Quarterly Case Update September 2017 59 Mansell Street, London, E1 8AN, Tel: +44 (0) 207 855 9669, Fax: +44 (0) 207 855 9666 Campbell Johnston Clark Limited is registered in England and Wales with Company registration number 8431508 and is authorised and regulated by the Solicitors Regulation Authority. Its registered office is at 59 Mansell Street, London, E1 8AN. SRA Number 596892. London • Newcastle • Singapore www.cjclaw.com Campbell Johnston Clark Quarterly Update September 2017 1 CONTENTS Gard Shipping AS v Clearlake Shipping Pte Ltd (The Zaliv Baikal) [2017] EWHC 1091 (Comm) Construction of demurrage clause Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 Electronic release system and cargo misappropriation Fulton Shipping Inc of Panama v Globalia Business Travel SAU (The “New Flamenco”) [2017] UKSC 43 What benefits obtained by an innocent party can be taken into account when assessing the level of damages? Vitol SA v Beta Renowable Group [2017] EWHC 1734 (Comm) Is the duty to nominate a vessel a condition precedent to a duty to provide cargo? London Arbitration 15/17 Balance of accounts dispute London Arbitration 16/17 Underperformance and the implied indemnity principle under clause 8 NYPE London Arbitration 19/17 Issues arising under an ICA claim Quarterly Update September 2017 2 Gard Shipping AS v Clearlake Shipping Pte Ltd (The Zaliv Baikal) [2017] EWHC 1091 (Comm) Facts OTHEREWISE AGREED, FOLLOWING INCREASE OF This was a voyage charterparty between Gard DEMMURAGE RATE TO APPLY Shipping ("Owners") and Clearlake Shipping ("Charterers"). The charterparty allowed for a DAYS 6–15 DEMM RATE PLUS second voyage in direct continuation from the $5,000 first voyage, and the dispute arose in relation to this second voyage. The vessel was DAYS 16–25 DEMM RATE PLUS instructed by Charterers to sail to Rotterdam $10,000 and despite tendering NOR, no berthing DAYS 26–35 DEMM RATE PLUS instructions were given for about 64 days. $15,000 Owners argued that they were entitled to claim ….” demurrage at an escalated rate, plus the value of bunkers consumed while the vessel was [Subparagraph (3)] waiting to discharge cargo at Rotterdam, further to the following contractual clauses: “Chrs option to order the ship to wait at an offshore position provided they Additional Clause 11: give final destination and expected cargo delivery window, In WHICH [Subparagraph (1)] case the above increase in rates not to "Notwithstanding any term of this apply” charter to the contrary, Charterers Owners primarily contended that Charterers shall have the liberty, at any stage of were not permitted to instruct the vessel to the voyage, of instructing the vessel to stop and wait for longer than 3 days or to use stop and wait for orders FOR MAX 3 the vessel as a floating storage, and that they DAYS… Charterers shall be entitled to were entitled to the escalated demurrage rate instruct the vessel not to tender NOR as a result. on arrival at or off any port or place or to delay arriving at any port of place Charterers on the other hand argued that the until Charterers give the order to do so. ordinary laytime and demurrage regime Time to count as used laytime or time applied, as they had given no order to stop on demurrage, if vessel is on and wait prior to the NOR being tendered at demurrage. AND ALL THE BUNKERS Rotterdam; Owners were only entitled to CONSUMED TO BE FOR CHRTS demurrage at the ordinary contractual rate. ACCOUNT.” In the alternative, Owners argued that an [Subparagraph (2)] implied term should be implied into the contract to prevent it from lacking commercial “AFTER FIRST 5 DAYS WAITING sense, as the commercial purpose of FOR ORDERS/DISCH Additional Clause 11 was for Charterers to pay INSTRUCTIONS AT SEA VESSEL TO the escalated rate where the Vessel was being BE CONSIDERED AS BEING USED used as a floating storage, whereas Charterers FOR STORAGE, AND, UNLESS Quarterly Update September 2017 3 could easily circumvent this by having the such a term would be inconsistent with the Vessel tender NOR. charterparty as properly construed. Additional Clause 11 did not lack commercial/practical Decision coherence. The judge found that the structure of Additional Accordingly, Court was not willing to interfere Clause 11 was clear. with the bargain as entered into by the parties. The first paragraph of Additional Clause 11 Comment gave Charterers the liberty to issue a positive order to the Vessel to stop and wait. No such This case is testament that it trite law that, in order was given here, and the Court rejected circumstances where contractual wording is Owners' argument that passive failure to give sufficiently clear, the Court will not interfere to an order was covered by the clause. rectify a 'bad' bargain by implying terms into a contract on the basis of even if it is reasonable The Court also concluded that paragraph 3 of to do so on the basis of 'commercial common the clause did not bite either, as Charterers sense'. As such, care should always be taken had not given an order for the vessel to wait at when drafting clauses to ensure their effect is "an offshore position" as required. The regime not watered down simply because they have provided for by Additional Clause 11 was not been drafted tightly enough to cover all the therefore not triggered in this case. possible scenarios. Consequently demurrage was only payable at the contractual rate and Charterers had paid Owners accordingly. The Court also refused to imply a term as proposed by Owners, holding that implying Glencore International AG v MSC Mediterranean Shipping Co SA [2017] EWCA Civ 365 The Court of Appeal recently considered a Since 2011, Antwerp port operated an number of notable issues following an incident electronic release system (ERS) under which of cargo misappropriation arising from the use the carriers provided (against presentation of of an electronic release system. bills of lading) computer-generated pin codes which were sent in a ‘release note’ via email to Facts the relevant receivers/their agents and the port terminal. This was instead of delivery orders or Between January 2011 and June 2012 release notes which would be presented to the Glencore International AG ("Glencore") terminal to take delivery of the goods. contracted with Mediterranean Shipping Company SA ("MSC") to carry 69 shipments of On each occasion Glencore (via their agent, cobalt briquettes to Antwerp, under bills of Steinwag) presented the bill of lading in lading with materially similar terms. These exchange for pin codes which then enabled provided “one Bill of Lading, duly endorsed them to obtain delivery of the goods from the must be surrendered by the Merchant to the MSC terminal at Antwerp. Carrier…..in exchange for the Goods or Delivery Order”. Quarterly Update June 2017 4 This case concerned the shipment of three delivery of a code could not itself constitute containers of cobalt briquettes. Upon delivery as this only amounted to a delivery of presentation of the bill to MSC, Steinweg means of access. Should the bill of lading received the pin codes. However, when the pin provided for the provision of pin codes codes were used to collect the containers from amounting to delivery, then the position may the MSC terminal, it was discovered that two have been different. had already been delivered to ‘unauthorised persons’. Issue 2 – the release note and pin codes as a delivery order Glencore issued a claim against MSC claiming damages for breach of contract, bailment and It was held that under the bill of lading, pin conversion on the basis that (as the bill of codes did not constitute provision of a delivery lading expressly stated) MSC should have order. A ‘delivery order’ in the context of an delivered the cargo against a bill of lading and English law contract, should be defined by not a pin code. reference to the definition of a ‘ship’s delivery order’ under COGSA 1992. The Commercial Court found in favour of As such, a delivery order is provided by Glencore and MSC subsequently appealed. owners of a ship, in exchange for a bill of lading and in substitution for it, as an The Court of Appeal – decision alternative to actual delivery. It should contain an undertaking by the carrier to deliver the On appeal, the applicable issues considered goods to the person identified in the bill. As the were: release note only instructed the terminal to deliver against the entry of the pin codes 1. whether delivery of the pin codes was symbolic delivery, thereby amounting without an undertaking, neither could (as a matter of law) to delivery of the constituted a delivery order. goods; 2. whether MSC’s provision of the pin In the premises, the goods were not delivered codes constituted provision of the upon entry of the pin code at the terminal and delivery order within the meaning of MSC’s obligations to Glencore continued. the bill of lading; 3. whether MSC’s provision of the pin Issue 3 – the release note and pin codes as codes constituted provision of a ship’s ship’s delivery order delivery order pursuant to s1(4) COGSA 1992; and MSC argued that the release note (containing 4. whether Glencore were estopped from the pin codes) was a ship’s delivery note as contending that delivery of the cargo defined by COGSA. As such, MSC undertook upon presentation of the pin codes was a breach of contract/and or duty, to deliver to whoever first entered the pin. because it had permitted use of the pin codes for the previous 69 The court did not agree with this and held that shipments.