BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
B e f o r e :
(sitting as a Judge of the High Court)
| AGILE HOLDINGS CORPORATION
- and -
|ESSAR SHIPPING LTD
Charles Priday and Sushma Ananda (instructed by Fishers, Solicitors) for the Defendant
Hearing date: 12 and 13 March 2018
Crown Copyright ©
RELEVANT CONTRACTUAL PROVISIONS
"… Charterers are to load, stow, and trim, tally and discharge the cargo at their expense under the supervision of the Captain…"
"Cargo claims as between the Owners and Charterers shall be settled in accordance with the Inter- Club New York Produce Exchange Agreement of February 1970 as amended September 1996 as attached, or any subsequent amendments."
I shall refer to that agreement as "the ICA".
"Cargo claims shall be apportioned as follows:…
(a) Claims in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel: 100% Owners…
(b) Claims in fact arising out of the loading, stowage, lashing, discharge, storage or other handling of cargo: 100% Charterers unless  the words "and responsibility" are added in clause 8 [of the NYPE form] or there is a similar amendment making the Master responsible for cargo handling in which case: 50% Charterers 50% Owners save  where the Charterer proves that the failure properly to load, stow, lash, discharge or handle the cargo was caused by the unseaworthiness of the vessel in which case: 100% Owners [my addition of the numbered square brackets to indicate the two provisos]
(c) Subject to (a) and (b) above, claims for shortage or overcarriage: 50% Charterers 50% Owners…
(d) All of the cargo claims whatsoever (including claims for delay to cargo): 50% Charterers/50% Owners…"
The Stevedores although appointed and paid by Charterers/Shippers/Receivers and or their Agents, to remain under the direction of the Master who will be responsible for proper stowage and seaworthiness and safety of the vessel…"
THE QUESTION FOR THE APPEAL
(1) the failure to load or stow the cargo was caused by the unseaworthiness of the vessel so that Agile was 100% liable under the second proviso, or
(2) at the very least, the first proviso to Clause (8) (b) applied. This was because Clause 49 was a "similar amendment making the Master responsible for cargo handling" in which case liability was 50/50.
The salient parts of the Award
"101. The Charterers accepted (quite correctly in our view) that loading a cargo of hot DRI would constitute improper loading… As we have also explained above, the failure to halt the belt promptly (which might have led to burning cargo entering the hold) constitutes a further failure properly to load which must, in our view, be for the account of the Charterers.
102. In our view, the claim therefore falls within Clause (8) (b). Liability is 100% for the Charterers unless one or other of the provisos apply.
103. In this regard, the Charterers argued first of all that Clause 49 constituted a "similar amendment" to the addition of "and responsibility" and therefore, that at worst there should be a 50/50 split …"
104. The relevant part of clause 49 provides that '...the Master...will be responsible for proper stowage and seaworthiness and safety of the vessel.'. Having given careful consideration to this clause, we cannot see that its purpose is anything other than to make it clear that the Master is responsible for (part at least of) the loading process. We accept Ms Master's point [for Agile] that the first part of the clause refers only to 'stowage' (as opposed to loading etc) but a similar argument seems to have found little favour with the Court in The Sea Miror  2 LI Rep 395. Moreover, it ignores the remainder of clause 49 which expressly refers to the Master being responsible for the seaworthiness and safety of the ship. Whilst it might be argued that this does no more than reinforce the Master's existing rights, it is, in our view, impossible to ignore the use of the word 'responsible'. In the context of clause 8, the importance of the addition of the words 'and responsibility' is well-known and we can attribute no less significance to it in clause 49.
105. Accordingly we find that the first proviso to Clause (8) (b) is engaged with the result that liability should be split 50/50.
106. For the sake of clarity, our findings in relation to unseaworthiness [where the tribunal rejected Essar's clause (8) (a) claim] mean that the second proviso to Clause (8) (b) does not come into play.
A PRELIMINARY POINT
"The question is of one of law as to the construction and application of clause 8(b) of the Inter-Club Agreement and clause 49 of the charterparty. That question will substantially affect the rights of the parties because, as the tribunal found, the prospect of the cargo claim being pursued to a judgment is not fanciful, and the question will determine the Claimant's rights of recovery of 50% of such liability from the Defendant in that eventuality. Accordingly the question affects the rights of the Claimant, and the effect is substantial because the potential liability is a real and substantial one. That question is one which the tribunal was asked to determine: it was articulated at paragraphs 65 and 103 of the award, and recognised by the tribunal as being in issue by being addressed in the immediately following paragraph, paragraph 104, whose reasoning is challenged in the appeal and the argument sought to be advanced on the appeal was raised by Ms Masters QC in this context, as set out-in the Claimant's reply skeleton. The question is one of general public importance as is conceded. The decision of the tribunal on that question is open to serious doubt for the reasons set out in the Claimant's skeletons. Section 70(2) has no application: the Claimant is not obliged to have sought further reasons. It is just and proper in all the circumstances for the Court to determine the question."
"At the outset, I should dispose of one preliminary matter. Mr Brenton, if I understood his submission correctly, suggested that because leave to appeal had been given under section 69 of the Arbitration Act 1996, the court hearing the appeal was bound to accept that question of law had arisen for decision. With great respect, that is not right. The court hearing the appeal cannot of course reopen the grant of leave and leave cannot properly have been granted unless the judge seised of that issue has concluded (amongst other things) that a question of law did arise out of the award under consideration. But the court hearing the appeal is in no other way bound by the decision of the judge granting leave. On hearing the appeal, the court is not restricted as to its conclusions; so, it may conclude that in reality there is no question or error of law at all. Nor does any such conclusion involve implicit criticism of the judge who granted leave; the task of the judge considering the grant of leave is different from the task of the judge hearing the appeal."
(1) It is impossible to see how the issues about public importance, affecting the rights of the parties and justice and convenience can ever be raised on the appeal once leave has been granted;
(2) The Law Question and the Determination Question are in a different category but in my view the appeal court should at the very least give considerable weight to the decision by the Judge granting permission on those points;
(3) That weight increases where (a) the decision was made not merely on paper but after an oral hearing and/or (b) the materials before the Judge granting permission were the same or substantially the same as those before the appeal court so that the appeal court is in effect being asked simply to second-guess the original decision. If both of those factors are present, then very considerable weight should be given to the original decision;
(4) Because, analytically, the Law Question might more genuinely arise out of a consideration on appeal of the tribunal's reasoning and decision, there might be somewhat more leeway to reconsider it on appeal than with the Determination Question.
"MS MASTERS: But in my submission it's not — in any view it's not what the word is saying. On any view, if transfers anything at all it can only transfer responsibility for proper stowage and we are not talking about stowage here, we are talking about loading
THE CHAIRMAN: That's something I was going to ask because that was one of the - clause 8 refers to a number of operations: loading, stowing, trimming, all rest of it. 49 refers simply to stowage…
THE CHAIRMAN: But in terms of the operations, does that tell us something about the scope of that clause in your submission.
MS MASTERS: In my submission, yes, it does. Because ordinarily — the problem — if and to the extent- standing back, my primary submission is that it's not clear enough to transfer anything at all.
THE CHAIRMAN: Okay.
MS MASTERS: And it's to do with stevedore damage. If it does transfer anything, what it's transferring is responsibility in the sort of cases where the stevedores are likely to be involved and that's when what's stowage rather than the physical act of loading of the cargo. This is not a stowage case and therefore we would say that if it transfers anything at all, it makes sense just to transfer responsibility for proper stowage and not for-
THE CHAIRMAN: But on that analysis if we were to find for Mr Priday that the - he said in opening I think it was akin to an amendment clause 8. Now, if that's right, I'm not saying it is or it isn't, we would then fall into the proviso to 8(b):
"Unless the words 'and responsibility' are added to clause 8 or similar amendment [in which case it's 50/50] save where charterers proved failure to load and was caused by the unseaworthiness of the vessel."
MS MASTERS: Well it depends then, in my submission what the meaning of "cargo handling" is. And cargo handling must be an amendment - it has to be - the words "responsibility" or [are] added or there's a similar amendment making the Master responsible for cargo handling.
Now cargo handling is a whole series of different events. So unless the words - the material amendment affects all of them, a fortiori, the proviso can't apply. So putting matters another way, even if is 49 is a material amendment for the purposes of stowage, it doesn't follow that it's a material amendment for loading –
THE CHAIRMAN: All purposes.
MS MASTERS: All purposes under clause 8."
The Meaning of "similar amendment making the Master responsible for cargo handling"
(1) it reads a great deal into Clause (8) (b) itself when on Agile's interpretation, it can operate perfectly well; it is not as if a solution is needed because "something has gone wrong with the drafting";
(2) it will require a detailed analysis of which particular cargo handling functions are in issue so as to compare them with the handling functions the subject of the "similar amendment"; while this can be done, although the parties may be in serious dispute about it on the facts of the case, it does not seem to me to be consistent with the simple approach of the ICA;
(3) it is true that there has to be a causal enquiry (emphasised by the use of the words "in fact") before deciding whether Clause (8) (b) is engaged at all but (a) this is in very broad terms and effectively just requires a finding that the claim arises out of cargo mishandling as opposed to, for example, unseaworthiness, navigation error, delay or short delivery and (b) the mere fact that there is a causal enquiry at this stage does not dictate that a further such enquiry is necessary when deciding whether there has been a "similar amendment";
(4) equally the fact that the second proviso requires an evidential assessment before it operates says nothing about the interpretation of the first proviso, which on its face is about terms not facts.
"(b) the cargo responsibility clauses in the charterparty have not been materially amended. A material amendment is one which makes the liability, as between owners and charterers, for cargo claims clear. In particular, it is agreed solely for the purposes of this Agreement
(i) that the addition of the words "and responsibility" in Clause 8… or any similar amendment of the charterparty making the Master responsible for cargo handling, is not a material amendment.."
"20.68 Clause 4(b) is similar to Clauses 1 (ii) (a) and (b) of the 1984 Agreement. It makes it a requirement for the applicability of the Agreement that the cargo responsibility clauses in the time charter have not been materially amended. A material amendment is defined as "one which makes the liability, as between Owners and Charterers, for Cargo Claims clear", although by Clause 4(b)(i) the common amendment of adding "and responsibility" to Clause 8….. is not for these purposes a material amendment. Clause 4(b)(i) goes on to provide that "any similar amendment of the charterparty" that is, similar to adding 'and responsibility making the Master responsible for cargo handling" is not a material amendment dis-applying the Agreement. That provision did not appear in the 1984 Agreement. ;There was a marked reluctance to regard amendments other than adding "and responsibility" as having equivalent effect, because the[ir] effect was to preclude any apportionment under the 1984 Agreement, rather than to apply the special apportionment regime for "and responsibility" charters. For example, all of these were held not to have made liability for cargo claims clear  "... charterers are to load, stow, trim and discharge at their risk and expense but always understood these operations remain under the supervision and direction and responsibility of the Captain" (London Arbitration 17/84 (LMLN 128));  "... charterers are to load, stow, trim and discharge the cargo at their expense but such stowage shall be directed by and under the control of the Master..." (The Trade Yonder, SMA No. 2435);  "... charterers are to load, stow and trim the cargo at their expense under the supervision and direction of the captain" (The Labrador  2 Lloyd's Rep. 387). In that last example, the same result might be reached now, under the 1996 Agreement. But it is suggested that the first two examples would be regarded as amendments similar to adding "and responsibility", so that under Clause 4(b)(i) of the 1996 Agreement, the Agreement would still apply, but apportionment would be under the "and responsibility" regime of Clause (8) (b)."
The Nature of clause 49
"Cargo shall be loaded, spout trimmed and/or to stowed at the expenses and risk of Shippers/Charterers… Stowage shall be under Masters direction and responsibility."
The Arbitrators' Decision
A FURTHER POINT