Case No: 2009 Folio 34
Neutral Citation Number: [2011] EWHC 538 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 17 March 2011 

Before : Jonathan Hirst QC sitting as a Deputy Judge of the High Court 

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Between :

	(1)	FORTIS BANK S.A./N.V.
(2)	STEMCOR UK LIMITED	

Claimants	
	- and -

INDIAN OVERSEAS BANK		
		Defendant	

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Timothy Young QC and Malcolm Jarvis (instructed by DLA Piper UK LLP) 
for the Second Claimants
Sara Cockerill (instructed by Holman Fenwick Willan LLP) for the Defendants

Hearing dates: 14-16 February 2011
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JUDGMENT

Mr Hirst QC : 

1.	The issue before the Court is whether the Second Claimant (“Stemcor”) is entitled to recover damages from the Defendant Bank (“IOB”) for having wrongfully failed to honour five letters of credit, or alternatively to recover in restitution.
Background and previous judgments
2.	Between 1 and 19 August 2008 Stemcor entered into five contracts for the sale of a total of 15,500 MT (10% more or less in seller’s option) shredded steel scrap to SESA International Limited (“SESA”) of Kolkata in India.  The prices ranged from US$525 to $620 per metric tonne.  Delivery was to be CFR CY Haldia/Kolkata in seller’s option according to INCOTERMS 2000 – viz.  Cost and Freight Container Yard Haldia/Kolkata.  INCOTERMS 2000 provide that the carriage must be arranged and paid for by the seller and that risk transfer from seller to buyer occurs when the goods pass the ship’s rail.  The buyer must accept delivery at the named destination and pay all costs relating to the goods from the time they have been delivered.   
3.	Payment was to be 100% by sight letter of credit opened by a first class bank and advised by Fortis Bank (“Fortis”) in London.  The sale contracts contained London arbitration clauses and were expressly governed by English law.
4.	IOB opened five letters of credit in relation to the sale contracts and notified Fortis.  They were as follows:
 	L/C ref:	L/C date:	L/C value (US$):	
L/C1	585/LC/166/08*	14 August 2008	1,160,000.00	
L/C2	585/LC/170/08*	18 August 2008	1,440,000.00	
L/C3	585/LC/184/08*	29 August 2008	2,625,000.00	
L/C4	585/LC/171/08	13 August 2008	1,800,000.00	
L/C5	585/LC/164/08	18 August 2008	1,240,000.00	
(The letters of credit will be referred to below by the number in the first column in the above table. The asterisks indicate confirmation by Fortis).
5.	All were subject to the Uniform Customs and Practice for Documentary Credits, 2007 revision, ICC Publication no. 600 (“UCP 600”).  The applicant for the L/Cs was MSTC Limited (“MSTC”), an Indian Government owned company operating under the aegis of the Ministry of Steel one of whose roles is to assist Indian companies purchasing steel scrap from abroad.  MSTC was described as the “facilitator” in the letters of credit.  The arrangements between MSTC and SESA appear to be governed by a memorandum of agreement dated 21 November 2006, as amended.  
6.	On receipt of the L/Cs, Fortis advised Stemcor.  In the case of L/Cs 1-3, Fortis added its confirmation.  In the case of L/Cs 4-5, Fortis advised Stemcor without adding any engagement on its behalf.  The L/Cs were all to be available at Fortis’s London branch.  Each L/C required presentation of bills of lading consigned to the order of IOB and showing 10 days free time at the discharge port.
7.	Between 12 September and 1 November 2008, Stemcor duly shipped steel scrap in 20ʹ containers for carriage from European ports to Haldia Port in India.  The bills of lading named Stemcor as the shipper and the consignee was “to the order of [IOB]”.  The bills gave between 10 and 14 days free time at the discharge port.  Several shipping lines were involved.  Most bills of lading were issued by Mediterranean Shipping Company SA (“MSC”) as carrier, but some were issued by Safmarine Container Line NV (“SAFM”) and by Blue Anchor Line, part of Kühne & Nagel A/S (“K+N”).  K+N used MSC and ANL vessels to carry the cargo but contracted as principals.
8.	The MSC bills of lading contained, inter alia, the following terms on the reverse:

1. DEFINITIONS

Merchant: includes the Shipper, Consignee, holder of this Bill of Lading, the receiver of the Goods and any Person owning, entitled to or claiming the possession of the Goods or of this Bill of Lading or anyone acting on behalf of this Person. 

2. CONTRACTING PARTIES AND WARRANTY
The contract evidenced by this Bill of Lading is between the Carrier and the Merchant. Every Person defined as “Merchant” is jointly and severally liable towards the Carrier for all the various undertakings, responsibilities and liabilities of the Merchant under or in connection with this Bill of Lading and to pay the Freight due under it without deduction or set-off. The Merchant warrants that in agreeing to the terms and conditions in this Bill of Lading, he is the owner of the Goods or he does so with the authority of the owner of the Goods or of the Person entitled to the possession of the Goods or of this Bill of Lading. 

3. CARRIER’S TARIFF
The terms and conditions of the Carrier’s applicable Tariff are incorporated into this Bill of lading. Particular attention is drawn to terms and conditions concerning additional charges including demurrage, per diem, storage expenses and legal fees, etc. A copy of the applicable Tariff can be obtained from the Carrier or its agent upon request and the Merchant is deemed to know and accept such Tariff. In the case of any conflict or inconsistency between this Bill of Lading and the applicable Tariff, it is agreed that this Bill of Lading shall prevail. 

16. FREIGHT AND CHARGES
16.1 Freight has been calculated on the basis of the Shipper's particulars and if such particulars are found to be erroneous and additional Freight is payable, the Merchant shall be liable therefore and also for any expense thereby incurred.

16.2 All Freight is earned and due upon receipt of the Goods by the Carrier, whether the Freight is prepaid or collect and the Carrier shall be entitled to all Freight due under all circumstances, ship and/or cargo lost or not lost or the voyage abandoned. All Freight shall be paid when due without any set-off, counter claim or deduction.

16.3 Every Person defined as “Merchant” in clause 1 shall be jointly and severally liable to the Carrier for the payment of all Freight and charges and for the performance of the obligations of each of them hereunder. Any Person engaged by the Merchant to perform forwarding services with respect to the Goods shall be considered to be exclusively the Merchant's agent for all purposes, and any payment of Freight to such Person shall not be considered payment to the Carrier in any event whatsoever. Failure of such third parties to pay any part of the Freight to the Carrier shall be considered a default by the Merchant in the payment of Freight.

17. CARRIER'S LIEN

THE CARRIER, ITS SERVANTS OR AGENTS SHALL HAVE A LIEN ON THE GOODS AND ANY DOCUMENT RELATING THERETO FOR FREIGHT AND FOR GENERAL AVERAGE CONTRIBUTIONS TO WHOMSOEVER DUE. THE CARRIER, ITS SERVANTS OR AGENTS SHALL ALSO HAVE A LIEN AGAINST THE MERCHANT ON THE GOODS AND ANY DOCUMENT RELATING THERETO FOR ALL SUMS DUE FROM THE MERCHANT TO THE CARRIER UNDER ANY OTHER CONTRACT. The Carrier may exercise its lien at any time and any place in its sole discretion, through the action of any servant, agent or Subcontractor, whether the contractual carriage is completed or not. The Carrier's lien shall also extend to cover the cost and legal expense of recovering any sums due. The Carrier shall have the right to sell any Goods liened by public auction or private treaty, without notice to the Merchant. Nothing herein shall prevent the Carrier from recovering from the Merchant the difference between the amount due to the Carrier and the net amount realised by such sale. 
		
20. NOTIFICATION AND DELIVERY
20.1 Any mention in this Bill of Lading of parties to be notified of the arrival of the Goods is solely for information of the Carrier. Failure to give such notification shall not subject the Carrier to any liability nor relieve the Merchant of any obligation hereunder. 

20.2 The Merchant shall take delivery of the Goods within the time provided for in the Carrier's applicable Tariff or as otherwise agreed. If the Merchant fails to do so, the Carrier may without notice unpack the Goods if packed in Containers and/or store the Goods ashore, afloat, in the open or under cover at the sole risk of the Merchant. Such storage shall constitute due delivery hereunder, and thereupon all liability whatsoever of the Carrier in respect of the Goods, including for misdelivery or non-delivery, shall cease and the costs of such storage shall forthwith upon demand be paid by the Merchant to the Carrier. 	

20.3 If the Goods are unclaimed within a reasonable time or whenever in the Carrier's opinion the Goods are likely to deteriorate, decay or become worthless, or incur charges whether for storage or otherwise in excess of their value, the Carrier may at its discretion and without prejudice to any other rights which it may have against the Merchant, without notice and without any responsibility attaching to it, sell, abandon or otherwise dispose of the Goods at the sole risk and expense of the Merchant and apply any proceeds of sale in reduction of the sums due to the Carrier from the Merchant under or in connection with this Bill of Lading.
                                                                                                
20.4 Refusal by the Merchant to take delivery of the Goods in accordance with the terms of this clause and/or to mitigate any loss or damage thereto shall constitute an absolute waiver and abandonment by the Merchant to the Carrier of any claim whatsoever relating to the Goods or the carriage thereof. The Carrier shall be entitled to an indemnity from the Merchant for all costs whatsoever incurred, including legal costs, for the cleaning and disposal of Goods refused and/or abandoned by the Merchant. 
The other bills of lading contained materially identical terms.
9.	Shortly after shipment, Stemcor presented the documents for payment under the respective L/Cs at Fortis’ London branch.  The documents presented in respect of each drawing under L/C numbers 1-3 were negotiated and honoured by Fortis pursuant to its confirmation and forwarded by Fortis to IOB.  Fortis duly paid the following sums to Stemcor:
L/C 1: 	$928,249.40 (in respect of 5 shipments);
L/C 2:	$1,461,888.00 (in respect of 3 shipments);
L/C 3	:	$2,633,904.00 (in respect of 7 shipments).
The documents presented in respect of each drawing under L/Cs 4-5 (in respect of which Fortis had not added its confirmation) were forwarded by Fortis to IOB.
10.	By the time of shipment the market price for scrap steel had fallen sharply and well below the contract prices. SESA had no wish to take delivery of and pay for the cargo.  It instructed V.N Dwivedi, an advocate based in Kolkata.  He wrote to MSTC on 25 November 2008 pointing out a number of alleged discrepancies in the documentation presented by Stemcor.  The letter concluded:
“This is therefore to call upon you to take necessary steps to ensure that the foreign exchange is not released under the above stated discrepant   documents.  Despite this notice if any amount is released, my client will hold you and [IOB] responsible for such wrongful payments, costs and consequences.”
11.	IOB rejected most of the documents presented by Fortis.  It declined to reimburse Fortis for any of the payments it had made to Stemcor under L/Cs 1-3 and it declined to pay Stemcor under L/Cs 4-5.
12.	Fortis and Stemcor issued these proceedings in the Commercial Court on 9 January 2009.  On 25 September 2009, Hamblen J delivered a judgment ([2009] EWHC 2303 (Comm)) on Fortis’ application for summary judgment against IOB.  He held that all IOB’s defences failed, apart from the objection that the beneficiary’s consolidated certificate failed to satisfy the requirements of the letters of credit (“the BCC point”).  He held that this was a valid point of discrepancy.  However, he left open the issue whether IOB was precluded from taking the BCC point because of its delays in returning the documents to Fortis.  It is important to emphasise that the BCC point applied to 17 of the 24 shipments, accounting for some 72% by value.  It was therefore a point of considerable financial significance.  In respect of the 7 shipments to which the BCC point did not apply, the Judge entered judgment against IOB for $791,966.65 in favour of Fortis and for $1,438,933.20 in favour of Stemcor, plus interest in both cases.  IOB paid the judgment debts promptly and, it appears, debited MSTC’s account with IOB on 13 February 2009.
13.	In a second judgment delivered on 28 January 2010 ([2010] EWHC 84 (Comm); [2010] 2 Lloyd’s Rep 641), Hamblen J decided, following a 3 day trial, that:
(1)	Having given a refusal notice, IOB was under an implied obligation to return the documents with reasonable promptness.
(2)	IOB had failed to return the documents to Fortis/Stemcor with reasonable promptness.
(3)	In consequence, IOB was precluded under Article 16(f) of UCP 600 from relying on the BCC discrepancy.
The Judge entered a further judgment against IOB for $4,232,074.75 in favour of Fortis and $1,594,104 in favour of Stemcor, plus interest in both cases.  IOB paid the judgment debts promptly.
14.	With the permission of the Judge, IOB appealed to the Court of Appeal in respect of both judgments.  On 31 January 2011, the Court of Appeal (Arden, Thomas and Etherton LJJ) delivered judgment ([2011] EWCA Civ 58) dismissing IOB’s appeals.  The Court held that IOB had been entitled to reject the documents on the grounds of the BCC discrepancy, but that IOB was precluded from taking the point by reason of its failure to return the documents with reasonable promptness.  
15.	IOB has not yet applied to the Supreme Court for permission to appeal.  I was told that it may yet do so.
The claims in these proceedings
16.	Stemcor now claims against IOB damages in respect of port storage costs and container demurrage charges which it has had to pay the carriers.  Mr Young QC for Stemcor argued that Stemcor is entitled to recover these costs as damages arising from IOB’s wrongful delay in making payment under the letters of credit.  Alternatively he argues that Stemcor is entitled to recover the monies it has had to pay by way of a restitutionary remedy.  I will set out those contentions more fully later in this judgment, but I must first explain in more detail what happened to the goods on arrival in Haldia.  This was not contentious between the parties. 

Delays at Haldia
17.	The first containers arrived at Haldia on 31 October 2008.  The last arrived on 25 December 2008.  The table below was agreed between the parties and sets out the detailed facts relating to each shipment:
1.
LC no.	2.
Sale Contract no.	3.
B/L Date	4.
L/C Drawing Amount [$]	5.
Fortis or Stemcor	6.
B/L Number	7.
BCC issue	8.
Quantum category	9.
IOB notice (date and disposal status)	10.
Date of arrival in Haldia	
1	99	29/09/08	165,555.20	F	SAFM526731650	X	2	4/11/08 – “RETURN”	8/11/08	
1	99	08/10/08	140,371.60	F	MAEU526705011	X	N/A	4/11/08 – “RETURN”	18/11/08	
1	99	14/10/08	195,425.20	F	SAFM526749887	X	2	11/11/08 – “RETURN”	26/11/08	
1	99	14/10/08	263,070.60	F	APLU704068424		N/A	N/A – no valid discrepancy alleged 	26/11/08	
1	99	14/10/08	163,826.80	F	SAFM526739904		2	N/A – no valid discrepancy alleged	26/11/08	
2	110	4/10/08	281,790.72	F	MSCUFX390542	X	1	4/11/08 – “RETURN”	1/12/08	
2	110	11/10/08	1,057,098.24	F	MSCUFX405118	X	1	4/11/08 – “RETURN”	25/11/08	
2	110	18/10/08	122,999.04	F	MSCUFX423004	X	1	19/11/08 – “RETURN”	9/12/08	
3	125	24/10/08	139,571.25	F	MSCUFX411785	X	1	15/11/08 – “RETURN”	9/12/08	
3	125

125	18/10/08

24/10/08	155,988.00

160,676.25	F

F	MSCUFX427765

MSCUFX430017	X

X	1

1	26/11/08 – “HOLD”
26/11/08 – “HOLD”	9/12/08

9/12/08	
3	125

125

125	31/10/08

31/10/08

1/11/08	927,848.25

688,821.00

195,930.00	F

F

F	MSCUFX428177

MSCUFX425033

MSCUFX444596	X

X

X	1

1

1	26/11/08 – “HOLD”
26/11/08 – “HOLD”
26/11/08 – “HOLD”	9/12/08

9/12/08

25/12/08	
3	125	31/10/08	365,069.25	F	MSCUFX426494		1	4/12/08 – “RETURN”	9/12/08	
4	105

105	25/09/08

10/10/08	161,316.00

32,496.00	S

S	MSCUFX379636

SAFM526599391		1

2	N/A – No discrepancy alleged
N/A – No discrepancy alleged	14/11/08

10/11/08	
4	105

105

105

105

105	15/10/08

04/10/08

30/09/08

4/10/08

23/10/08	573,576.00

302,124.00

587,832.00

113,952.00

16,620.00	S

S

S

S

S	SAFM526565404

K+N 0020-9163-809-027
K+N 0020-9163-809-028
MSCUFX390476

SAFM526774274	X

X

X

X

X	2

4

3

1

2	4/11/08 – “RETURN”
4/11/08 – “RETURN”
4/11/08 – “RETURN”
4/11/08 – “RETURN”
4/11/08 – “RETURN”	05/11/08

31/10/08

23/11/08

01/12/08

29/11/08	
5	98

98	13/09/08

12/09/08	335,990.40

909,130.80	S

S	MSCUFX3344797

MSCUFX343186		1

1	N/A – No discrepancy alleged
N/A – No discrepancy alleged	2/11/08

14/11/08	

18.	Fortis presented documents for payment by IOB as and when they became available from Stemcor.  The first rejections by IOB occurred on 4 November 2008 – in respect of all but one presentation, the BCC point applied and constituted an initially valid ground of rejection. In respect of the three arrivals on 2 November and 14 November (x2), no point as to discrepancy was taken by IOB.  However, IOB made no payment and only admitted liability in the course of the summary judgment hearing before Hamblen J.  Otherwise, IOB alleged that the documents were discrepant and declined to pay.  In accordance with the findings of the Judge, as recorded in column 9 of the table, where the entry “Return” applies, IOB rejected the drawings accompanying them with Swift messages stating “Return”.  Hamblen J. and the Court of Appeal held that the documents should have been returned with reasonable promptness, and that IOB’s failure to do so precluded it from relying on the BCC discrepancies.  Where the entry “Hold” appears, IOB notified Fortis that it was holding the documents pending further instructions from the presenter.  Instructions were given by Fortis on 13 January 2009 to return the documents by courier, but they were not returned until 16 February 2009.  The Judge and the Court of Appeal held that the delay after 13 January 2009 precluded IOB from relying on the BCC point. 
19.	SESA and MSTC declined to make any arrangements to take delivery of the cargo and there was in effect a stalemate.  MSTC notified MSC’s agents, Samsara Shipping, on 10 November 2008:
“We wish to inform you that the L/C opening bank has refused to accept the shipping documents as the same have not been submitted by the overseas supplier as per L/c terms.  As such we are unable to accept the above cargo.  We would request you to take the necessary action in this regard at your end”
SESA notified Samsara Shipping on 4 December 2008:
“We wish to inform you that our bank have refused to accept the shipping document as the same are not LC compliant and negotiating bank/shipper have been advised accordingly.  As such we are unable to accept the cargo”
	This was treated by Stemcor as amounting to a definite abandonment of the cargo.  These messages were somewhat disingenuous – SESA and MSTC had been pointing out discrepancies and urging IOB not to make payment under the letters of credit. 
20.	On 26 February 2009, DLA Piper UK LLP for Stemcor proposed to Holman Fenwick & Willan (for IOB) on an entirely without prejudice basis that Stemcor and IOB join forces for the purposes of realising the best possible salvage value for the cargo.  IOB indicated to MSTC that it favoured the proposal, but MSTC declined to participate and warned IOB that it must return the discrepant documents and that MSTC would hold IOB liable for all costs and consequences of non-compliance.  In the light of this response, IOB did not reply to Stemcor’s proposal.
21.	In the meantime, the containers were accruing storage charges at Haldia and demurrage to the container owners. For 20 foot containers, after 3 days, port charges applied starting at $2.25 per day for a 20 foot container and rising to $27 per day on the 31st day.  MSC container demurrage started at $5 per day and rose to $20 per day after 26 days.  By 17 December 2008, MSC informed Stemcor that the 339 MSC containers which had arrived would eventually incur combined port and demurrage charges of $15,933 per day.  By 26 February 2009, the containers (which had by now all arrived) were racking up charges at the rate of c.$26,000 per day. The MSC containers were moved to cheaper storage (c. $10 per day) in mid-January 2009.
22.	The carriers asserted that under the terms of the bills of lading, Stemcor was liable as shipper to pay the storage charges and container demurrage as it accrued. 
23.	By 6 February 2009, MSC was claiming port costs and demurrage of $689,112.57.  Stemcor initially denied liability on the basis that the costs were for the consignee to pay.  This denial was robustly rejected by MSC.  A high level meeting took place in London on 16 March.  MSC asserted that by 31 March 2009 $764,860 container demurrage and $298,528.85 port charges would have accrued.  Following the meeting, agreement was reached that Stemcor would pay $869,048 in two instalments in respect of the claims up to 31 March, plus a further payment of $130,952 if it became necessary to make a further payment to a third party, as it did not.  No further charges would accrue after 31 March but:
 “... we [MSC] will continue to invoice you [Stemcor] demurrage from 1st April to the date of empty return of MSC’s equipment enabling you to recover this amount as part of your claim against IOB.  The outgoing demurrage will be charged at the usual rate of $20 per day.  MSC agree not to pursue Stemcor for the recovery of this charge in the event that your claim against IOB is unsuccessful.  If successful however, then we agree to waive 50% of these charges you have recovered to offset your losses.”
	This latter part of arrangement does no credit to Stemcor or MSC, but it is fair to observe that no claim was maintained against IOB in relation to this aspect of the settlement with MSC.  On 30 March 2009, MSC wrote to Stemcor to confirm the settlement and concluded:
“We wish to take this opportunity to thank you for your assistance in this very difficult situation.  Your professionalism is exemplary and we look forward to a mutually beneficial business relationship in the future.”
	The $869,048 was duly paid by Stemcor to MSC.
24.	As regards the SAFM bills, Stemcor reached a settlement in October 2009 by which it paid $175,000 (out of a claim of c.$500,000), but on terms that SAFM would do its utmost to recover the sums in India and that, if it succeeded in making recoveries, Stemcor would benefit.  In the event SAFM made a sufficient recovery from the proceeds of sale to refund Stemcor in full, and no claim is pursued against IOB.
25.	As regards K+N, its claims were settled by payments totalling €166,803.33 and $53,000.  No criticism is made of the settlements that led up to these payments.
The auction sales
26.	On 8 June 2010, SESA commenced proceedings against MSTC and IOB in the High Court of Calcutta seeking an injunction restraining IOB from pursuing any claim against SESA in respect of the goods, and a declaration that SESA was under no obligation to accept the tender of any documents presented under the letters of credit and that MSTC was not entitled to demand payment from SESA in respect of the five letters of credit.  
27.	On 18 June 2010, the Calcutta High Court granted SESA’s application for an order for the sale of the goods.  They were sold by auction at Haldia Port on 21 August 2010.  The sales realised the equivalent of $491,453, but on terms all outstanding port fees and demurrage charges were paid by the purchaser.

The claim in damages
28.	Against this background, Mr Young submitted that IOB, having been held to have breached its obligations under the letters of credit, was liable for any damages caused.  He cited Jack on Documentary Credits (4th ed.) at §5.91 for the proposition that:
“Where a seller has suffered loss through delay in payment, he may recover that loss, subject to his satisfying the court that it is recoverable applying the ordinary rules of causation and damages”  
Had it not been for IOB’s breaches, IOB would have promptly taken up the documents and having then debited MSTC/SESA’s account accordingly, forwarded the documents to MSTC/SESA.  The documents would then have been taken up and the goods collected.  No rational buyer that had had $8 million debited from its account was going to abandon the goods – it was as Mr Young put it something of a no-brainer.  The result would have been that port and detention charges would not have been incurred or would have been paid by MSTC/SESA before they could take possession of the goods.
29.	Miss Cockerill responded with four main arguments:
(1)	As regards L/Cs 1-3, Stemcor had been promptly paid by Fortis as confirming Bank.  There was no breach of contract by IOB vis-á-vis Stemcor.  The breach by IOB was of its obligation to reimburse Fortis.  Stemcor had no right to make a claim in damages in respect of breaches of contract by IOB of its obligations to Fortis.
(2)	It was not proven on the balance of probabilities that, if IOB had paid under the L/Cs, this would have resulted in the chain of events forecast by Mr Young.  In particular, MSTC and SESA were on strong ground in declining to pay for and take delivery of the goods to which the BCC point applied.  It was only IOB’s failure to return the documents with reasonable promptness that precluded IOB from maintaining what was otherwise a sound basis for rejection.
(3)	In any event the loss did not naturally flow from a breach by IOB of its obligation to pay the amounts due under the L/Cs.  She emphasised that the claim for damages was based on the failure to make payment, and not the failure to return the documents.
(4)	Finally she made a number of points on mitigation and quantum.
(1)	Was IOB in breach of contract vis-á-vis Stemcor
L/Cs 4-5
30.	There can be no question but that IOB did commit breaches of contractual obligations owed to Stemcor in relation to L/C’s 4-5.  In respect of those presentations in four cases there was no discrepancy and in five cases IOB rejected the drawings accompanying them with Swift messages stating “Return”, resulting in IOB being precluded from relying on the BCC discrepancies, when it failed to return the documents with reasonable promptness.  
31.	There was an issue as to when the breach occurred in cases where the BCC point applied.  Mr Young argued that once IOB became debarred from relying on the discrepancy, it was to be treated as being in breach from the outset.  Miss Cockerill contended on the contrary that IOB was only in breach from the time when it ceased to be entitled to take the otherwise valid BCC point.  In principle, I think Miss Cockerill must be right.  Until the Bank failed to return the documents with reasonable promptness, it was entitled to refuse payment and committed no breach of contract by its failure do so.  Only when it failed to return the documents with reasonable promptness did it become unable to rely on the BCC point and in breach of contract in failing to make payment.  IOB would be liable for damages flowing from that breach, but not for damages sustained earlier.
32.	When did the breach occur?  The judge and the Court of Appeal did not have to decide the question.  IOB urged caution on fixing the date when IOB became precluded from taking the point.  However, I think it is clear from the Court of Appeal’s judgments in this case that it considered that the requirement that the Bank return the documents with reasonable promptness meant that it was obliged to return them within a few days – see in particular §41 of the of Thomas LJ’s judgment:
It is also clear from the evidence of practice to which I have referred that an issuing bank that elects to return documents is expected to do so promptly and without delay. Taking into consideration the necessity for the presenter to be able to deal with the documents, it is clear in my view that if the issuing bank elects to return the documents, it must do so with reasonable promptness. I accept that the notice under sub-article 16(c) has to be given within the specified time of 5 banking days and what is reasonable promptness does not produce an equivalent exact time. However, I cannot accept that interpreting the provision in this way is likely to give rise to any real uncertainty. It is likely to be very clear whether the issuing bank has acted with reasonable promptness.
33.	As the Court of Appeal observed, DOCDEX decision no. 242 pointed out that neither the UCP nor any ICC paper provided a specific time or a time such as “without delay” or a means by which the documents should be returned:
“Notwithstanding the absence of a specific requirement or specific guidance in this regard, there is a market expectation that, consistent with the reading of Articles 13 and 14, international standard banking practice and the importance associated with possession of the documents, especially title documents, the timely return of dishonoured commercial documents requires priority processing, as delay in returning the documents may prejudice the beneficiary's rights and security. 
While the Experts do not have the authority to establish such a standard concerning an exact time period to return the documents once notice is sent, the Experts agree that once the notice is sent stating that the documents are being returned, documents should be returned without delay and by expeditious means.”
34.	In my judgment, the obligation to return the documents within reasonable promptness must be considered in the context where UCP 600 set a five banking day limit for the paying bank to decide whether to accept or reject the documents – a more onerous task than making arrangements to return the documents – and in the light of the commercial importance of getting the documents back to the presenter.  On the other hand an obligation to act with reasonable promptness is not the same as a duty to act immediately, and it implies some flexibility before a bank is to be treated as precluded from taking an important point.  
35.	Balancing these factors, it seems to me that in the absence of special extenuating circumstances, a bank which failed to despatch the documents within three banking days would have failed to act within reasonable promptness.  Many banks would, I expect, aim to despatch the documents more swiftly.  In these cases, IOB gave the “return” notice on 4 November 2008.  I would hold that it became precluded from taking the BCC point as from 7 November 2008 and was then in breach of contract towards Stemcor. 
L/Cs 1-3
36.	The issue whether IOB was in breach of contract towards Stemcor in relation to L/Cs 1-3, where Stemcor was promptly paid by Fortis as confirming bank, depends on the wording of UCP 600:
Article 7
Issuing Bank Undertaking
a.	Provided that the stipulated documents are presented to the nominated bank or the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by:
i.	  sight payment, deferred payment or acceptance with the issuing bank;
ii.	  sight payment with a nominated bank and that nominated bank does not pay
...

c.	an issuing bank undertakes to reimburse a nominated bank that has honoured a complying presentation and forwarded the documents to the issuing bank. ... An issuing bank’s undertaking to reimburse a nominated bank is independent of the issuing bank’s undertaking to the beneficiary.  

Article 8
Confirming Bank Undertaking
a.	 Provided that the stipulated documents are presented to the confirming bank and that they constitute a complying presentation, the confirming bank must:
i.	  honour if the credit is available by 
a.	  sight payment, deferred payment or acceptance with the confirming bank;
...
b.	A confirming bank is irrevocably bound to honour or negotiate as of the time it adds its confirmation.
37.	Here the credit was available by sight payment with Fortis, which had added its confirmation.  In my judgment it is clear under Article 7 of UCP 600 that the issuing bank only becomes subject to a duty itself to honour the credit if the nominated bank does not pay: see Art. 7(a)(ii).  In relation to L/Cs 1-3, Fortis as nominated (and confirming) bank did pay promptly on presentation of the documents.  IOB never became under an obligation to pay Stemcor – that would only have arisen if Fortis had defaulted.  IOB’s obligation under Article 7(c) was to reimburse Fortis.   
38.	It follows that IOB committed no breach of contract in failing to pay Stemcor under L/Cs 1-3.  The initial obligation to honour the credit was on Fortis and that obligation was discharged.  IOB was in breach of its obligation to reimburse Fortis, but in my judgment that was not an obligation owed to Stemcor.  It follows that in relation to L/Cs 1-3, IOB has committed no breach of contract towards Stemcor and Stemcor cannot therefore claim damages for breach.  Mr Young advanced no argument as to why IOB could be liable in damages to Stemcor in such circumstances, other than to observe that it was an irony.
(2)	Did non-payment by IOB cause the loss
39.	I now turn to the question whether as a matter of fact – or rather inference from the facts – Stemcor has established on the balance of probabilities that, if IOB had honoured its obligation to make payment, SESA or MSTC would have taken up the documents and collected the goods, with the result that port and detention charges would not have been incurred or would have been paid by SESA/MSTC before they could take possession.  This issue is clearly relevant to L/Cs 4-5.  It is also relevant to L/Cs 1-3 if I am wrong in my conclusions expressed in (1) above.
40.	Stemcor’s case very much depends on being able to establish that, had IOB paid Stemcor or Fortis promptly when it should, MSTC would have been forced to pay, and then MSTC would have forced SESA to pay with the result that, as a matter of rational commercial common-sense, SESA would have collected the goods and paid outstanding charges.
41.	There is evidence that the arrangements between MSTC and IOB enabled IOB to debit MSTC’s account at IOB and that it did so after the High Court judgments.  There is no evidence as to the status of the account and as to whether the result was to reduce a credit balance or simply to add to a deficit.
42.	As regards the relationship between MSTC and SESA, there is no evidence that MSTC had any immediate means of forcing SESA to pay.   On the contrary, the memorandum of agreement dated 21 November 2006 evidences that SESA had had to put up a deposit of Rs 1 million (equivalent to about US$21,000) on signature of the memorandum and that it had to put up a 10% deposit for the issue of the letters of credit. According to SESA’s petition in the Calcutta High Court proceedings, the security deposit was Rs 38,600,000 (equivalent to about $800,000) but this was refunded with interest in March 2010 by way of adjustment.
43.	None of this seems to me to demonstrate that MSTC had any immediate means of putting pressure on SESA to pay more than it had deposited.  In my judgment, it is clear that SESA was quite determined not make payment and not to take the goods.  The collapse in the market price meant that it would sustain huge losses if it had done so.  As far as it was concerned, as regards 17 of the 24 shipments (accounting for some 72% of the goods by value) there was a valid point of discrepancy and it was IOB’s fault that it became precluded from taking the point.  As regards the balance, IOB had no good argument that the documents were discrepant, but it does not follow that SESA considered that was so – it was contending that all the presentations were discrepant.  In any event, it does not appear that SESA tried to draw a rational distinction between good and bad points.  It was making a blanket rejection.  In my judgment therefore I cannot infer on the balance of probabilities that SESA would have paid for and taken delivery of the cargo, if IOB had made prompt payment to Fortis/Stemcor. 
44.	I have considered whether, even though SESA would have maintained its rejection, MSTC might have acted on its own initiative, and decided to pay for and take delivery of the cargo itself.  This would have been quite a bold action for it to take.  There is no evidence that IOB was able to put it under any real pressure.  It too will have considered that, as regards at least ⅔rds of the cargo, it had a defence to IOB’s claims.  It refused to co-operate when requested to do so by IOB in February 2009 and took the point robustly that the documents were discrepant and should be returned by IOB. In my judgment therefore I cannot infer on the balance of probabilities that MSTC would have paid for and taken delivery of the cargo, had IOB made payment when it should have done so and debited MSTC’s account. 
45.	It follows that the claim for damages fails in respect of all the letters of credit.
(3)	Causation
46.	Miss Cockerill submitted that even if it had been established that, had IOB paid promptly, the goods would have been paid for and collected by SESA or MSTC with the result that the port costs and demurrage incurred by Stemcor was reduced or eliminated, IOB’s breach of contract had not caused the loss.  She accepted that the loss was not too remote in law, but she argued that it was not the effective or dominant cause of the loss.  Given that I have held that the case fails on the facts, I am reluctant to be drawn into an issue which would be better decided when it does arise directly.  It is clear that damages can be awarded for failure to pay money: Sempra Metals Limited v. IRC [2007] UKHL 34; [2008] 1AC 561, and damages have been awarded for currency losses sustained as a result of a bank failure to make prompt payment under a letter of credit: see Ozalid Group (Export) Ltd v. African Continental Bank Ltd [1979] 1 Lloyd’s Rep 231.  But counsel pointed to no case where a bank had been held liable for the sorts of losses claimed here.  I can see that a claim might well succeed where the claim against the bank relates to wrongful detention of the documents but, as Miss Cockerill emphasised, Stemcor has been careful to confine its case to breaches of contract based solely on non-payment.  I am bound to say that I have very considerable doubts whether it can be said that in such circumstances the bank’s breach was an effective cause of the shippers’ losses. 
(4)	Mitigation
47.	Although it does not strictly arise on my findings, I should summarise my conclusions on mitigation of loss.
48.	Miss Cockerill made three main criticisms of Stemcor:
(1)	Stemcor should have got the containers moved to a cheaper storage area earlier so as to reduce the rate at which storage charges accrued and pushed for a sale of the goods as soon as possible.
(2)	Stemcor’s settlement with MSC was unreasonably generous and motivated by commercial advantage to Stemcor of doing a deal with MSC – this was rather evidenced by the congratulatory terms of MSC’s letter dated 30 March 2009.  Had a proper deal been negotiated it would have been possible to achieve a similar arrangement to that made with SAFM, with the result that in the end no loss was sustained.
(3)	As regards the two shipments covered by L/C 5, on which IOB raised no valid discrepancies, Stemcor should have accepted IOB’s breach as repudiatory, terminated the L/C contract and the sale contract, and taken delivery of the goods, with the result that the storage and demurrage charges would have been eliminated or reduced.
49.	I heard the evidence of Julie Hollyer, Head of Logistics at Stemcor.  I considered that she was a reliable witness.  As regards the first criticism, she explained Stemcor’s concerns that it should not be seen to be asserting any control or right over the goods, in case that damaged Stemcor’s claim against IOB and SESA.  Moreover Stemcor did not have the documents of title in its possession so there was not a lot it could do.  I accept that evidence and reject the first criticism.
50.	As regards the settlement with MSC, the reality is that Stemcor had no defence to MSC’s claim.  It could only use its long term business relationship with MSC as a means of reducing the amount payable.  I consider that the deal with MSC was the best that could be achieved in the circumstances.  It is correct that a better deal was done with SAFM, but it does not seem to have been as robust in its demands.  
51.	As regards third point, I consider that Stemcor would have been commercially most unwise if it had adopted the course proposed by IOB.  If Stemcor had treated the contracts as repudiated, there is a serious risk that it would have been much harder to recover damages from IOB in respect of the loss.  As it is, it ultimately succeeded in making a full recovery of the price.  The argument therefore fails on its facts.  The argument also faces considerable difficulty in law: this is not a case that comes close to the principles developed in White & Carter (Councils) Ltd v. McGregor [1962] AC 413 and subsequent authority.
52.	In those circumstances, had it been relevant I would have held that IOB had not shown that Stemcor acted unreasonably in failing to mitigate its loss.
Restitution
53.	Stemcor argues in the alternative that, if and to the extent its damages claim fails, it can recover the sums paid to MSC, SAFM and K+N from IOB in restitution.  Mr Young put the case in three ways:
(1)	 Recoupment – Stemcor had been compelled by law to discharge IOB’s liability to pay the storage charges and the container demurrage.  Citing Niru Battery Manufacturing Co. v. Milestone Trading Limited (No. 2) [2004] EWCA Civ 487; [2004] 2 Lloyd’s Rep 319 at §66, Mr Young submitted that Stemcor had satisfied the three requirements of a claim in recoupment:
(i)	It had been compelled, or was compellable, by law to make the payment;
(ii)	It had not officiously exposed itself to the liability to make the payment;
(iii)	The payment discharged a liability of IOB, benefitting it accordingly.  
(2)	Contribution – Stemcor is entitled to a 100% contribution from IOB for the common obligation it discharged, namely the costs for which Stemcor and IOB were jointly liable under the bills of lading.    Mr Young  cited the following passage from Rowlatt on Principal and  Surety which was approved by Clauson LJ in Whitham v. Bullock [1939] 2 KB 81, 85:
“If, as between several persons or properties all equally liable in law to the same demand, it would be equitable that the burden should fall in a certain way, the court will so far as possible, having regard to the solvency of the different parties, see that, if the burden is placed inequitably by the exercise of legal right, its incidence should be afterwards adjusted.”
	Stemcor and IOB owed a common obligation as “Merchant” under the bill of lading to pay the relevant costs.  Stemcor has discharged more than its proportionate share of the obligation and, given that the costs were incurred by reason of IOB’s wrongful refusal to honour the L/Cs, it was equitable to apportion 100% of the costs to IOB: cf. Niru (supra) at §48. 
(3)	Subrogation – in the further alternative, Stemcor claims to be subrogated to the rights of the carriers to claim the costs from IOB under the relevant bills of lading so as to prevent IOB’s unjust enrichment.  
Recoupment and Contribution
54.	Miss Cockerill did not dispute the broad propositions advanced by Mr Young. Her main submission was that, whether the claim was put forward by way of recoupment or contribution, it was essential that IOB had a legal responsibility for the storage costs and container demurrage such that Stemcor’s payments discharged a liability of IOB.  She cited the following passage in Goff & Jones on The Law of Restitution (7th ed.) at §15-015:
“Compulsion is not enough to recover.  He must also, by reason of compulsion, have paid money which the latter was primarily liable to pay so that the latter obtained the benefit by the discharge of his liability.
(emphasis as in text)

She submitted that this statement was well supported by authority and cited the judgment of Lord Wright in Brooks Wharf Ltd v. Goodman Bros [1937] 1 KB 534, 544:

“The essence of the rule is that there is a liability for the same debt resting on the plaintiff and the defendant and the plaintiff has been legally compelled to pay, but the defendant gets the benefit of the payment, because his debt is discharged either entirely or pro tanto, whereas the defendant is primarily liable to pay as between himself and the plaintiff. The case is analogous to that of a payment by a surety which has the effect of discharging the principal's debt and which, therefore, gives a right of indemnity against the principal.”

55.	She argued that IOB owed no obligation as named consignee under the bills of lading to pay the storage charges or the container demurrage to the carriers.    In those circumstances, the claim in recoupment and contribution failed.  Mr Young accepted that it was essential for him to establish that IOB had a legal liability to the carriers if he was to succeed under either head and I now turn to that critical question.
IOB’s liabilities as named consignees in the bills of lading
56.	The starting point is the Carriage of Goods by Sea Act 1992 (“COGSA”) which provides insofar as relevant as follows:
2.— Rights under shipping documents.
(1) Subject to the following provisions of this section, a person who becomes—
(a) the lawful holder of a bill of lading;
(b) the person who (without being an original party to the contract of carriage) is the person to whom delivery of the goods to which a sea waybill relates is to be made by the carrier in accordance with that contract; or
(c) the person to whom delivery of the goods to which a ship's delivery order relates is to be made in accordance with the undertaking contained in the order,
shall (by virtue of becoming the holder of the bill or, as the case may be, the person to whom delivery is to be made) have transferred to and vested in him all rights of suit under the contract of carriage as if he had been a party to that contract.

3.— Liabilities under shipping documents.
(1) Where subsection (1) of section 2 of this Act operates in relation to any document to which this Act applies and the person in whom rights are vested by virtue of that subsection—
(a) takes or demands delivery from the carrier of any of the goods to which the document relates;
(b) makes a claim under the contract of carriage against the carrier in respect of any of those goods; or
(c) is a person who, at a time before those rights were vested in him, took or demanded delivery from the carrier of any of those goods,
that person shall (by virtue of taking or demanding delivery or making the claim or, in a case falling within paragraph (c) above, of having the rights vested in him) become subject to the same liabilities under that contract as if he had been a party to that contract.
57.	As explained in Aikens, Lord & Bools on Bills of Lading at §8.87
“Section 3 only applies where the requirements of section 2(1) of the Act are satisfied.  The further limitation on the imposition of liabilities is directed primarily to ensure that banks or others with only a security interest in the goods are not saddled with the liabilities of the original shipper simply by virtue of being lawful holders of the bill to whom the rights of suit have been transferred.  The underlying philosophy is that such persons should not be under liabilities under the bill of lading unless they seek to exercise or enforce their rights”.
58.	This analysis is fully supported by Lord Hobhouse’s speech in Borealis AB v. Stargas Ltd [2001] UKHL 17; [2002] 2 AC 205 at §33:
From the context in the Act and the purpose underlying section 3(1), it is clear that section 3 must be understood in a way which reflects the potentially important consequences of the choice or election which the bill of lading holder is making. The liabilities, particularly when alleged dangerous goods are involved, may be disproportionate to the value of the goods; the liabilities may not be covered by insurance; the endorsee may not be fully aware of what the liabilities are. 
59.	In this case it is common ground that IOB has neither taken nor demanded delivery from the carriers of any of the goods to which the bills of lading related, and that it has made no claim under the contracts of carriage against the carriers in respect of those goods.  Both counsel accepted that section 3 of COGSA did not apply to this case.
60.	Mr Young however argued that Stemcor had contracted with the carriers as agent for IOB.  The L/Cs expressly required IOB to be named as consignees and IOB thus authorised its joinder in such capacity.  IOB was therefore an authorised initial party to the bills of lading and liable as a Merchant to pay port storage charges and container demurrage.   
61.	He cited Borealis (supra) for the proposition that it is possible for a shipper to contract as agent for the consignee – see Lord Hobhouse’s speech at §19:
The parties to that contract are the issuing carrier, usually the shipowner although it may be a charterer, and the shipper or his principal. Where there is a named consignee it may be inferred that the contracting party is the consignee not the shipper: Dawes v. Peck (1799) 8 Durn & E 330 and the other cases cited by Brandon J in The Albazero [1977] AC 774, 786A-B.
62.	He also cited TICC Ltd v. COSCO (UK) Ltd [2001] EWCA Civ 1862; [2002] CLC 346.  There, TICC was the named consignee in the bills of lading.  It argued that it was an original party to the bill of lading contracts as shipper through the agency of the named Hong Kong shippers.  At first instance HH Judge Hallgarten upheld this argument.  On appeal, Rix LJ said this at §17:
“I will assume that it may be possible that TICC is to be regarded as the Hong Kong shippers’ principal and thus as the true original party to the bill of lading contracts. It has to be said, however, that that is an unusual situation. The normal rule is that a party who procures a shipment for the ultimate benefit of a consignee does not thereby contract with the carrier as agent for the consignee. Thus a cif seller is not an agent for his buyer in procuring a contract of carriage. Moreover, it is difficult to think that [the Hong Kong shippers] are not themselves liable as principals on the bill of lading contracts and entitled to enforce rights under them, for, despite the direct contact between TICC and COSCO UK, there is nothing to suggest that [the Hong Kong shippers] have contracted only as agents without personal responsibility: see Perishables Transport Co Ltd v N Spyropoulos (London) Ltd [1964] 2 Ll Rep 379. TICC furthermore is named as the consignee and not as the shipper. I am therefore prepared to assume (I need not decide) that the Hong Kong shippers are principal parties under those contracts and that TICC, even though in other respects it may be their principal, is to be treated for the purpose of such contracts as a consignee and not as a shipper.” 
63.	Here, Mr Young argued, IOB had insisted on being named as consignee and it authorised Stemcor as seller to give instructions for IOB’s name to be inserted in the consignee box in the bills of lading.  It is to be inferred that by doing so, IOB was authorising the contract of carriage to be concluded on its behalf.  
64.	In response Miss Cockerill cited Cooke et al on Voyage Charters (3rd ed.) at §18.77, which states:
“Where goods are consigned on terms that property and risk are to pass upon shipment, and independently of the transfer of the bill of lading, it may sometimes be inferred that the shipper acts as agent for the named consignee.  However, the general rule is that a party who procures shipment for the ultimate benefit of a consignee does not thereby contract with the carrier as agent of the consignee”
65.	In this case, IOB was named as consignee but it was not the buyer of the goods and had no interest in the contract of carriage.  There needed to be something specific which indicated an intention that Stemcor should contract on behalf of IOB.  Here IOB’s only interest was a notional security interest.  There was no basis to infer that IOB was authorising Stemcor to contract on its behalf, or that Stemcor did so.  The terms of the bills of lading purporting to make a consignee liable as Merchant did not assist Stemcor’s argument.  IOB would not even know the terms of the bills.
66.	In reply, Mr Young submitted that the letter of credit was in effect saying “Put our name in the consignee box and if the contract says the consignee is liable, so be it”.  By doing so the effect, albeit inadvertent, was that IOB became a party to the contract 
67.	I accept Miss Cockerill’s submissions.  The L/Cs required in field 46A that the bills of lading be consigned to the order of IOB.  I do not consider that by making this requirement, it can be inferred that IOB was authorising Stemcor to enter into a contract on its behalf in terms of the bills of lading.  If Mr Young’s submission is correct, it would seem to follow that whenever a bank requires in a letter of credit that it is named as consignee in the bill of lading, it must be inferred that it is authorising the shipper to contract on its behalf.  Such a conclusion would run contrary to the regime established by COGSA and open banks up to potentially enormous liabilities.  I would add that in my judgment Stemcor did not even purport to contract on behalf of IOB.  The contracts it made were as shipper and principal in its own right.
68.	It follows that the claims in recoupment and contribution must fail.  In paying the storage costs and the container demurrage, Stemcor was not discharging a liability of IOB.
Subrogation
69.	Mr Young’s case was that Stemcor was entitled to be subrogated to the rights of the carriers to claim the costs from IOB under the bills of lading so as to prevent unjust enrichment.  As he made clear the remedy relied upon was that of equitable and not contractual subrogation which, as Lord Hoffman explained in Banque Finacière de la Cité v. Parc (Battersea) Ltd [1999] 1 AC 221, 231G-H, is “an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived”.
70.	Lord Hoffman summarised the principles governing the availability of the remedy at p. 234 B-D as follows:
“These cases seem to me to show that it is a mistake to regard the availability of subrogation as a remedy to prevent unjust enrichment as turning entirely upon the question of intention, whether common or unilateral. Such an analysis has inevitably to be propped up by presumptions which can verge upon outright fictions, more appropriate to a less developed legal system than we now have. I would venture to suggest that the reason why intention has played so prominent a part in the earlier cases is because of the influence of cases on contractual subrogation. But I think it should be recognised that one is here concerned with a restitutionary remedy and that the appropriate questions are therefore, first, whether the defendant would be enriched at the plaintiff's expense; secondly, whether such enrichment would be unjust; and thirdly, whether there are nevertheless reasons of policy for denying a remedy.”     
Lord Steyn’s analysis was the same, but he split the first question and said at p.227A-B:
“Four questions arise. (1) Has O.O.L. benefited or been enriched? (2) Was the enrichment at the expense of B.F.C.? (3) Was the enrichment unjust? (4) Are there any defences?”

71.	Mr Young submitted that IOB had been enriched at the expense of Stemcor, that the enrichment was unjust and that there were no reasons of policy for denying a remedy.
72.	In response, Miss Cockerill submitted that Stemcor had never explained to what right it claimed to be subrogated.  Further IOB had not been enriched – it never had any obligation to the carriers to pay the storage charges and container demurrage. 
73.	In reply, Mr Young explained that the right to which Stemcor was subrogated was the carriers’ contractual lien over the cargo for their charges.  The value of IOB’s security interest in the goods had increased by the partial discharge of the claims for port storage charges and container demurrage.  It was irrelevant that IOB had never realised that security interest.
74.	In my judgment the subrogation argument fails for the same reason as the other restitution arguments.  IOB has not been enriched by Stemcor’s payments because IOB never became under any obligation to the carriers to pay the charges.  That is a complete answer to the subrogation claim. The proposition that the value of IOB’s security interest had risen is doubtful and at best it amounts to an indirect benefit resulting from Stemcor’s discharge of its obligations to the carriers. But even if that were correct, it cannot create any subrogated right. 
75.	There is a more fundamental reason why the claim fails.  The claim depends on Stemcor being able to establish that, under the settlements achieved with the carriers, Stemcor is to be treated as subrogated to the liens held by the carriers.  Mr Young did not explain how Stemcor’s entitlement to share in the carriers’ liens arose.  These were commercial settlements of claims against Stemcor.  If the parties had intended that Stemcor should be subrogated to the carriers’ lien in part, in my judgment that would have required an express term to that effect, or a necessary implication in the settlement agreements.  A joint lien would inevitably have had significant implications for the carriers’ ability to realise payment of outstanding and future charges not discharged by Stemcor.  It was not explained what duties the carrier would have to Stemcor in pursuing and settling claims for the outstanding charges.  Mr Young relied on Lord Hoffman’s analysis for the proposition that rights of equitable subrogation do not depend on intention, but I consider that the right of subrogation would have to arise under the express or implied terms of the contract with the carriers. A contractual arrangement was made with SAFM containing an express provision allowing on Stemcor to gain some benefit from any subsequent recoveries made.  No similar arrangement was made with the other carriers and I can see no basis on which to imply any such arrangement.
Conclusion
76.	Stemcor’s claims in damages and in restitution against IOB fail.  If Stemcor is to effect any recovery of the port storage charges and container demurrage it has had to pay, that must be from others.
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