Songa Chemicals AS v Navig8 Chemicals Pool Ltd (Rev 1), Court of Appeal - Commercial Court, March 02, 2018, [2018] EWHC 397 (Comm)

Resolution Date:March 02, 2018
Issuing Organization:Commercial Court
Actores:Songa Chemicals AS v Navig8 Chemicals Pool Ltd (Rev 1)
 
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Neutral Citation Number: [2018] EWHC 397 (Comm)

Case Nos: CL-2017-000627 & CL-2017-000637

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Rolls Building, Fetter Lane, London EC4A 1NL

Date: 2 March 2018

Before :

MR JUSTICE ANDREW BAKER

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Alistair Schaff QC & Jocelin Gale (instructed by Clyde & Co LLP) for Songa Chemicals AS

Oliver Caplin (instructed by Ince & Co LLP) for Navig8 Chemicals Pool Inc

Timothy Young QC & Luke Pearce (instructed by Reed Smith LLP) for Glencore Agriculture BV

Hearing dates: 13, 14 February 2018

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Mr Justice Andrew Baker :

Introduction

  1. This judgment is the third in what will be a trilogy of judgments concerning a key feature of the International P&I Clubs' standard form for letters of indemnity (`LOIs') for delivering cargo without production of original bills of lading, following the judgments of Teare J in The Bremen Max [2009] 1 Lloyd's Rep 81 and The Zagora [2017] 1 Lloyd's Rep 194, all against the backdrop of the decisions of Cooke J and the Court of Appeal in The Laemthong Glory [2005] 1 Lloyd's Rep 632, 688. For this case concerns, as did The Bremen Max and The Zagora, whether a delivery made against such an LOI was to a party delivery to whom was requested by the LOI.

  2. LOIs on the standard form are addressed to the owners of the carrying ship and, after opening with brief details of the ship, the voyage, the cargo and the bills of lading issued, make a request that the owners deliver the cargo ``to [R] at [P] without production of the original bill of lading''. `R' is the receiver delivery to whom without production of the bill of lading is requested; `P' is the requested place of delivery. The blank standard form provides that `R' should be ``X [name of the specific party] or ... such party as you believe to be or to represent X or to be acting on behalf of X'' and says for `P', ``[insert place where delivery is to be made]''.

  3. The Bremen Max is authority for the proposition, accepted before me, that delivery must have been made to `R' as defined in the LOI delivery request, as a pre-condition to any possible liability under the substantive indemnification provisions of the LOI. When that case was decided, the standard form provided for `R' to be defined simply as the name of the intended receiver. The wording by which delivery to a party believed to be, to represent, or to be acting on behalf of the named intended receiver is now sufficient was introduced to the standard form in response to that decision and was considered in The Zagora.

  4. In this case, the named intended receiver under the relevant LOIs was Aavanti Industries Pte Ltd (`Aavanti') and it is common ground that the carrying ship, the m.t. Songa Winds, delivered the relevant cargo to Ruchi Soya Industries Ltd (`Ruchi').

  5. If in taking delivery from the ship Ruchi in fact represented or was acting on behalf of Aavanti, the Bremen Max pre-condition was fulfilled without reference to the new wording of belief. Delivery to Ruchi as representative of Aavanti was delivery ``to Aavanti''. Likewise delivery to Ruchi acting on behalf of Aavanti. Whilst that was not formally conceded before me, I regard it as unarguably correct.

  6. The main questions for determination by this judgment, if they can be determined now, are as follows:

    i) Was Ruchi, in taking delivery from the ship, representing or acting on behalf of Aavanti?

    ii) If not, did the shipowner believe that in taking delivery from the ship, Ruchi represented or acted on behalf of Aavanti?

    iii) If not, was the relevant delivery from the ship deemed to be delivery to the party delivery to whom had been requested, by operation of clause 4 of the relevant LOIs?

  7. For the reasons set out below, I find myself answering those main questions as follows:

    i) Yes.

    ii) I cannot say on the evidence as it stands; the question is not suited to final determination at this stage.

    iii) No.

  8. A further main question arises specific to claim no. 637 (I explain the procedural position below, when setting out the facts), namely whether the claim is defeated by clause 38 of the voyage charter between the parties. For the reasons set out below, my answer to this further main question is `No'.

  9. I consider at the end of this judgment the appropriate relief to be granted at this stage in the light of those answers. That gives rise to a number of further questions as to the meaning and effect of the relevant LOIs.

    The Basic Facts

  10. Songa Winds is an oil and chemical tanker owned by Songa Chemical AS (`Songa'), the claimant in claim no. 627. Pursuant to a pool agreement dated 27 November 2013, she was time chartered to Navig8 Chemicals Pool Inc (`Navig8'), the defendant in claim no. 627 and the claimant in claim no. 637, on time charter terms based on the Shelltime 4 form. On 2 February 2016, Navig8 fixed her on voyage terms based on the Vegoilvoy form to Glencore Agriculture BV, at the time called Glencore Grain BV, (`Glencore'), the defendant in claim no. 637, to carry a minimum of 19,000 m.t. of crude sunflower seed oil from Ilychevsk, Ukraine, for delivery at safe ports in the New Mangalore/Kakinada range in Glencore's option.

  11. Pursuant to both charters, Interocean Shipping India Pvt Ltd (`Interocean') was appointed by Navig8 to act as agent at the discharge ports in India. The precise role played by Interocean arises for consideration under some of the arguments now before the court.

  12. The vessel was chartered by Glencore, in part, so it could fulfil a contract concluded in late January 2016 to sell 6,000 m.t. of crude edible grade sunflower seed oil in bulk to Ruchi Agritrading (Pte) Ltd (`Agritrading'), a subsidiary or affiliate of Ruchi. The delivery term was C&F pumped out New Mangalore or Kakinada. The sale contract provided for property to remain with Glencore until payment.

  13. The vessel loaded under the voyage charter at Ilychevsk in March 2016 and bills of lading consigned to order were issued dated 13 March 2016 naming Ruchi as the notify party.

  14. After shipment, on or about 21 March 2016, Glencore's contract of sale with Agritrading was replaced by a contract to sell 6,000 m.t. to Aavanti on terms materially back-to-back (save as to price) to those of two contracts dated 18 February 2016 by which Aavanti had contracted to sell (in aggregate) 6,000 m.t. to Ruchi.

  15. In the event, c.4,000 m.t. was delivered to Ruchi from the vessel at New Mangalore and c.2,000 m.t. was delivered to Ruchi from the vessel at Kakinada. The exact quantities delivered are in evidence but do not matter for my purposes. Neither delivery was made against presentation of any original bill of lading.

  16. Delivery otherwise than against bills of lading was requested by and on the terms of LOIs on the International Clubs' standard form, as follows:

    i) By two LOIs addressed to Glencore and dated 22 March 2016, Aavanti requested that delivery without production of bills of lading be made to Ruchi (or to such party as Glencore believed to be, to represent, or to be acting on behalf of Ruchi) (`the Aavanti LOIs'). One of these LOIs requested delivery of 4,000 m.t. ``at the port of MANGALORE, INDIA'', the other requested delivery of 2,000 m.t. ``at KAKINADA, INDIA''.

    ii) By LOIs addressed to Navig8 and dated 6 April and 13 April 2016, for 4,000 m.t. and 2,000 m.t. respectively, Glencore requested that delivery without production of bills of lading be made to Aavanti (or to such party as Navig8 believed to be, to represent, or to be acting on behalf of Aavanti) (`the Glencore LOIs'). Both of these LOIs requested that delivery be ``at New Mangalore or Kakinada, India''.

    iii) By LOIs deemed to have been issued by Navig8 addressed to Songa, otherwise on terms identical to the Glencore LOIs, Navig8 requested that delivery without production of bills of lading be made to Aavanti (or to such party as Songa believed to be, to represent, or to be acting on behalf of Aavanti) (`the Navig8 LOIs'). The deemed issue of the Navig8 LOIs, by operation of clause 87 of the time charter, is common ground between Songa and Navig8.

  17. By paragraphs 1 and 2 of each pair of LOIs, the following substantive indemnification obligations were accepted if delivery was made as requested:

  18. 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.

  19. 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.

  20. In relation to discharge at New Mangalore, clause 87 of the time charter was invoked, so that the first Navig8 LOI was deemed to be issued, by an email from Navig8 to the master of the vessel, copied to Interocean, on 6 April 2016 attaching a copy of the first Glencore LOI of that date and stating as follows:

    Please be advised the Charterers have presented the LOI as attached and same is acceptable to us, basis the contract we have with these charterers.

    Navig8 hereby invoke the Owners P and I wordings to discharge the cargo without presentation of the OBL's at the Discharge port as Per Clause 87 of the governing TCP. Discharge to be carried out in line with instructions received by agents/terminal.

    The Receiver/ Quantity details as per the attached voyage charterers LOI.

    ...

    Kindly Confirm all in order and master has been authorized accordingly to discharge to the named receiver as per the LOI.

    RIC: Agents / Please note the LOI invocation and have the cargo discharged accordingly to the rightful receivers.

    ...

  21. A materially...

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