SNAPSHOTS – Three Important Shipping Cases in 2021
When is a Bill of Lading Not a Bill of Lading?
The Luna  SGCA 84
R sold bunkers on FOB terms to subsidiaries of OW Bunker (the “Buyers”). The Buyers nominated various bunker barges (of which A were the demise charterers/owners) for loading of bunkers at Vopak Terminal on various dates in October 2014.
After the loading of the bunker barges, Vopak Terminals generated, inter alia, a document issued in triplicate titled “Bill of lading” (the “Vopak BLs”) which were kept by R until payment was received from the Buyers. In the meantime, the bunkers were delivered to various vessels without the production of any BLs.
The Buyers defaulted on payment and R as holders of the Vopak BLs demanded delivery of the bunkers from A. Various bunker barges owned or demise chartered by A were subsequently arrested by R.
Did the Vopak BLs function as contracts of carriage and/or as documents of title?
The Court held that the parties never intended the Vopak BLs to have contractual force and to operate as a document of title. All parties conducted themselves on the basis that the Buyers could direct the bunker barges to deliver bunkers to various ocean-going vessels immediately after loading, without any involvement of R and without any presentation of the Vopak BLs, which, before the 30 days credit period, were still in R’s possession.
It is not the case that any document titled “bill of lading” will have the same legal effect or function as a typical bill of lading (i.e. as a memorandum of the terms of contract of carriage and as a document of title).
Can a defective passage plan render a vessel unseaworthy?
Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra)  UKHL 51
The shipowner of a vessel grounded off the coast of Xiamen on a shoal tried to claim general average while the cargo interest alleged that the cause was unseaworthiness of the vessel caused by a defective passage plan which did not indicate the full extent of the shoal on which the vessel grounded and had not been updated with warnings regarding uncharted depths outside of the buoyed slipway.
Whether the defective passage plan rendered the vessel unseaworthy under Article III, Rule 1 of the Hague Rules.
The fact that the passage plan was defective at the beginning of the voyage rendered the vessel unseaworthy within the meaning of article IIII, rule 1 of the Hague Rules. This was a case in which the negligent navigational act caused the unseaworthiness and as such, the Article IV, rule 2a exception was no defence to a claim for loss or damage caused by unseaworthiness
The concept of seaworthiness and due diligence can be viewed broadly and may be affected by seemingly ancillary or exempted factors.
Is a shipowner entitled to an indemnity from the charterer where it incurs liability as a result of misdescription in a draft bill of lading prepared by or on behalf of the charterer?
Noble Chartering Inc v Priminds Shipping Hong Kong Co Ltd (The Tai Prize)  EWCA Civ 87
A bill of lading was executed on behalf of the master, stating that the cargo was shipped in apparent good order and condition. It was later found that some of the cargo was damaged and the Chinese Courts subsequently ordered the head owner to pay over US$1 million to the cargo receivers.
The head owners then claimed a contribution from the Owners who paid up and then sought an indemnity from the Charterers at arbitration.
Where an owner incurs liability as a result of a misdescription of the apparent condition of the cargo in a draft bill of lading presented to the master for signature by or on behalf of the charterer, and the charterer knows or should know of the misdescription, is the owner entitled to an indemnity from the charterer if the master did not have reasonable means of discovering that the description was inaccurate?
The draft bill of lading stating apparent good order and condition did not amount to a representation or warranty by the Charterers as to the apparent condition of the cargo observable prior to loading. It is no more than a request to the master to satisfy himself that the bill in these terms can be properly signed and does not give rise to any right of indemnity.
Owners should consider including express indemnity terms in charterparties and/or requiring letters of indemnity when issuing clean bills of lading in situations where the condition of the cargo is suspect or unknown to them.
For more information please contact:
|K. Murali Pany
JTJB Singapore Office
T: 6224 3645 / 9687 1165