Issue 1 2021
The year 2020 was a year like no other and we earnestly hope
breach of the charterers’ obligation to complete loading within
as 2021 advances that the detrimental effects of Coronavirus will
the lay days, it was a requirement that the plaintiff demonstrate
recede. With an eye on a return to normality we are pleased to
that such additional loss was not only different in character from
resume publication of our newsletter.
the loss of use but stemmed from breach of an additional and/or
independent obligation.”
Within the firm we congratulate Danae Fasois upon having
qualified as a solicitor and are delighted to welcome Sofia Xylouri
Following an extensive review of the authorities, Andrew Baker J
to the firm as a trainee solicitor.
held that the Bonde was wrongly decided. The Judge found that
damage to cargo was distinct from and additional to the detention
as a type of loss. Agreeing demurrage at a set rate quantified
CLAIMS IN ADDITION TO DEMURRAGE
Owners’ loss for their loss of use of the vessel to earn freight
elsewhere, the Judge found it did not extend to cover different
One of the most common questions asked of maritime solicitors
kinds of loss.
is whether claims can be raised by Owners against Charterers
under voyage charterparties for anything other than demurrage.
In conclusion, the Court held that Owners were entitled to
The perceived wisdom is that demurrage is the exclusive remedy
recover damages as an indemnity for the cargo deterioration in
except in the most limited circumstances. This has now changed.
addition to demurrage.
Owners K Line voyage chartered the Vessel “Eternal Bliss”
to Charterers Priminds who failed to discharge the cargo of
SOYABEANS AND BILLS OF LADING
soyabeans at Longhou, China within the agreed laytime under the
Charterparty. Priminds paid K Line demurrage at the contractual
In an earlier case involving soyabeans and the same ultimate
rate: there was no dispute between the parties as to demurrage.
Charterers, HHJ Pelling QC absolved voyage Charterers from
liability for a cargo description in Bills of Lading.
However, the delay in discharging the cargo of soyabeans was
said to have caused it to deteriorate. Owners had to arrange
By a voyage charterparty dated 29 June 2012, the Defendant
security for USD 6 million and paid claims brought by cargo
Disponent Owners, Noble Chartering, agreed to subcharter the
interests in the amount of $1.1 million.
vessel “TAI PRIZE” to the Claimant Charterers, Priminds Shipping,
for the carriage of a cargo of soyabeans from Brazil to China.
Owners brought a claim against Charterers for compensation or
an implied indemnity for the loss they had suffered by reason of
A Congenbill 1994 Bill of Lading was drafted by the shipper
Charterers’ prolonged retention of the cargo on board the Vessel
and signed by the Master. The cargo was described as
on the basis the cargo would not have been damaged had it
“63,366.150 metric tons Brazilian Soyabeans Clean on Board.”
been discharged during the agreed laytime.
Further, the B/L stated that the Cargo had been “SHIPPED… in
apparent good order and condition...”. The B/L incorporated the
Charterers argued demurrage was a form of liquidated damages
Hague Rules.
and represented Owners’ exclusive remedy for their breach of
charter for late discharge of the cargo and accordingly Owners’
At the discharge port, the cargo receivers discovered that the
loss had been met by the payment of demurrage.
cargo had suffered heat and mould damage and commenced
proceedings in the Chinese courts against the Owners. The
Owners argued in response that their claim was unrelated to
Owners were ordered to pay US$1,086,564.70 to the receivers.
the demurrage payment which represented the loss of ability to
earn freight elsewhere, and that the relevant loss in the present
The Owners subsequently brought a claim against the Disponent
case was liability for damage to the cargo caused by Charterers’
Owners for 50% of the sum they had to pay to the receivers. This
detention of the Vessel for a prolonged period.
claim was settled for USD$500,000. The Disponent Owners in
turn commenced London arbitration proceedings against the
Charterers argued that this was not a case of a different kind of
Voyage Charterers seeking to recover the US$500,000 and the
loss because the loss flowed from their detention of the Vessel.
costs of defending the claim.
They relied on the authority in the Bonde [1991] in which it was
held that: “where a charter-party contained a demurrage clause,
The Tribunal found that the cargo was damaged by heating,
then in order to recover damages in addition to demurrage for
caking and mould and that the damage was pre-existing.
WATERSON HICKS • SOLICITORS • 11 BOLT COURT • LONDON EC4A 3DQ
Telephone: +44 (0)20 7929 6060 Fax: +44 (0)20 3004 0997 E-Mail: law@watersonhicks.com www.watersonhicks.com
Issue 1 2021
However, the arbitrator concluded that even though the damage
for commencement of proceedings by the Receivers had expired
would not have been visible to the Master on loading; it would
the Owners gave an undertaking to the Court to submit to
have been visible upon reasonable examination by the shippers.
arbitration if it was commenced within 60 days of the injunction.
It followed therefore that the cargo was not in apparent good
order and condition when shipped.
DUTIES OF MORTGAGEES WHEN SETTLING
Hence the Charterers were held liable because the shipper was
ASSIGNED CLAIMS
acting as the Charterers’ agent and the Charterers had impliedly
represented with the clean B/L that the cargo was in good order
This firm acted for Aegean Baltic Bank in litigation involving the
when loaded and/or had agreed to indemnify the Disponent
vessel “Starlet”. The Bank had entered into a loan agreement
Owners against the consequences of the inaccuracy of any such
with the Owners on terms including the usual assignment of the
statement. The voyage Charterers appealed to the High Court.
Vessel’s insurances. In July 2015 the Vessel suffered water ingress
to its engine room whilst at Yemen. There being no possibility to
It was held that when a Charterer or Shipper acting on his behalf
salvage the Vessel (in part due to the ongoing conflict in Yemen)
tenders a Bill of Lading containing a statement of the apparent
Owners served a Notice of Abandonment on hull insurance
good order and condition of the cargo for signature by the
leaders Generali. Generali rejected the Notice on the basis it
Master, the Master is invited to make his own assessment of the
was timebarred under Italian law. The Bank concluded a
cargo to verify the above statement.
settlement agreement with Generali on a partial loss basis (being
about half the amount of Generali’s potential liability under a
The Hague Rules draw a distinction between information provided
constructive total loss claim).
by the Charterers or Shippers on the Charterers’ behalf that can
be taken at face value by the Master, and representations as to
The Bank brought a claim for the balance of the loan under the
the apparent condition of the cargo. Article III, rule 3 provides
loan agreement and security in the amount of US$ 9,979,972.21.
that any B/L to which the Hague Rules apply should include “the
The Defendants did not challenge the quantum of the Bank’s
leading marks necessary for identification of the goods” and
claim, but raised various defences questioning the Bank’s duty
“the number of packages or pieces or the quantity or weight”
to the insured when exercising its rights under assignments
of the goods constituting the cargo to which the bill related, as
of insurance.
information that must be “furnished in writing by the shipper”.
The Rules also refer to “the apparent good order and condition
The basis of the Defence was the contention that the Bank acted
of the goods”. However, that is information not required to be
negligently or in breach of duty in its conduct of the insurance
“furnished by the shipper”. That assessment is to be made by the
claims following damage to the Vessel and that claims against
Carrier or the Master on its behalf at the point of shipment.
the Bank for such provided a defence of circuity of action or
set-off in favour of the Owner so that the Guarantees had been
In light of the Tribunal’s finding that the damage would not
discharged under Greek law.
have been reasonably visible to the Master, the B/L was not
found to be inaccurate. As to the Tribunal’s concern that the
The Defendants contended the Bank’s settlement with Generali
Disponent Owners would be left without recourse, the Hague
was unreasonable in that the Bank should have settled on the
Rules deliberately did not provide an express indemnity obligation
basis of a constructive total loss or should have sued on the basis
in respect of information supplied as to apparent good order
the Notice was not timebarred as a matter of Italian law. The
and condition.
Defendants also contended that the Bank had failed to recover
sums under the London market policy.
Further, the Disponent Owners elected to pay the shipowners
rather than defend the claim by reference to the true condition of
The Defendants also argued as a matter of Greek law that as
the cargo. Their liability therefore did not arise due to any fault of
guarantors they were relieved from liability because the Bank
the Charterers. The appeal was allowed.
(a) by its own gross misconduct caused the Owners’ inability to
repay the debt; and
SOYABEANS AND CHINA AGAIN
(b) dealt with the H&M insurance claims in a manner contrary to
good faith, morality, and/or the purpose for which such rights
In a third case involving soyabeans discharged in China
had been granted.
the Owners of
“Bulk Poland” discharged the cargo under
“to order” Bills of Lading containing English law and London
The Defendants were debarred from adducing witness evidence
arbitration provisions.
or expert evidence in support of their case by reason of their
failure to comply with an unless order to provide disclosure of
The Receivers demanded security and commenced proceedings
documents, and the judgment provides a helpful illustration
in China. The Owners commenced arbitration in London. Upon
of the considerations the Court will take into account to ensure
review Bryan J found the Owners were entitled to maintain the
gaps in evidence by reason of the sanctions imposed on the
anti-suit injunction since the Receivers’ proceedings had been
Defendants do not inure to their benefit.
commenced in breach of the arbitration clause. Although time
WATERSON HICKS • SOLICITORS • 11 BOLT COURT • LONDON EC4A 3DQ
Telephone: +44 (0)20 7929 6060 Fax: +44 (0)20 3004 0997 E-Mail: law@watersonhicks.com www.watersonhicks.com
Issue 1 2021
Adrian Beltrami QC, sitting as a deputy High Court judge found
WHERE AN ARBITRATION HAS NO EXPRESS
against the Defendants and gave judgment in favour of the Bank.
CHOICE OF LAW
In doing so the Judge held that in exercising its rights under
the assignment of the insurance policies in settling claims, the
In Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb,
Bank owed to the Defendants a duty of good faith and a duty
the Supreme Court has finally clarified the position regarding
of reasonable care to obtain a proper recovery. There was no
which law governs the scope and validity of an arbitration
evidence the Bank was in breach of these duties in the present
agreement when there is no express choice of law for the
case. There was no obligation to exercise rights under the
arbitration agreement and the law of the contract and the law of
assignment within a certain time frame even if the non-exercise
the seat differ.
of rights resulted in a reduction in the amount recovered. Such
duties could be further restricted in their scope by contractual
The Supreme Court applied the common law rules, and upheld
provisions in the assignment, for example curtailing the duty not
the decision of the Court of Appeal, although not with the same
to engage in wilful misconduct.
reasoning, concluding that the arbitration agreement should be
governed by the express or implied choice of the parties. In the
The Greek law defences also failed.
absence of such choice, the arbitration agreement is governed
by the law with which it is most closely connected. When there
is no express choice of law for the arbitration agreement, there is
ARBITRAL BIAS
a presumption that the parties intended the law of the contract
containing the arbitration agreement to govern the arbitration
Perceptions of bias on the part of arbitrators will linger at least
agreement. The choice of seat does not affect this presumption.
as long as parties are allowed to choose their own arbitrators
When however there is neither an express nor an implied choice
in references.
of law, the law of the seat will generally be the law to govern the
arbitration agreement, being the one most closely connected with
The Supreme Court was asked to consider the issue in
it. The majority of the Court disagreed with the Court of Appeal’s
Halliburton v. Chubb, an insurance coverage arbitration
decision that there is a strong presumption that the parties have
arising out of the Deepwater Horizon incident. The major
chosen the law of the seat to govern the arbitration agreement.
arbitral bodies were permitted to intervene. Disappointingly
the points for determination were relatively narrow but certain
Two exceptions were identified which depart from this principle:
principles emerged.
1) Situations where applying the principle would amount to
a serious risk of the arbitration agreement being ineffective,
Chubb had appointed the highly respected Kenneth Rokison QC
referred to as the “validation principle”;
as its arbitrator in a number of references and was then appointed
2) When there is a provision of the law of the seat indicating that
by the High Court to preside over the arbitration between
the arbitration agreement should be governed by that
Halliburton and Chubb. Following this Chubb also appointed him
country’s law.
on further references. Halliburton asked him to resign.
This case highlights the importance of the parties deciding
Halliburton considered there was unconscious bias on the part
which law should govern the actual arbitration agreement itself,
of Mr Rokison accepting appointment in multiple arbitrations
as well as which law should govern the main contract and the
relating to the same or overlapping matters with one common
choice of the seat.
party and questioned whether an arbitrator could accept multiple
appointments in this way without giving disclosure.
SUBJECT TO SUPPLIERS’ APPROVAL
The Supreme Court confirmed that an arbitrator has a duty to
disclose facts and noted that an arbitrator may have a financial
In Nautica Marine Ltd v Trafigura Trading LLC the Commercial
interest in obtaining further appointments as arbitrator and
Court had to determine whether a fixture of the “Leonidas”
circumstances which might give rise to the appearance of bias.
had become legally binding. Negotiations had taken place in
In reaching this conclusion the Court also noted that some
two distinct stages. At first the parties had reached what was
(but not all) of the intervening arbitral bodies sought recognition
agreed to be a non-binding agreement which was stated to
of a legal duty of disclosure.
be on subjects. There were four distinct
“subjects”. At the
second stage Trafigura lifted three of the four subjects in return
The Supreme Court found that an arbitrator may have to disclose
for Nautica agreeing to reduce the demurrage rate. The one
acceptance of appointments in multiple overlapping references
outstanding subject was suppliers’ approval. Thereafter Trafigura
with only one common party. The time for disclosure is when the
did not obtain suppliers’ approval and made no attempt to do so.
duty to disclose arises; the time for assessment of apparent bias
Trafigura contended that the fixture had never become binding.
is at the time of hearing the challenge to the arbitrator.
Nautica contended that the fixture became binding at the second
stage and claimed damages for non-performance by Trafigura.
On the specific facts of the case there was no finding of the
Whether there was a binding contract depended upon whether
possibility of bias against Mr Rokison.
the suppliers’ approval subject was properly to be treated as
a pre-condition or as a performance condition. If the latter the
contract was binding and Trafigura would only be excused
WATERSON HICKS • SOLICITORS • 11 BOLT COURT • LONDON EC4A 3DQ
Telephone: +44 (0)20 7929 6060 Fax: +44 (0)20 3004 0997 E-Mail: law@watersonhicks.com www.watersonhicks.com
Issue 1 2021
performance if the subject were not satisfied for reasons other
was simply a contract for RockSolid to collect and dispose of the
than its own breach of contract. The Court noted that subjects is
IBA. How this was done was no business of the Claimant. Indeed
an expression which usually signals that there are preconditions
the risk passed to RockSolid upon collection.
to contract which remain outstanding rather than a performance
condition. The Court also noted that there was uncertainty as to
The only evidence of an implied authority was the Claimant’s
what suppliers’ approval meant. This uncertainty suggested the
lack of reaction to having been named as shipper on 33 previous
subject was more likely to be a precondition than a performance
occasions. The Court held that assent was not to be inferred from
condition. The Court concluded that the suppliers’ approval was
silence and more was required to show that the Claimant had
a pre-condition and that a binding charterparty had not come
authorised RockSolid or SS to enter it into a contract.
into existence. The discussions at the second stage had not
changed the nature of the suppliers’ approval required. Nautica’s
As to ostensible authority, the Defendant argued that the 33
claim failed.
previous emails sent out attaching bills of lading naming the
Claimant as the shipper were evidence the Claimant had held out
to the Defendant that RockSolid and or SS were authorised to
PARTIES TO THE BILL OF LADING
act on its behalf. The Court rejected this argument, this particular
carrier had no knowledge of the previous emails when it entered
In the
“Nortrader” the Claimant’s business was converting
into the contract of carriage.
waste products into energy at Plymouth. A by-product of this
process is ‘incinerator bottom ash’ (IBA). The Claimant entered
into a contract with a Dutch company RockSolid whereby it paid
ONE VESSEL LIABLE FOR ALL COLLISIONS
RockSolid to collect IBA from the Claimant’s plant and dispose
of it. Under the contract risk in the IBA passed to RockSolid
On 15 July 2018 a southbound convoy of
8 vessels was
and the Claimant had no commercial or proprietary interest in
proceeding through the southern section of the Suez Canal. The
the IBA as soon as it was loaded onto RockSolid’s vehicles.
vessel at the head of the convoy suffered engine problems and
was forced to anchor in the canal. Vessels following the lead
Under a separate contract between RockSolid and a wharfing
vessel took steps to anchor or moor.
company in Plymouth, RockSolid arranged shipment of the
IBA to Holland. RockSolid appointed a shipping agent (SS) for
The eighth vessel in the convoy collided with the seventh vessel
this purpose. SS arranged shipment using various vessels and
which was at anchor and together they both collided with the
would state the Claimant as the shipper on the Bill of Lading
sixth vessel in the convoy which was moored at the Canal side.
and RockSolid as the consignee. This was done on 33 separate
Each vessel alleged causative fault against the other.
shipments. On each occasion the Claimant and other parties
would be emailed a copy of the Bill of Lading by SS. The Bill
Vessel eight alleged negligence against vessel six saying she
of Lading incorporated the terms of the voyage charterparty
ought to have advised vessels eight and seven of her intention
between the Owners of the vessels used to carry the cargo
to moor.
and RockSolid.
Vessel eight also alleged negligence against vessel seven
On the 34th shipment, there was an explosion on board the Vessel
in relation to her failure to give notice of an intention to moor.
and the Defendant Owners brought arbitration proceedings
Vessel eight also suggested that the way in which vessel seven
against the Claimant on the basis of the Bill of Lading. The
attempted to moor prevented her from sailing past in safety.
Claimant challenged the Tribunal’s jurisdiction in an appeal under
s.67 of the Arbitration Act.
The Court dismissed the allegations by vessel eight against
vessels seven and six and held that the collision between vessels
The Court held that while the parties to a contract of carriage are
eight and seven was caused by the negligence of vessel eight.
the named Shipper and Carrier on the Bill of Lading, it is open to
someone who is ostensibly a party to contend that it has wrongly
As to the later collisions between those two vessels and the
been identified as a party on the Bill of Lading.
moored vessel six, the Court had to consider whether the effect
of the first collision was continuing in such a way as not merely to
The question arose whether RockSolid or its agents SS had actual
provide the opportunity for the later collision but as to constitute
express, implied or ostensible authority on behalf of the Claimant
the cause of them in line with the ruling in the Calliope [1970].
to enter into a contract of carriage on the Claimant’s behalf.
On the facts of the case the Court held that the first collision
There was no evidence the Claimant expressly or impliedly
remained a real and effective cause of the later collisions and the
authorised RockSolid or its agent SS to enter it into the contract
Court held vessel eight alone to blame for all of the collisions.
of carriage. The contract between the Claimant and RockSolid
The above are only intended to be short summaries.
If you require any further information please feel free to contact us.
WATERSON HICKS • SOLICITORS • 11 BOLT COURT • LONDON EC4A 3DQ
Telephone: +44 (0)20 7929 6060 Fax: +44 (0)20 3004 0997 E-Mail: law@watersonhicks.com www.watersonhicks.com
