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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Trafigura Beheer BV v Navigazione Montanari Spa [2014] EWHC 129 (Comm) (30 January 2014) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2014/129.html Cite as: [2014] EWHC 129 (Comm), [2014] 1 Lloyd's Rep 550 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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Trafigura Beheer BV |
Claimants |
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- and - |
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Navigazione Montanari Spa |
Defendants |
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Michael Ashcroft QC (instructed by Ince & Co LLP) for the defendants
Hearing dates: 21 January 2014
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Crown Copyright ©
Mr Justice Andrew Smith:
"5. On 14 December 2010, as ordered by the Claimants, the Vessel loaded a cargo of premium motor spirit ("the Cargo") at Abdijan, Cort d'Ivoire for passage to Lagos, Nigeria for discharge.
6.
6.1 On 16 December 2010 at around 2330 hours the Vessel arrived at offshore Lagos and tendered notice of readiness in line with the Claimants' instruction.
6.2 On or around 21 December 2010 the Master sailed to a position 17nm offshore Cotonou, Benin and about 55nm south-west of Lagos and awaited orders from the Claimants.
6.3 On or around 24 December 2010, at approximately 2330 hours, the Vessel was attacked by a group of about 15 armed men ("the Pirates"), whilst drifting at about 16.5nm from Cotonou and 60nm from Lagos.
6.4 The Pirates took control of the Vessel.
6.5 On 26 December 2010 the Pirates arranged for an STS transfer of approximately 5,300 MT of the Cargo ("the Transferred Cargo") to an unknown lightering vessel, which then departed with the Transferred Cargo.
6.6 On 27 December 2010, the Vessel was released by the Pirates.
7. Subsequent to the facts and matters set out in paragraph 6 above: (1) the Claimants say that the Vessel was ordered to discharge part of the Cargo at Atlas Cove Jetty Depot and the balance at Petroleum Wharf Apapa; and (2) the Defendants say that on 31 January 2011 the Vessel was ordered to discharge part of the Cargo at the New Atlas Cove Jetty and the balance at Bulk Oil Plant terminal. Any cargo measurements taken immediately before discharge to the order of the Claimants would or should have shown substantially lower net vessel volumes than the net vessel volumes ascertained after loading, on account of the fact that the Transferred Cargo had already, during December 2010, been forcibly removed from the Vessel by the Pirates."
(The dispute about where the cargo was discharged is irrelevant for present purposes.)
"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 exceeds0.3%0.5% and Charterers shall have the right todeduct from freightclaim 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."
i) Payment of Freight:
"Freight shall be payable immediately after completion of discharge . Payment shall be made in US dollars less any sum derived from the operation of Clauses 8 and 4 and 5 of Trafigura Shipping clauses 1991 " (clause 7).
The words that I have underlined were introduced (in substitution for reference to another clause in the standard BP form) by the Trafigura terms. It is agreed that "Trafigura Shipping clauses 1991" is intended to refer to the Trafigura terms.
ii) Suspension of Laytime/Demurrage for Loading and Discharge:
"Time shall not count against laytime or, if the Vessel is on demurrage, for demurrage when spent or lost:-
(a) on an inward passage until the Vessel is securely moored at the berth or other loading or discharging place specified by Charterers;
(b) due, whether directly or indirectly, to breakdown, inefficiency or other cause attributable to the Vessel and/or Owners, including inability of the Vessel to pump out the cargo at the [specified] rate;
(c) as a result of labour dispute, or strike, involving Master, officers or crew of the Vessel or tugs or pilot;
(d) in, or in connection with, the handling of ballast ; and
(e) in cleaning tanks, pumps and pipelines.
Nothing herein contained shall be affected by the provisions of Clause 46."
(Clause 20)
iii) Exceptions:
"The provisions of Article III (other than Rule 8), IV, IV bis and VIII of the Schedule to the Carriage of Goods by Sea Act, 1971 of the United Kingdom shall apply to this Charter and shall be deemed to be inserted in extenso herein. This Charter shall be deemed to be a contract for the carriage of goods by sea to which the said Articles apply, and Owners shall be entitled to the protection of the said Articles in respect of any claim made hereunder.
Charterers shall not, unless otherwise in this Charter expressly provided, be responsible for any loss or damage or delay or failure in performance hereunder arising or resulting from Act of God, act of war, seizure under legal process, quarantine restrictions, labour disputes, strikes, riots, civil commotions, arrest or restraint of princes, rulers or people "
(Clause 46)
Here the parties incorporated the standard wording of this provision of the BP form: the Trafigura terms provided for additional words at the end of the clause, "or any other cause beyond Charterers' control", but that was overridden by the recap that said of this clause 46 "maintain as printed".
iv) Clause Paramount:
"This Bill of Lading shall
(1) In relation to the carriage of any goods from any port in Great Britain or Northern Ireland to any other port whether in or outside Great Britain or Northern Ireland have effect subject to the provisions of the Carriage of Goods by Sea Act 1971 and to the Rules contained in the Schedule thereto (the Hague/Visby Rules) and nothing herein contained shall be deemed a surrender by Carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the said Act;
(2) In relation to the carriage of any goods from any port in a state in which legislation similar in effect to the Carriage of Goods by Sea Act 1971 of the United Kingdom is in force to any port in any other state, have effect subject to such legislation and to the Rules contained in the Schedule thereto and nothing herein contained shall be deemed a surrender by the Carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the said legislation;
(3) In relation to the carriage of any goods between ports in two different states, where this Bill of Lading is issued in Great Britain, Northern Ireland or any state in which legislation similar in effect to the Carriage of Goods by Sea Act 1971 of the United Kingdom is in force have effect subject to such Act or such legislation and to the Rules contained in the Schedule thereto and nothing herein contained shall be deemed a surrender by the Carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the said Act or said legislation;
(4) In any other case have effect as if the contract of carriage herein contained were a contract of carriage to which the provisions of the Carriage of Goods by Sea Act 1971 of the United Kingdom applied and the Carrier shall be entitled to the benefit of the privileges, rights and immunities conferred by the said Act and the Rules contained in the Schedule thereto as if the same were herein specifically set out.
Notwithstanding the foregoing provisions of this Clause the Hague/Visby Rules shall not apply to this contract where the goods carried hereunder consist of cargo which by this contract is stated as being carried on deck and is so carried.
If any term of this Bill of Lading be repugnant to the provisions of the Hague/Visby Rules such term shall be void to that extent but no further."
(Clause 52)
v) Law: clause 55 provided for the construction, validity and performance of the charterparty to be governed by English law.
"Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability."
Article IV includes (at rule 2) provision that:
"Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (c) Perils, dangers and accidents of the sea or other navigable waters. (f) Act of public enemies. (q) Any other cause arising without actual fault or privity of the carrier, or without fault or neglect of the agents or servants of the carrier, ".
"Are the Defendants liable under the Charterparty to the Claimants 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 the order of the Claimants at the discharge port, plus freight and insurance? In particular:
[1] on a true construction of the In-Transit Loss Clause, does the Transferred Cargo discharged from the Vessel in the circumstances set out in paragraph 6 above constitute "in transit loss" or "lost cargo" for the purposes of that clause?
and if the Transferred Cargo does so constitute:
[2] on a true construction of the Charterparty does the In-Transit loss Clause impose strict liability upon the Defendants in respect of such Transferred Cargo, or do the exceptions of Clause 46 of the Charterparty apply to exclude that liability? [Further,
[2.1] is there a clear and distinct inconsistency between the In-Transit loss Clause and Clause 46 of the Charterparty;
[2.2] can the Clauses be reconciled?]"
The dispute is about the specific issues numbered [1] and [2]. I made clear that I shall not deal with the question that I have marked by square brackets discretely, this being simply a consideration potentially relevant to other issues. Neither Mr Jeffrey Gruder QC, who represented the charterers, nor Mr Michael Ashcroft QC, who represented the owners, pressed me to do so.
Commercial considerations
"The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear":
Wickman Machine Tools Sales Ltd v Schuler AG, [1974] AC 235, 251 per Lord Reid.
i) The owners would be strictly liable for loss of cargo, but not for damage to it.
ii) The owners would be strictly liable for apparent loss occurring between the two measurements, but not if the loss occurred before the earlier measurement (say, during loading) or after the later one (say, during discharge), or if the second measurement was not made (say, because the vessel sank with her cargo).
The first issue
" the ascertainment of any short delivery after a normal voyage is notoriously difficult in the bulk carriage of oil. It depends on complex calculations comparing the quantity apparently loaded with the quantity apparently discharged, with some additional allowances for undischargable quantities of sediment and for oil remaining in the ship's lines, and also possibly for apparent losses due to evaporation. At the end of the day, as in the present case, there may remain an apparent, but inexplicable, short delivery. Such disputes are commonplace, and they are strikingly illustrated by the unexplained disparity of 2420 tonnes in the present case, albeit that this was less than 1 per cent. of the total cargo. Accordingly what the charterers contend is that the object of cl.7 was that it was designed for a normal voyage in circumstances where the charterers have a refinery at a discharging port mentioned specifically in the charter, as in this case, with consequently little likelihood of negotiation of the bill of lading, and that the clause did not contemplate some major casualty ."
In-transit loss 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. It might be that contrariwise they also provide a cut-off point below which the charterers cannot present a claim for lost cargo simply on the basis of a difference between volumetric measures, but that question does not arise in this case and I say nothing about it in relation to the ITL clause in this case or more generally.
i) "The inevitable/unavoidable difference between the volumes of a liquid as measured at 2 separate occasions (load and discharge port(s))". He referred in this context to measurements differing because of temperature, as well as to differences attributable to how the measurements are taken and to evaporation.
ii) "Physical loss due to causes internal to the ship/owners". He gave as examples cargo leakage into ballast tanks or the void spaces between a vessel's double hull, and losses attributable to a jammed pressure release valve causing excessive cargo venting.
The second category is less readily seen as directly incidental to carriage of oil than the first. Further, Mr Gretton said in his report that in-transit loss clauses do not cover "external interventions and fortuities that would generally be expected to be covered by a Marine All-risks insurance policy", but in cross-examination Mr Gruder demonstrated, and Mr Gretton accepted, that losses that the industry would regard as "in-transit losses" do not fully correspond with those generally covered by such insurance. (For example, he said that there would be in-transit loss if owners used cargo as bunkers or caused loss through errors in operating the valves, but did not know whether such losses would usually be covered by charterers' insurance.) At most, the usual scope of charterers' insurance provides only a rough rule of thumb about what is "in-transit loss".
The second issue
"Mr. Boyd enumerated a number of anomalies, or inconsistencies, which he said would result if the charterers were not accountable in any way subsequently for the sum deducted. He said that, properly read, cl.7 is in effect a retention clause allowing charterers to retain the particular amount against a future determination of owners' liability for short delivery. Among the anomalies which he mentioned was that this clause, construed in the way contended for by the charterers, would amount to imposing absolute liability upon the owners, and yet Part II of the charter-party incorporated The Hague Rules, which rules provided defences for the owners; so that the effect of cl.7 would be to impose a liability when, in accordance with Part II, the owners would not be liable. Mr. Boyd said that consistency requires the Court to construe cl.7 in the way that he submitted; ".
Eveleigh LJ was not persuaded by Mr Boyd's arguments (loc cit at p.208):
"The absurdities, or inconsistencies, of which Mr. Boyd speaks are only seen as such if we assume that cl. 7 is designed to deal with liability for loss; then of course the conflict with The Hague Rules would be apparent. But in my opinion cl.7 deals with freight. Nowhere in the Hague Rules, or in the charter-party, is freight dealt with, except in cl.21, and that deals with the owners' lien for freight, and it is in the printed form. It does not apply to this case, where freight is only due after discharge .".
Stephenson LJ agreed with Eveleigh LJ's reasoning, and, although his judgment is less explicit, I do not understand Kerr LJ to have disagreed.
i) Increasing, to the advantage of the owners, the proportion of the cargo that was to be lost (according to the vessel readings) to trigger claims to over 0.5%; but
ii) Giving the charterers greater rights if more than 0.5% of the cargo was lost by allowing them not only to deduct from freight (in accordance with the amended payment of freight clause in the BP form), but also to make a claim.
The parties are not to be taken, Mr Gruder argued, to have intended when agreeing upon those changes to the standard Trafigura clause to have abandoned the strict nature of the owners' responsibility for the loss. After all, if their responsibility is not strict in the context of a claim under the ITL clause, then (as Mr Ashcroft accepted) neither is it strict in the context of a deduction under the payment of freight clause, notwithstanding The "Olympic Brilliance".
Contra proferentem
Mr Gretton's evidence
Conclusion
i) On the true construction of the ITL clause, the Transferred Cargo was not (and did not occasion) "in transit loss" or "cargo loss" within the meaning of the clause.
ii) If (contrary to i)) the Transferred Cargo was (or occasioned) "in transit loss" or "cargo loss" within the meaning of the ITL clause, on the true construction of the charterparty the clause imposed liability on the owners subject to the exceptions of clause 46.
I understand that the parties agree that therefore the answer to the more general preliminary issue is that the defendants are not liable under the charterparty, and that judgment should be entered for the defendants, but I am willing to hear further submissions about this.