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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Far East Chartering Ltd & Anor v Great Eastern Shipping Company Ltd  EWCA Civ 180 (09 March 2012)
Cite as:  EWCA Civ 180
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
His Honour Judge Mackie QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE TOMLINSON
LORD JUSTICE DAVIS
| Far East Chartering Limited (formerly known as Visa Comtrade Asia Limited)
Binani Cement Limited
Second Defendant / Appellant
|- and -
|Great Eastern Shipping Company Limited
||Claimant / Respondent
David Goldstone QC (instructed by Mays Brown) for the Respondents
Hearing date : 13 January 2012
Crown Copyright ©
Lord Justice Tomlinson :
A) Delivery of cargo without production of the original bill of lading;
B) Delivery of cargo at a port other than that stated in the bill of lading; and
C) Delivery of cargo at a port other than that stated in the bill of lading and without production of the original bill of lading.
i) The shipowners never transferred physical possession of the cargo to the receivers and thus did not perform the request to deliver the cargo;
ii) On its proper construction, in the context of the factual matrix, the receivers' letter of indemnity was in any event addressed not to the charterers but to the shipowners themselves. That precluded any claim under the 1999 Act because it was not open to the charterers to accept the offer made in the letter of indemnity. The judge accepted that in such circumstances the shipowners would not themselves be able to rely upon a direct rather than a derivative claim against the receivers, notwithstanding the letter of indemnity was on this hypothesis addressed to them, because it was common ground that the shipowners did not know of the existence of the receivers' letter of indemnity until months after the discharge of the goods (and delivery if that had been effected) had taken place. An offeree cannot accept an offer of which it is ignorant.
iii) When the charterers asked the receivers to issue the letter of indemnity the charterers knew, although the receivers did not, that the shipper was withholding the original bills of lading as security for payment for the cargo. The charterers, a sister company of the buyers withholding payment from the shippers, therefore intended the letter of indemnity to facilitate delivery not only without production of the original bills of lading but also contrary to the wishes of the shipper and in circumvention of the rights which the shipper was asserting as holder of the original bills of lading and owner of the cargo. Either as a matter of public policy or on the true construction of the letter of indemnity the charterers would not have been entitled to enforce the indemnity against the receivers and, under the 1999 Act, the shipowners could be in no better position than the charterers.
"In case the vessel reaches discharging port prior to Buyer receiving original documents, Seller will make prior arrangement with ship owners to allow unloading against Buyer's Letter of Indemnity."
"IN CASE OF NON AVAILABILITY OF ORIGINAL B/LS AT DISCHARGE PORT, OWNERS TO ALLOW DISCHARGE OF CARGO AGAINST CHARTERERS' LOI IN OWNERS' PNI CLUB FORMAT. FAX COPY OF LOI TO BE ACCEPTABLE. COPY OF BS/L TO BE ATTACHED WITH THE LOI."
The fixture recap further provided by Clause 18:-
"OTHERWISE AS PER M.V JAG RAVI/VISA CP DTD 14TH FEBRUARY, 2008 WITH LOGICAL CHANGES, ALTERATIONS AND AMENDMENTS AS PER MAINTERMS AGREED.
Clause 67 of the earlier charterparty had provided:-
"In case the original Bills of Lading not be available upon vessel's arrival discharge port, Owners/Master agree to discharging/release cargo against presentation of Charterers Letter of Indemnity in Owners P&I Club wording signed by Charterers only. Fax copy of Letter of Indemnity to be acceptable. Copy of bill of lading to be attached with the Letter of Indemnity."
"Enclosed please find format of LOI required from receivers for discharge of cargo without presentation of original Bills of Lading. Please send us the LOI duly executed to enable us to take owners' confirmation on the LOI."
Attached was a draft LOI and photocopies of the front of the five bills of lading.
""Date: 6th October 2008
To: The Owners / Disponent Owners / Charterers of the MV JAG RAVI
Ship: MV JAG RAVI
Voyage: TABONEO ANCHORAGE, SOUTH KALIMANTAN, INDONESIA to NAVLAKHI SEAPORT, INDIA
Cargo: INDONESIAN STEAM (NON-COKING) COAL IN BULK
Bill of lading:
S.No. B/L No. Date Place of issue Quantity 1. 01A/BJM-IND/08 30TH SEPTEMBER 2008 BANJARMASIN 10,000 MT 2. 01B/BJM-IND/08 30TH SEPTEMBER 2008 BANJARMASIN 10,000 MT 3. 01C/BJM-IND/08 30TH SEPTEMBER 2008 BANJARMASIN 10,000 MT 4. 01D/BJM-IND/08 30TH SEPTEMBER 2008 BANJARMASIN 10,000 MT 5. 01E/BJM-IND/08 30TH SEPTEMBER 2008 BANJARMASIN 4,104 MT TOTAL: 44,104 MT
The above cargo was shipped on the above ship by;
P.T.HARKAT UTAMA MULIA MANDIRI
JL. AHMAD YANI KM.37TH, SUNGAI PERING,
MARTAPURA – BANJAR
SOUTH KALIMANTAN, INDONESIA
TEL: +62 511 4773577 FAX: +62 511 4773577
and consigned TO ORDER for delivery at the port of NAVLAKHI SEAPORT, INDIA but the bill of lading has not arrived and we, BINANI CEMENT LIMITED, hereby request you to deliver the said cargo to BINANI CEMENT LIMITED at NAVLAKHI SEAPORT, INDIA without production of the original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.
2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
4. If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.
5. As soon as all original bills of lading for the above cargo shall have come into our possession to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice England.
For and on behalf of Binani Cement Limited"
i) It was addressed to:-The Great Eastern Shipping Co LtdMumbai IndiaThe Owners of the MV JAG RAVI
ii) After details of the cargo and by whom it had been shipped, the text recorded a request by "we, VISA COMTRADE (ASIA) LIMITED" that "you . . . deliver the said cargo to BINANI CEMENT LIMTED at NAVLAKHI SEAPORT, INDIA without production of the original bill of lading."
"We hv recd chrtrs loi for dely of cargo without obl. You are authorised to disch cargo on arrival navlakhi without obl and deliver cargo to binani cement limited."
"SUB: M.V. JAG RAVI AT NAVLAKHI PORT – DELIVERY ORDER
With reference to the above, we request your goodself to kindly deliver the below mentioned cargo being discharged from the subject vessel at Navlakhi Anch to the Receivers, M/s. Binani Cement Ltd. through their handling agents M/s. United Shippers Ltd, Jamnagar. The details are as under:
MARKS & NOS DESCRIPTION QUANTITY LOADPORT
Nil in Bulk Indonesian Steam (Non-Coking) Coal 44104 MT Taboneo (Indonesia)
Please note that this Delivery Order is issued subject to terms, conditions & exceptions of the Relevant Charter Party
For Compass Shipping & Trading Pvt. Ltd
"1. – (1) Subject to the provisions of this Act, a person who is not a party to a contract (a "third party") may in his own right enforce a term of the contract if –
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.
(3) The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into.
3. –(1) Subsections (2) to (5) apply where, in reliance on section 1, proceedings for the enforcement of a term of a contract are brought by a third party.
(2) The promisor shall have available to him by way of defence or set-off any matter that-
(a) arises from or in connection with the contract and is relevant to the term, and
(b) would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.
(3) The promisor shall also have available to him by way of defence or set-off any matter if-
(a) an express term of the contract provides for it to be available to him in proceedings brought by the third party, and
(b) it would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.
(4) The promisor shall also have available to him-
(a) by way of defence or set-off any matter, and
(b) by way of counterclaim any matter not arising from the contract,
that would have been available to him by way of defence or set-off or, as the case may be, by way of counterclaim against the third party if the third party had been a party to the contract.
(5) Subsections (2) and (4) are subject to any express term of the contract as to the matters that are not to be available to the promisor by way of defence, set-off or counterclaim.
(6) Where in any proceedings brought against him a third party seeks in reliance on section 1 to enforce a term of a contract (including, in particular, a term purporting to exclude or limit liability), he may not do so if he could not have done so (whether by reason of any particular circumstances relating to him or otherwise) had he been a party to the contract."
Was Binani's LOI of 6 October 2008 addressed to the charterers?
"I would clarify that the LOI was not sent to GE (the owners) at any stage. As was agreed with Visa Asia, we would issue the LOI to them and they, in turn, would issue their own letter of indemnity to GE, as is the normal practice."
However the identity of the addressee of the document was, submitted Mr Gee, a matter of construction on which the subjective understanding of Mr Venkataraman was of no relevance. I agree with Mr Gee on that point. However the evidence was admissible as showing that it is in fact normal practice for there to be a chain of letters of indemnity, so if on its true construction this document was addressed to Visa that would not be an unexpected or anomalous outcome.
Did the owners deliver the cargo to Binani?
Lord Justice Davis :
Lord Justice Longmore :