CL-2024-000292 - [2025] EWHC 1990 (Comm)

BACKGROUND

The Tribunal set out an account of the facts at §§ 1-12 of the Award, and a fuller account at §§ 3-44 of the separate document containing the Reasons for the Award (“Reasons”). I summarise below the facts relevant to the appeal.

Grand Changjiang Shipping Ltd (“Grand Changjiang”) was the registered owner of the Vessel. Owners held the Vessel under a bareboat charter at all relevant times. Fuk Hing Steamship Company Ltd (“FHS”), a member of the same corporate group as Owners, managed the Vessel as Owners’ agents.

On 1 April 2014, FHS concluded a transaction for Owners to time charter the Vessel to Charterers for a trip (the “Charterparty”) carrying lawful and harmless cargoes via the East Coast of South America to the Far East. The Charterparty was agreed by way of a fixture recap email dated 1 April 2014 incorporating a previous charterparty for M/V “Grand Marcia”.

On 3 April 2014, Charterers sub-chartered the Vessel to China National Chartering Co Ltd by way of voyage charter for the carriage of soyabeans in bulk from Uruguay and Argentina to China.

On 1 April 2014, Charterers’ agents sent voyage instructions to the Vessel’s master. On 1 May 2014, the Vessel arrived and tendered Notice of Readiness at Montevideo. On 27 May 2014, the loading of the cargo was completed and a clean bill of lading (the “Montevideo Bill”) was issued evidencing the shipment of Uruguayan soyabeans in bulk (the “Montevideo Cargo”). The Montevideo Bill was on the CONGENBILL 2007 form, incorporating the law and arbitration clause in the Charterparty by condition (1) of the Conditions of Carriage on the reverse of the bill. The CONGENBILL 2007 form incorporates the Hague or Hague-Visby Rules, Article IV(2)(m) of which states that “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from - … (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods…”.

On 28 May 2014, the Vessel arrived at Bahia Blanca, Argentina, to load a further cargo. Loading was completed on 5 June 2014 and a clean bill of lading (the “Bahia Blanca Bill”) was issued evidencing the shipment of Argentine soyabeans in bulk (the “Bahia Blanca Cargo”).

The two cargoes were inspected during the Vessel’s voyage. On 11 July 2014 the Montevideo Cargo was found to show signs of discolouration and/or mould and/or self-heating.

On 20 July 2014 the Vessel berthed at Zhoushan, China to undertake part discharge. Her holds were inspected by CIQ, the Chinese inspection and quarantine authorities, and surveyors acting for interested parties (the “Cargo Interests”). The Montevideo Cargo was found to be mildewed, discoloured, caked and blackened.

On 25 July 2014, the Vessel arrived at Jiangyin, China and discharged the balance of her cargo. Discharge was completed on 12 August 2014. The Bahia Blanca Cargo was in good order and condition on discharge.

On 2 September 2014, Cargo Interests and their subrogated insurers began proceedings against Grand Chiangjiang and Owners in Wuhan Maritime Court (the “PRC Proceedings”). The PRC Proceedings were served on 13 November 2014.

The Swedish Club, with whom Owners had entered the Vessel for P&I insurance, decided to defend the claim on its merits in China, rather than to challenge jurisdiction or take steps in England.

On 31 August 2018, the PRC Proceedings resulted in the PRC Judgment in favour of Cargo Interests, for a sum roughly 20% less than that originally claimed. The court was not persuaded that the damage to the Montevideo Cargo was due to inherent vice. Owners were held liable on the basis of their failure to take adequate care.

It was common ground, both before the Tribunal and on appeal, that the damage to the Montevideo Cargo was in fact due to inherent vice.

Successive appeals to the Hubei Higher People’s Court and the People’s Supreme Court were dismissed on 12 October 2019 and 28 June 2021 respectively.

The Swedish Club paid the judgment sums to the Cargo Interests and their subrogated insurers.

The Charterparty incorporated an amended NYPE 1946 form (the “NYPE Form”) with rider clauses.

Clause 6 of the Recap provided that the Charterparty was for carriage “with harmless lawful cargoes”.

Clause 8 of the NYPE Form provided that “… The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency…”.

Clause 43 of the Charterparty provided that “[l]iabilities for cargo claim shall be borne by the Owners and the Charterers in accordance with NYPE Inter-Club Agreement 1996 or latest updated version” (the “ICA”). Clause 8(d) of the ICA provided as follows:-

“(4)

Apportionment under this Agreement shall only be applied to Cargo Claims where:

…

(c)

the claim has been properly settled or compromised or paid.

…

(8)

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

save where the Owner proves that the unseaworthiness was caused by the loading, stowage, lashing, discharge or other handling of the cargo, in which case the claim shall be apportioned under sub-clause (b).

(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 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

(c)

Subject to (a) and (b) above, claims for shortage or overcarriage:

50% Charterers 50% Owners

unless there is clear and irrefutable evidence that the claim arose out of pilferage or act or neglect by one or the other (including their servants or sub-contractors) in which case that party shall then bear 100% of the claim.

(d)

All other cargo claims whatsoever (including claims for delay to cargo):

50% Charterers 50% Owners

unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of the one or the other (including their servants or sub-contractors) in which case that party shall then bear 100% of the claim.”

Clause 59 stated:-

“Clause 59 - Protective Clauses :

Clause Paramount, U.S. Clause Paramount, Canadian Clause Paramount, wherever applicable, shall be deemed to form part of this Charter Party and shall be contained in Bill(s) of Lading issued hereunder. Conwartime 2004 War Risk Clause, Both-to-Blame Collision Clause and New Jason Clause, also form part of this Charter Party.”

The Clause Paramount stated:-

“The Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier or any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this Bill of Lading repugnant to said applicable Act to any extent, such term shall be void to that extent, but no further.”

Paragraph 4(2)(m) of the US Carriage of Goods by Sea Act 1936 (“USCOGSA”) provides that “[n]either the carrier nor the ship shall be responsible for … loss or damage arising from inherent defect, quality, or vice of the goods”.

Clause 12 of the Recap identified destinations to which the Vessel could not be ordered to trade. The PRC was not a prohibited destination.

Clause 82 of the Charterparty set out a list of cargo exclusions, and a list of cargoes where Owners enjoyed additional protections. The Montevideo and Bahia Blanca Cargoes did not engage those exclusions or protections.