently, the central issue between the parties in the appeal to Court of Appeal was whether or not Head Owners' claims against Time Charterers fell within Article 2 of the 1976 Limitation Convention (fn.1).<br />
<br />
'''Judgment'''<br />
<br />
The Court of Appeal’s opinion was given by Males LJ, with whom Falk LJ and Sir Launcelot Henderson agreed.<br />
<br />
Based on various concessions made between the parties (fn.2), the Court only needed to examine whether Time Charterers could limit their liability to Head Owners for (a) discharging and decontaminating the cargo, (b) removing firefighting water, (c) payments to authorities, and (d) removing burnt waste.<br />
<br />
The Court considered that the purpose of such limitation of liability was to protect shipowners from third party claims, not to limit claims by shipowners against their charterers for losses suffered by the shipowners themselves.<br />
<br />
The Court rejected Time Charterers’ argument that Head Owners’ claims could be broken down into separate heads, some of them being limitable. Overall, the Court considered that this was a non-limitable claim for damage to the vessel.<br />
<br />
The Court considered that, even if Time Charterers’ argument was correct, the claims did not fall within Article 2 of the 1976 Limitation Convention. The cargo handling expenses fell within Article 2(1)(e) at most but the other claims did not.<br />
<br />
Further, Article 2(1)(f) did not apply, because the measures taken were not solely to minimise cargo loss. The claims were also not “consequential losses” under 2(1)(a), because they primarily resulted from damage to the vessel.<br />
<br />
In giving effect to the language of Article 2, on the facts as found by the Admiralty Judge, Time Charterers were not entitled to limit their liability to Head Owners. Accordingly, the Court dismissed Time Charterers’ appeal.<br />
<br />
'''Comment'''<br />
<br />
This judgment considered and broadly applied, despite differences in reasoning, the earlier judgments in The “Aegean Sea” (fn.3) and The “CMA Djakarta” (fn.4). The Court of Appeal judgment in the latter case had also been approved, on a non-binding basis, by the UK Supreme Court in The “Ocean Victory” (fn.5).<br />
<br />
In particular, the Court of Appeal in the present case accepted that a charterer can limit its liability only in respect of liabilities that originate “outside” the group of entities that are defined as “shipowners”, for the purposes of limitation, in Article 1.2 (fn.6) of the 1976 Limitation Convention.<br />
<br />
Thus a charterer, as an “insider”, whose right to limit arises only because it falls within the definition of “shipowner”, cannot limit its liability in relation to claims by the actual owner, as another “insider”, in respect of losses suffered only by the actual owner.<br />
<br />
The above result appears to be in keeping with the objective intention of the scheme created by and implemented under the 1976 Limitation Convention, in view of the English case law on this topic taken as a whole.<br />
<br />
<br />
Footnote 1:<br />
<br />
Article 2 materially states:–<br />
<br />
“1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability: <br />
<br />
(a) Claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom; <br />
<br />
(b) Claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage; <br />
<br />
(c) Claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connexion with the operation of the ship or salvage operations; <br />
<br />
(d) Claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship; <br />
<br />
(e) Claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship; <br />
<br />
(f) Claims of a person other than the person liable in respect of measures taken in order to avert or minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures. <br />
<br />
2. Claims set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, claims set out under paragraph 1 (d), (e) and (f) shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.”<br />
<br />
Footnote 2:<br />
<br />
Head Owners accepted that there were some claims or potential claims in respect of which Time Charterers were or would be entitled to limit their liability. For example, if Head Owners had been held liable to cargo claimants in the United States proceedings related to the casualty, they accepted that their claims to be indemnified against such liability by Time Charterers would be subject to limitation. Conversely, Time Charterers accepted that there were some claims by Head Owners in respect of which they were not entitled to limit their liability, as to which there was no appeal from the Admiralty Judge's decision – for example, the cost of repairing the vessel.<br />
<br />
Footnote 3:<br />
<br />
[1998] 2 Lloyd's Rep 39<br />
<br />
Footnote 4:<br />
<br />
High Court [2003] EWHC 641 (Comm), [2003] 2 Lloyd's Rep 50 (DMC’s Case Note available here [https://archive.onlinedmc.co.uk/cma_cgm_v__classica_shipping.htm] <br />
<br />
Court of Appeal [2004] EWCA Civ 114, [2004] 1 Lloyd’s Rep 460 (DMC’s Case Note available here [https://archive.onlinedmc.co.uk/CMA%20CGM%20v.%20Classica%20CofA.htm])<br />
<br />
Footnote 5:<br />
<br />
[2017] UKSC 35, [2017] 1 WLR 1793 (judgment available here and DMC’s Case Note available here [[https://www.onlinedmc.co.uk/index.php/Gard_Marine_%26_Energy_v_China_National_Chartering_-_The_Ocean_Victory]])<br />
<br />
Footnote 6:<br />
<br />
Article 1 materially states:–<br />
<br />
“2. The term "shipowner" shall mean the owner, charterer, manager and operator of a seagoing ship.”</div>Dmcadminhttps://www.onlinedmc.co.uk/index.php?title=JB_Cocoa_Sdn_Bhd_v_Maersk_Line_AS_-_The_Maersk_ChennaiJB Cocoa Sdn Bhd v Maersk Line AS - The Maersk Chennai2024-02-23T17:03:59Z<p>Dmcadmin: </p>
<hr />
<div>DMC/SandT/24/04<br />
<br />
'''England'''<br />
<br />
'''JB Cocoa SDN BHD & Others v Maersk Line AS (The “Maersk Chennai”)'''<br />
<br />
'''English Commercial Court: HHJ Keyser KC: [2023] EWHC 2203 (Comm): 5 September 2023'''<br />
<br />
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2023/2203.html<br />
<br />
Andrew Leung (instructed by Birketts LLP) for JB Cocoa (Cargo Interests)<br />
<br />
Thomas Steward (instructed by Campbell Johnston Clark) for Maersk Line (Contractual Carriers)<br />
<br />
'''CLAIM FOR CARGO DAMAGE ARISING AFTER DISCHARGE: LIABILITY OF CARRIER: WHETHER EXCLUSION CLAUSE IN BILL OF LADING VALID'''<br />
<br />
'''Summary'''<br />
<br />
In finding for Contractual Carriers, the High Court dismissed the claim of Cargo Interests because, amongst other things, clause 5 in the bill of lading, which stated “the carrier shall have no liability whatsoever for any loss or damage to the goods, howsoever caused, if such loss or damage arises … after … tendering the cargo for delivery”, excluded the carrier’s liability for any damage to the cargo – cocoa beans laden in a container – after its discharge from the vessel.<br />
<br />
<br />
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes<br />
<br />
'''Background'''<br />
<br />
The claimants (JB Cocoa and others) claimed from the defendant (Maersk Line) EUR185,355.78 as damages arising out of damage to a cargo of cocoa beans carried in a container, under a bill of lading issued at Lagos, Nigeria, on 26 September 2017, on board “Maersk Chennai” from Lagos to Tanjung Pelepas, Malaysia. The container was discharged by 1 October 2017 but was not collected until around 28 November 2017, when the cargo inside was found to be suffering from condensation and mould damage.<br />
<br />
The claimants’ case was that the damage to the cargo was caused by the defendant’s breach of its duty to take reasonable care of the cargo until the point of delivery, in particular from the time of discharge until the time of delivery. The defendant’s case was that the terms of the bill of lading exempted it from any liability and that, in any event, it had taken proper care of the cargo, which probably deteriorated on account of inherent vice.<br />
<br />
The bill of lading, which was subject to English law, materially provided that:<br />
<br />
"5. Carrier's Responsibility: Ocean Transport<br />
<br />
5.1 Where the Carriage is Ocean Transport, the Carrier undertakes to perform and/or in his own name to procure performance of the Carriage from the Port of Loading to the Port of Discharge. The liability of the Carrier for loss of or damage to the Goods occurring between the time of acceptance by the Carrier of custody of the Goods at the Port of Loading and the time of the Carrier tendering the Goods for delivery at the Port of Discharge shall be determined in accordance with Articles 1-8 of the Hague Rules save as is otherwise provided in these Terms and Conditions. These articles of the Hague Rules shall apply as a matter of contract.<br />
<br />
5.2 The Carrier shall have no liability whatsoever for any loss or damage to the Goods, howsoever caused, if such loss or damage arises before acceptance by the Carrier of custody of the Goods or after the Carrier tendering the cargo for delivery…”<br />
<br />
'''Judgment'''<br />
<br />
Having set out the background to the dispute, the relevant terms of the bill of lading, the parties’ respective arguments and reviewed the case law, the Judge proceeded to address the key facts and the law applicable thereto.<br />
<br />
In relation to the cause of the damage to the cargo, the Judge accepted that, on the evidence taken as a whole, the probable cause of the damage was the prolonged delay in the cargo remaining in the container between the discharge of the container from the vessel and its devanning (the removal of the cargo from the container) at Tanjung Pelepas.<br />
<br />
Having so decided, the Judge had to consider whether or not the terms of the bill of lading were such as to exempt the contractual carrier from liability for the resulting damage to the cargo. Put another way, when did the defendant’s responsibility for the cargo end?<br />
<br />
The Judge noted that, as The “Giant Ace” (fn.1) made clear, the Hague Rules apply to the contract of carriage only between loading and discharge. That alone did not mean carriers could have no responsibility before loading or after discharge: it was a matter that depended on the terms of the contract. That required the terms of the bill of lading to be considered.<br />
<br />
Clause 5.2 contained provisions purporting to limit the temporal extent of the defendant’s responsibility for the cargo. The claimants accepted that the defendant’s liabilities in respect of the cargo were capable of being temporally delimited. The defendant contended that its liabilities were so delimited and relied in that regard on clause 5.<br />
<br />
The Judge held that clause 5 did limit the defendant’s liability for loss of or damage to the cargo to loss or damage occurring in the period to which the Hague Rules applied, namely from loading to discharge, with liability for loss or damage occurring before or after that period being excluded.<br />
<br />
Accordingly, the claimants were unable to prove that the defendant was contractually liable for the cause of the damage to the cargo, and so the claim was dismissed with costs.<br />
<br />
'''Comment'''<br />
<br />
This judgment is a neat illustration of how the decision in The “Giant Ace” enables contractual carriers under bills of lading subject to the Hague or the Hague-Visby Rules to exclude any liability for damage or loss to the cargo carried occurring before loading and after discharge. However, as the terms of clause 5 in this case illustrate, the wording used must be clear. Thus, it depends on the clarity of language used in the bill of lading as to whether or not liability for cargo loss or damage occurring prior to loading or after discharge will be excluded in any given case.<br />
<br />
<br />
Footnote 1: FIMBank plc v KCH Shipping Co Ltd [2022] EWHC 2400 (Comm) – see DMC case note here [[https://www.onlinedmc.co.uk/index.php/FIMBank_Plc_v_KCH_Shipping_Co_-_The_Giant_Ace]] - and [2023] EWCA Civ 569 – see DMC case note here [[https://www.onlinedmc.co.uk/index.php?title=FIMBank_v_KCH_Shipping_-_The_Giant_Ace]]</div>Dmcadminhttps://www.onlinedmc.co.uk/index.php?title=Herculito_Maritime_v_Gunvor_International_-_Supreme_Court_Decision_-_The_PolarHerculito Maritime v Gunvor International - Supreme Court Decision - The Polar2024-01-19T20:16:39Z<p>Dmcadmin: </p>
<hr />
<div>DMC/SandT/24/03<br />
<br />
'''England'''<br />
<br />
'''Herculito Maritime Limited v Gunvor International BV (The “Polar”)'''<br />
<br />
'''UK Supreme Court: Lord Hodge, Lord Hamblen, Lord Leggatt, Lady Rose and Lord Richards: [2024] UKSC 2: 17 January 2024'''<br />
<br />
Judgment Available on BAILII @ https://www.bailii.org/uk/cases/UKSC/2024/2.html<br />
<br />
Guy Blackwood QC and Oliver Caplin (instructed by Holman Fenwick Willan LLP) for Herculito (Contractual Carriers/Owners)<br />
<br />
Stephen Hofmeyr QC and Mark Jones (instructed by Tatham & Co) for Gunvor (Bill of Lading Holders/Cargo Interests)<br />
<br />
'''BILL OF LADING: VOYAGE CHARTER: WHETHER BILLS OF LADING INCORPORATED CHARTERPARTY “CODE” BY WHICH CHARTERERS’ OBLIGATION TO PAY ADDITIONAL WAR RISKS INSURANCE PREMIA HAD ENTITLED THE BILL OF LADING HOLDERS TO THE BENEFIT OF THE WAR RISK INSURANCES: WHETHER BILL OF LADING HOLDERS LIABLE TO COMPENSATE OWNERS FOR CARGO’S PROPORTION OF GENERAL AVERAGE ARISING FROM PAYMENT OF RANSOM TO PIRATES: ARBITRATION ACT 1996 SECTION 69 APPEAL ON QUESTION OF LAW'''<br />
<br />
'''Summary'''<br />
<br />
The UK Supreme Court, in upholding the decisions of the High Court [[https://www.onlinedmc.co.uk/index.php/Herculito_Maritime_Ltd_v_Gunvor_International_BV]] and the Court of Appeal [[https://www.onlinedmc.co.uk/index.php/Herculito_Maritime_v_Gunvor_International_-_The_Polar]], dismissed bill of lading holders’ appeal against their liability to contribute in general average to the ransom payment made to pirates, who had seized the vessel whilst she was in transit in the Gulf of Aden, for the release of the vessel and her cargo. Although the Gulf of Aden and War Risk clauses in the voyage charterparty were incorporated into the bills of lading, they did not – as a matter of interpretation – exclude the bill of lading holders from such a liability. This conclusion was based on the grounds that there was no insurance “code” or “fund” arrangement under the voyage charterparty as between the shipowners and the charterers, whereby the charterers, by reimbursing the owners for the war risk premia, became joint insureds under the war risk policies, with the result that the owners could not recover from them losses insured under those policies. Even if there were such a "code" or "fund", there was no necessity to manipulate/change the language of those clauses to substitute references to the bill of lading holders in place of the references to the charterers therein.<br />
<br />
<br />
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes<br />
<br />
'''Background'''<br />
<br />
The fuller facts and background to the case can be found in the background section of the High Court case note, which can be found here [[https://www.onlinedmc.co.uk/index.php/Herculito_Maritime_Ltd_v_Gunvor_International_BV]]. The Gulf of Aden clause and the War Risk clause can be found at footnote 1 below. The voyage charter also included an amended version of the BPVoy 4 War Risks clause (clause 39), which can be found in the annex to the judgment accessible through the BAILII hyperlink given above.<br />
<br />
'''Judgment'''<br />
<br />
Lord Hamblen, who dismissed bill of lading holders’/cargo interests’ appeal for the following reasons, delivered the unanimous judgment of the Court. There were four issues before the Court, which were each addressed in turn.<br />
<br />
(1) - Whether on the proper interpretation of the charter, and in particular the War Risk clauses and the additional Gulf of Aden clause and/or by implication the shipowner was precluded from claiming against the charterer in respect of losses arising out of risks for which additional insurance had been obtained pursuant to those clauses<br />
<br />
In The Evia (No 2) (fn.2), Lord Roskill identified features which justified his conclusion that the shipowner and the charterer had agreed an insurance “code” or “fund” arrangement, at clause 21 of the Baltime charter, which precluded the shipowner from claiming insured losses from the charterer. Three of these were:<br />
<br />
1. The owner had an unqualified right/absolute veto to refuse to accept orders for the vessel to go or to continue to any place or on any voyage or to be used in any service which would subject her to war and related risks;<br />
<br />
2. The owner could, when required to do so by reason of an order to enter an additional premia War Risks area, insure the vessel and charge the premiums to the time charterer;<br />
<br />
3. Notwithstanding the off-hire clause, the vessel was to stay on-hire in the event of loss of time due to loss or injury to the crew or their refusal to proceed to a war or related risks zone or to be exposed to such risks.<br />
<br />
The Court considered that the terms of the voyage charterparty in this case were materially different to those of the Baltime charter in The Evia (No 2), such that the decision in that case could and should be distinguished. As such, that judgment provided no support for there being in the voyage charterparty a “code” or “fund” arrangement such as previously described. But the presence of such a “code” or “fund”, precluding the shipowner’s entitlement to claim against the charterer for any insured losses, was a prerequisite to enabling the bill of lading holders to argue that they too were protected by such a “code” or “fund” by reason of the incorporation of the voyage charterparty into the bill of lading contracts.<br />
<br />
That was because the decision in The Evia (No 2) turned on the particular terms of the charter in that case. That judgment also did not purport to establish any general principle, nor did it do so. The Court considered that tribunals should, therefore, be cautious before concluding that the reasoning and decision in The Evia (No 2) should be followed in relation to charters on different terms.<br />
<br />
In view of the decision on the first issue, the further three issues did not strictly have to be decided, because they assumed that there was a “code” or “fund”, but the Court, nevertheless, expressed its obiter (non-binding) views, given that the Court of Appeal had addressed the further issues on that assumed basis.<br />
<br />
(2) - Whether all material parts of those clauses were incorporated into the bills of lading<br />
<br />
Under this heading, the shipowner had argued that the parts of the war clauses which concerned the obligations for payment of insurance premia were not appropriate for inclusion in the bills of lading, since they were not directly relevant to the loading, carriage, and discharge of the cargo. However, the Court disagreed, for the same reasons as those given by the Court of Appeal, namely that those clauses were directly relevant to the carriage of the cargo because they related to the route to be taken by the vessel.<br />
<br />
(3) - Whether on the proper interpretation of those clauses in the bill of lading and/or by implication, the shipowner was similarly precluded from claiming for such losses against the bill of lading holders<br />
<br />
The Court indicated that if there were no manipulation of the wording of the incorporated clauses, then the obligation to pay the insurance premia remained on the charterer alone. If that were the case (as to which see issue four below), then an essential reason for holding that there was an insurance “code” or “fund” relevant to the bill of lading holders was inapplicable, since they would not have bought into or paid the price for the insurance “code” or “fund” arrangements.<br />
<br />
Under such a “code” or “fund” the bilateral bargain made was that the parties (shipowner and charterer) would not look to each other to make good any insured losses. In that context, what necessarily followed in the charter context did not automatically transpose to the bills of lading context, since, in the absence of manipulation, they were on materially different terms. The result was, therefore, that absent manipulation, the shipowner would not be precluded from looking to the bill of lading holders to recover insured losses.<br />
<br />
(4) - If necessary, whether the wording of those clauses should be manipulated so as to substitute for the words "the Charterers", the words "the holders of the bill of lading" in the parts of those clauses allocating responsibility for the payment of the additional insurance premia<br />
<br />
The Court noted that, as a matter of principle, the manipulation of charter clauses incorporated by general reference into bills of lading was possible when necessary. But, in this case, the Gulf of Aden and War Risk clauses made perfectly good sense in the context of the bills of lading simply as a record of the terms upon which the shipowner had agreed to transit the Gulf of Aden, referring, as they did, to the charterer, who was to pay the insurance premia. As such, there was no necessity to manipulate the clauses in this case.<br />
<br />
Accordingly, the Court concluded that the bill of lading holders’ appeal from the decisions of the High Court and the Court of Appeal [[https://www.onlinedmc.co.uk/index.php/Herculito_Maritime_v_Gunvor_International_-_The_Polar]]should be dismissed.<br />
<br />
'''Comment'''<br />
<br />
This judgment, just like the High Court and the Court of Appeal decisions, undoubtedly comes to the right conclusion, based on the application of the general principles relevant to the issues in contention.<br />
<br />
The discussion on the first issue notably – and most helpfully, given the current issues being grappled with on whether or not vessels are obliged to proceed via the Suez Canal, necessitating the transit of the Gulf of Aden/Bab-el-Mandab/Red Sea – approved the Court of Appeal decision in The “Product Star” (fn.3) and the obiter (non-binding) comments of Teare J at paragraph [17] in The “Paiwan Wisdom” (fn.4).<br />
<br />
The result of those two judgments having been endorsed is seemingly that, in principle, where owners have agreed that the vessel will transit via the Suez Canal and charterers are to pay the additional War Risk insurance premia, if a different war risk materialised in the Gulf of Aden, or there were a change in the nature of the war risk or a change in the degree of the war risk sufficient to make it qualitatively different, compared to that at the time when the charter was fixed, then it may be that a CONWARTIME or similar clause could be lawfully relied upon by owners to refuse to proceed via the Suez Canal. But this would not be so if there had been no change in war risk between the time of fixing and that when the vessel had to proceed.<br />
<br />
<br />
Footnote 1: <br />
<br />
The “Gulf of Aden” Clause –<br />
<br />
"FOR THIS CP ONLY DATED 20.09.10<br />
IN CASE THE VESSEL FOR SAFETY REASONS IS ESCORTED BY NAVAL VESSEL(S) AND/OR RESTRICTED BY DAYLIGHT, AND/OR IF A PROTECTION TEAM AND OR ANY OTHER PROTECTIVE MEASURES IS EMPLOYED, ALL TIME USED WHILE AWAITING ESCORT AND/OR AWAITING DAYLIGHT AND/OR AWAITING THE PROTECTION TEAM AND/OR AWAITING IMPLEMENTATION OF PROTECTIVE MEASURES TO COUNT AT HALF TIME AGAINST USED LAYTIME OR DEMURRAGE IF VESSEL ALREADY ON DEMURRAGE.<br />
FURTHERMORE IF IT IS NECESSARY FOR THE VESSEL TO FOLLOW A FIXED ROUTE (WAY POINTS) AND/OR TO ENTER A CONVOY AND/OR TO DEVIATE TO PICK UP/DROP OFF A PROTECTION TEAM AND/OR IMPLEMENT ANY OTHER PROTECTIVE REASONABLE MEASURE, AND/OR TO DEVIATE FROM THE USUAL ROUTE, ADDITIONAL COSTS (INCLUDING THE COSTS OF PROTECTION TEAM AND PROTECTIVE MEASURES), TIME AND BUNKERS USED TO BE SHARED 50/50 BETWEEN OWNERS AND CHARTERERS.<br />
ANY ADDITIONAL INSURANCE PREMIA (INCLUDING, BUT NOT LIMITED TO, THOSE IN RESPECT OF H&M, CREW, P&I KIDNAP RISKS AND RANSOMS), CREW BONUSES (WHICH TO BE IN ACCORDANCE WITH THE INTERNATIONAL STANDARD) SHALL BE FOR CHRTRS ACCOUNT. MAX USD40,000 FOR CHARTERERS ACCOUNT FOR ANY ADDITIONAL INSURANCE PREMIUM EXCEPT FOR CREW BONUS WHICH TO BE MAX USD 20,000 FOR CHARTERERS ACCOUNT.”<br />
<br />
The “War Risk” Clause –<br />
<br />
“ANY ADDITIONAL PREMIUMS PAYABLE BY OWNER IN RESPECT OF WAR RISKS UNDER THEIR POLICIES OF INSURANCE THAT ARE INCURRED BY REASON OF THE VESSEL TRADING TO EXCLUDED AREAS NOT COVERED BY OWNER'S BASIC WAR RISK INSURANCE SHALL BE FOR CHARTERER'S ACCOUNT. ANY BONUSES OR ADDITIONAL PREMIUMS PAYBLE (sic) BY OWNERS IN RESPECT OF THEIR CREW WHICH ARE DUE BY REASON OF TRADING TO SUCH EXCLUDED AREAS SHALL ALSO BE FOR CHARTERER'S ACCOUNT.<br />
FOR THE AVOIDANCE OF DOUBT IT IS AGREED THAT IF THE VESSEL IS BOUND TO ENTER AN EXCLUDED AREA IN ORDER TO ARRIVE AT THE LOAD PORT, OR IF THE VESSEL WILL HAVE TO STEAM AWAY FROM THE DISCHARGE PORT IN ORDER TO LEAVE AN EXCLUDED AREA THEN THE ADDITIONAL PREMIUMS AND BONUSES PAYABLE BY CHARTERERS SHALL INCLUDE THOSE PAYABLE FROM THE TIME THE VESSEL PASSES INTO THE EXCLUDED AREA INBOUND TO THE LOAD PORT AND UNTIL THE TIME THE VESSEL PASSES OUT OF THE EXCLUDED AREA OUTWARD BOUND FROM THE DISCHARGE PORT CALCULATED AT NORMAL SPEEDS AND PRUDENT NAVIGATION. SUCH ADDITIONAL PREMIUMS AND EXPENSES THAT ARE FOR CHARTERER'S ACCOUNT ARE PAYABLE BY CHARTERERS TOGETHER WITH FREIGHT AGAINST OWNER'S INVOICE SUPPORTED BY APPROPRIATE DOCUMENTS. IF SUCH DOCUMENTS ARE NOT AVAILABLE THEN SUCH ADDITIONAL PREMIUMS AND EXPENSES SHALL BE SETTLED NOT LATER THAN 2 WEEKS AFTER RECEIPT BY CHARTERER FROM OWNER'S INVOICE AND APPROPRIATE SUPPORTING DOCUMENTS.<br />
ANY DISCOUNT OR REBATE REFUNDED TO OWNER FOR WHATSOEVER REASON SHALL BE PASSED ON TO CHARTERER. ANY PREMIUMS AND INCREASE THERETO ATTRIBUTABLE TO CLOSURE MAX USD 20,000 CREW WAR BONUS FOR CHARTERERS ACCOUNT.”<br />
<br />
Footnote 2: [1983] 1 AC 736 (H.L.)<br />
<br />
Footnote 3: [1993] 1 Lloyd’s Rep. 397 (C.A.)<br />
<br />
Footnote 4: [2012] EWHC 1888 (Comm), [2012] 2 Lloyd’s Rep. 416</div>Dmcadminhttps://www.onlinedmc.co.uk/index.php?title=Litasco_SA_v_Der_Mond_Oil_and_Gas_SALitasco SA v Der Mond Oil and Gas SA2024-01-12T19:49:22Z<p>Dmcadmin: </p>
<hr />
<div>DMC/SandT/24/02<br />
<br />
'''England'''<br />
<br />
'''Litasco SA v Der Mond Oil & Gas Africa SA'''<br />
<br />
'''English Commercial Court: Foxton J: [2023] EWHC 2866 (Comm): 15 November 2023'''<br />
<br />
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2023/2866.html<br />
<br />
Fredrick Alliott (instructed by MFB Solicitors) for Litasco (Sellers)<br />
<br />
Yash Kulkarni KC and Gaurav Sharma (instructed by Withers LLP) for Der Mond (Buyers)<br />
<br />
'''APPLICATION FOR SUMMARY JUDGMENT ON CLAIM FOR UNPAID PART OF PURCHASE PRICE FOR CRUDE OIL: TRADE SANCTIONS: WHETHER APPLICABLE UNDER RELEVANT CONTRACT: WHETHER 2019 REGULATIONS APPLIED: WHETHER PRESIDENT PUTIN'S POSITION AS HEAD OF A COMMAND ECONOMY MEANT THAT HE WAS IN "CONTROL" OF ANY PARTY TO THESE PROCEEDINGS: WHETHER THERE WAS ANY COMPELLING REASON WHY THE DISPUTE SHOULD GO TO TRIAL'''<br />
<br />
'''Summary'''<br />
<br />
Sellers succeeded in their application for summary judgment, for the sums owed by Buyers under an addendum to a deed of payment entered into by the parties after Buyers had defaulted in payment of the balance due under a sale contract for crude oil. The defences raised by Buyers, which were based on trade sanctions, on the grounds that Sellers had connections with Russia, were dismissed by the High Court. The Judge held that Buyers had no defence under the terms of the relevant contract, that they could not rely on the Russia (Sanctions) (EU Exit) Regulations 2019 (the “2019 Regulations”) and there was no other compelling reason why the dispute should proceed to a trial. The Judge also held that the powers of President Putin, as the head of a command economy, did not amount in this case to “control” of any party engaged in these proceedings.<br />
<br />
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes<br />
<br />
'''Background'''<br />
<br />
Sellers, a company incorporated in Switzerland and wholly-owned by a Russian oil company called Lukoil PJSC, and Buyers, a company incorporated in Senegal, entered into a sale contract for Nigerian crude oil on CFR Dakar, Senegal terms, under which only part payment was made after delivery of the cargo. Buyers later failed to pay the balance of the purchase price due. This led the parties to enter into a deed of payment, and later an addendum thereto, but the payments due thereunder were only satisfied in part. In consequence, Sellers commenced the present proceedings to enforce their claim under the addendum.<br />
<br />
Buyers raised defences based on alleged misrepresentation, frustration and the force majeure and trade sanctions terms incorporated from the sale contract into the addendum. Sellers considered that the alleged defences did not have a realistic prospect of success and there was, in any event, no compelling reason for a trial. As such, Sellers applied to the High Court for summary judgment. This note focuses on the trade sanctions (clause 15 – fn.1) related aspects of the defence.<br />
<br />
'''Judgment'''<br />
<br />
Having set out the background to the dispute, the relevant trade sanctions clause, the parties’ respective arguments and reviewed the case law, the Judge proceeded to address whether the defence had a realistic prospect of success or whether there was any other compelling reason for a trial in any event.<br />
<br />
The Judge noted that there could be a potential defence based on (1) the terms of the contract, with reference to clause 15.2, and/or (2) separately under the 2019 Regulations. The former depended on “the reasonable belief of the Seller” alone. However, the latter depended on the 2019 Regulations as properly construed and based on the actual facts, not the reasonable belief of a party as to the risks it might face.<br />
<br />
The Judge also pointed out that the Court of Appeal in Mints v PJSC National Bank Trust (Mints – fn.2) had held that the 2019 Regulations did not prevent the court from entering a money judgment in favour of a sanctioned party. On that basis, the 2019 Regulations did not provide a defence to a claim for such a judgment.<br />
<br />
Did Clause 15.2 Apply?<br />
<br />
Having considered clause 15.2, the Judge was satisfied that it did not apply. Leaving aside any question of the “reasonable belief of the Seller”, Buyers had not identified any relevant ‘Sanctions Changes’, as defined by clause 15.2, since the date on which the parties had entered into the contract. For that reason alone, the contractual sanctions defence failed.<br />
<br />
Did the 2019 Regulations Apply?<br />
<br />
Having considered the 2019 Regulations, in particular regulation 7 (fn.3) which addresses the issue of whether a body or entity is owned or controlled directly or indirectly by a sanctioned person, the Judge considered that it was not arguable that the 2019 Regulations were directly or indirectly applicable to one or both of the parties to the transaction in the absence of Buyers identifying the basis on which they said the 2019 Regulations so applied.<br />
<br />
Accordingly, absent such an explanation, the Judge held that there was no arguable case that Sellers were controlled by a person who had been sanctioned under the 2019 Regulations. Notably, neither Sellers nor their parent company (Lukoil PJSC) had been named as a sanctioned entity.<br />
<br />
As regards regulation 12 of the 2019 Regulations, which makes it an offence to make funds available to a sanctioned (designated) person, and with regulation 7 in mind, the Judge noted that, while the former founder and president (Mr Alekperov) of Sellers and Lukoil PJSC had been sanctioned, he had stood down from Sellers after he was sanctioned and the evidence available showed his shareholding in Lukoil PJSC to be 8.5%, which was insufficient to amount to a controlling stake in Sellers. <br />
<br />
In relation to the President of Russia (President Putin) who had also been sanctioned, the Judge was prepared to assume that it was strongly arguable that President Putin had the means of placing all of Sellers and/or their assets under his de facto control, should he decide to do so. However, the Judge considered that the better view of regulation 7(4) was that it concerned an existing influence of a sanctioned person over a relevant affair of the company and not a state of affairs which a designated person was in a position to bring about.<br />
<br />
The Judge considered that, were matters otherwise, it would follow that President Putin was arguably in control, for Regulation 7(4) purposes, of companies of whose existence he was wholly ignorant, and whose affairs were conducted on a routine basis without any thought of him. The Judge took comfort in that view by noting that the Chancellor of the High Court, Sir Julian Flaux, in the Court of Appeal opinion in Mints, endorsed part of the summary of the effect of regulation 7(4), namely that it applied “when the designated person ‘calls the shots’”, not the wider formulation (“if the designated person calls the shots, or can call the shots”).<br />
<br />
Therefore, while the Judge accepted that the Chancellor had lent some limited support to a view that being “at the apex of a command economy” might be sufficient for regulation 7(4) purposes, and that “Mr Putin could be deemed to control everything in Russia”, those observations were couched in tentative terms, and necessarily reflected the particular context in which they were made.<br />
<br />
Finally, in line with Mints, the mere existence of the 2019 Regulations did not, without more, prevent a money judgment being entered in Sellers’ favour.<br />
<br />
Some other reason for a Trial?<br />
<br />
The Judge did not consider the present case should proceed to trial as a test case on the issue of ‘control’ under the 2019 Regulations. There was no arguable evidential basis for such a debate nor should Sellers be deprived of a judgment not prohibited by the 2019 Regulations simply to provide the occasion for it.<br />
<br />
'''Comment'''<br />
<br />
This judgment provides some relief to concerns due to the obiter (non-binding) view expressed by the Court of Appeal in Mints, to the effect that regulation 7 of the 2019 Regulations may apply to any Russia related public body or private entity over which President Putin may in principle be able to exercise ‘control’. That was contrary to the first instance judgment in Mints (fn.4), where Cockerill J held that a designated person who exercised ‘political control’ over another entity did not satisfy the requirement for ‘control’ in regulation 7.<br />
<br />
Following the Court of Appeal handing down Mints, on 6 October 2023, the UK Foreign, Commonwealth & Development Office (FCDO) published guidance, on 17 November 2023 (Guidance – fn.5), to confirm that the FCDO does not presume a Russia related public body or private entity to be controlled by a designated official because such an official holds office in a Russian public body or could in principle exercise control over a Russia related private entity.<br />
<br />
The Guidance was published two days after the present judgment was handed down, and so goes some way to fortify the view that the 2019 Regulations require actual proof of direct or indirect control of a Russia related public body or private entity before a breach of regulation 12 (which makes it an offence to make funds available to a sanctioned person) could be proven. Yet, the 2019 Regulations is a dense piece of legislation that is not simple to interpret.<br />
<br />
It will be interesting to see how this debate develops in the future disputes the Judge anticipated would soon come before the courts on the issue of ‘control’. That is because a fair reading of regulation 7(4) is amenable to a view that the sanctioned person (P) need not have taken any step to control the body or entity (C), given the phrase “P would (if P chose to) be able … to achieve the result that affairs of C are conducted in accordance with P’s wishes” (emphasis added).<br />
<br />
<br />
Footnote 1: <br />
<br />
“15 TRADE SANCTIONS<br />
…<br />
15.2 If, at any time during the validity of the Agreement, there is an effective amendment to any existing Trade Sanctions or new Trade Sanctions have become or are due to become effective, which in the reasonable belief of the Seller may:<br />
<br />
15.2.1 result in or risk the Seller breaching Trade Sanctions by performing any one or more of its obligations under the Agreement; and/or<br />
<br />
15.2.2 result in or risk the imposition of any penalty, prohibition or impediment in any way of the payment obligations between the Parties,<br />
<br />
hereinafter referred to as ‘Sanctions Changes’<br />
<br />
then at any time following such occurrence, may, at its sole and absolute discretion (with no obligation), suspend performance of any one or more of its obligations under the Agreement (including without limitation those which are affected by the Trade Sanctions), without any liability to the other Party whatsoever. Any such suspension of performance shall be notified by the Seller to the other Party.<br />
…”<br />
<br />
Footnote 2: [2023] EWCA Civ 1132, see paragraph [225] in particular, available at https://www.bailii.org/ew/cases/EWCA/Civ/2023/1132.html<br />
<br />
Footnote 3: “Meaning of ‘owned or controlled directly or indirectly’<br />
<br />
7.—(1) A person who is not an individual ("C") is "owned or controlled directly or indirectly" by another person ("P") if either of the following two conditions is met (or both are met).<br />
<br />
(2) The first condition is that P—<br />
<br />
(a) holds directly or indirectly more than 50% of the shares in C,<br />
<br />
(b) holds directly or indirectly more than 50% of the voting rights in C, or<br />
<br />
(c) holds the right directly or indirectly to appoint or remove a majority of the board of directors of C.<br />
<br />
(3) Schedule 1 contains provision applying for the purpose of interpreting paragraph (2).<br />
<br />
(4) The second condition is that it is reasonable, having regard to all the circumstances, to expect that P would (if P chose to) be able, in most cases or in significant respects, by whatever means and whether directly or indirectly, to achieve the result that affairs of C are conducted in accordance with P’s wishes.”<br />
<br />
Footnote 4: [2023] EWHC 118 (Comm), see paragraphs [216]-[248], available at https://www.bailii.org/ew/cases/EWHC/Comm/2023/118.html<br />
<br />
Footnote 5: see paragraphs 2 and 3 in particular, available at https://www.gov.uk/government/publications/ownership-and-control-public-officials-and-control-guidance/ownership-and-control-public-officials-and-control-guidance</div>Dmcadminhttps://www.onlinedmc.co.uk/index.php?title=Mercuria_Energy_Trading-v-Raphael_Cotoner_Investments_-_The_Afra_OakMercuria Energy Trading-v-Raphael Cotoner Investments - The Afra Oak2024-01-02T21:22:36Z<p>Dmcadmin: Created page with "DMC/SandT/24/01 '''England''' '''Mercuria Energy Trading Pte Ltd v Raphael Cotoner Investments Limited (The “Afra Oak”)''' '''English Commercial Court: Sir Nigel Teare:..."</p>
<hr />
<div>DMC/SandT/24/01<br />
<br />
'''England'''<br />
<br />
'''Mercuria Energy Trading Pte Ltd v Raphael Cotoner Investments Limited (The “Afra Oak”)'''<br />
<br />
'''English Commercial Court: Sir Nigel Teare: [2023] EWHC 2978 (Comm): 23 November 2023'''<br />
<br />
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2023/2978.html<br />
<br />
John Russell KC and Joseph Gourgey (instructed by Squire Patton Boggs (UK) LLP) for Mercuria Energy (Charterers)<br />
<br />
Timothy Hill KC and Socrates Papadopoulos (instructed by Stann Law Limited) for Raphael Cotoner (Owners)<br />
<br />
'''VOYAGE CHARTER: EXXONVOY FORM: US COGSA INCORPORATED: CHARTERERS ORDERED VESSEL ONCE LADEN TO AWAIT FURTHER ORDERS AT SINGAPORE EOPL*: MASTER CHANGED ANCHORAGE LOCATION AFTER DEPARTING LOADING PORT AND ANCHORED ILLEGALLY IN INDONESIAN TERRITORIAL WATERS CAUSING PROLONGED DETENTION: WHETHER SECTION 4(2)(A) OF US COGSA/ARTICLE IV(2)(A) OF HAGUE RULES PROVIDED A DEFENCE IN SUCH CIRCUMSTANCES: APPEAL FROM FINAL AWARD ON QUESTION OF LAW UNDER SECTION 69 OF ARBITRATION ACT 1996'''<br />
<br />
*See text for meaning of this acronym<br />
<br />
'''Summary'''<br />
<br />
In dismissing Charterers’ appeal, the Judge held that whether Section 4(2)(a) of US COGSA/Article IV(2)(a) of Hague Rules provides a defence when, in breach of charterers’ orders, a vessel proceeds into territorial waters and waits at anchor there in breach of local law, depends upon the particular facts of the case.<br />
<br />
In this case the defence applied because the Master’s decision to anchor the vessel where he should not have done, contrary to the passage plan prepared before departing the loading port (which if followed would have led to the vessel anchoring lawfully), was caused by his error in navigation and seamanship.<br />
<br />
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and International Contributor to DMC’s Case Notes<br />
<br />
'''Background'''<br />
<br />
Owners voyage chartered their crude oil tanker “Afra Oak” to Charterers for the carriage of a cargo on the Exxonvoy form, which included an English law and London arbitration clause, and incorporated the United States Carriage of Goods by Sea Act 1936 (“US COGSA”). Section 4(2)(a) of US COGSA provided (being to the same effect as Article IV(2)(a) of Hague Rules):<br />
<br />
“Section 4…<br />
<br />
2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:<br />
<br />
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.”<br />
<br />
Under the voyage charter, Charterers were also entitled to order the vessel to safe location(s) to await further orders. Owners warranted that the vessel would be in full compliance with all applicable laws, regulations and requirements of the countries to which the vessel might be ordered and that they would be responsible for any adverse consequences of not complying with Charterers’ voyage instructions.<br />
<br />
Charterers ordered the vessel to load a cargo and then to proceed to Singapore “EOPL” (Eastern Outer/Off/Outside Port Limits) to await further orders as to where to discharge the cargo. The passage plan prepared before the vessel departed the loading port had designated an anchorage at Singapore EOPL that would have caused no problem but during the voyage the Master decided to change the place of anchorage to a location within the territorial waters of Indonesia, which the Tribunal (in the arbitration) found "was within the range of ordinary practice for Singapore EOPL" at the relevant time.<br />
<br />
That decision was contrary to Indonesian law, because only vessels intending to call at ports in Indonesia were allowed to anchor in Indonesia territorial waters. This would not necessarily have led inevitably to the Indonesian authorities taking action against the vessel. However, in the event, the Indonesian authorities did take action, by detaining the vessel and prosecuting the Master. This caused substantial delay to the vessel and cargo and resulted in a dispute between the parties, which they submitted to arbitration for resolution.<br />
<br />
The Tribunal dismissed Charterers’ claim, on the basis that the Master’s decision to change the anchorage location was an error in navigation and seamanship within the US COGSA defence.<br />
<br />
Charterers appealed to the High Court, on the grounds that the Tribunal had been wrong in law to conclude that Owners were entitled to rely upon the navigational error defence, in view of the decisions in the cases of Knutsford v Tillmans (fn.1) and The “Hill Harmony” (fn.2).<br />
<br />
'''Judgment'''<br />
<br />
Having set out the background to the dispute, the relevant charter terms, the parties’ respective arguments and reviewed the case law, the Judge proceeded to address the issue of law that arose under the section 69 appeal.<br />
<br />
There was no dispute that the order given by Charterers was as to the vessel’s employment and that they were entitled to give it under the charter. However, Charterers considered on the authorities, that – when an employment order has been given and breached – the navigational error defence would not apply in the absence of a good reason for departing from the order. Owners, on the other hand, were of the view that it was a defence for them if they could provide either a good reason for the departure or establish that there had been an act, neglect or default of the master in the navigation or management of the ship.<br />
<br />
The Judge thought there would be little room in the established legal landscape for the suggested proposition that, where an owner fails to comply with an order as to the vessel’s employment, he can never avail himself of the negligent navigation exception. The Judge did not consider that The “Hill Harmony” established that proposition, save in the sense that, if there is a choice not to comply with employment orders, that choice cannot, without more, be described as negligent navigation. In that case, there was no negligent navigation; the master simply chose not to comply with the routing order given, and so the owner was unable to rely upon the defence of negligent navigation.<br />
<br />
Turning to the facts of the present case, the Judge noted that the Tribunal regarded the Master as having acted negligently in the navigation of the vessel. That finding was supported by expert evidence and by the vessel’s passage plan. The Tribunal also found that the gist of Charterers’ order was to anchor wherever it was safe to do so in EOPL using good navigation and seamanship. The Tribunal had considered whether the relevant danger was one which could have been avoided by good navigation and seamanship, and concluded it could have been avoided. Consequently, the Judge was satisfied that the Tribunal had considered the issue with care and also reached a clear conclusion.<br />
<br />
Charterers were critical of the Tribunal having stated, with reference to Knutsford v Tillmans and The “Hill Harmony”, that “these cases are in a different category from the present case, where the master attempted to comply with the orders given by simple oversight in the course of navigation and anchored the vessel where he should not have done”. However, the Judge highlighted that in neither case relied on by Charterers was there an error of navigation. In the former judgment, the master had a mistaken understanding of the clause which permitted the vessel to discharge elsewhere, if the port was inaccessible on account of ice. By contrast, in the present case the Master failed to exhibit good navigation and seamanship when he failed to take due account of the risk of anchoring in Indonesian territorial waters. It was, in the Judge’s view, that failure which caused him to fail to comply with Charterers’ order, and there was no appeal against those findings.<br />
<br />
On the above basis, the Judge was unable to detect any error of law in the Tribunal’s comment that cases such as Knutsford v Tillmans and The “Hill Harmony” were in a different category. As such, the Tribunal did not err in law in the manner suggested by Charterers when holding that Owners were entitled to rely upon section 4(2)(a) of the US COGSA as a defence to the claim that Owners had failed to comply with Charterers’ orders.<br />
<br />
Accordingly, for the reasons he had given, the Judge held that whether the navigational error defence applied depended on the facts of the case. In this case, the defence applied, as the Tribunal had held, because the detention of the vessel had been caused by the Master’s error in navigation and seamanship in anchoring where he should not have done.<br />
<br />
'''Comment'''<br />
<br />
This judgment provides a helpful insight into when the navigational error defence in the Hague Rules, Hague-Visby Rules and US COGSA applies. It should also assist vessels that anchor in this busy area, consisting of international waters and territorial waters of Malaysia, Indonesia and Singapore, which are in part contested, to appreciate the need to be cautious to avoid being caught out.<br />
<br />
Notably, this defence was available because the Master’s error had been made after the vessel had departed on the cargo-carrying voyage. Had the error been made “before and at the beginning of the voyage” the defence may not have been available, given the UK Supreme Court’s judgment on a passage planning error before the vessel commenced on the voyage in The “CMA CGM Libra” (fn.3).<br />
<br />
Footnote 1: [1908] AC 406<br />
<br />
Footnote 2: [2001] 1 AC 638<br />
<br />
Footnote 3: [2021] UKSC 51 – case note available at https://www.onlinedmc.co.uk/index.php/Alize_1954_and_CMA_CGM_SA_v_Allianz_Versicherungs_AG_and_Ors_-_the_CMA_CGM_Libra</div>Dmcadmin