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Charterparty cases under appeal


Dr Johanna Hjalmarsson summarises events in some charterparty cases currently, or recently, before the English Court of Appeal.


Transgrain Shipping v Yangtze Navigation

Transgrain Shipping (Singapore) Pte Ltd v Yangze Navigation (Hong Kong) Co Ltd (The MV “Yangtze Xing Hua”) [2016] EWHC 3132 (Comm), is awaiting a hearing before the Court of Appeal. Teare J at first instance (reported at [2017] 1 Lloyd’s Rep 212) interpreted language in the Inter-Club Agreement, which had been incorporated in the time charterparty at issue. The words in question were “act or neglect”: in the absence of such “act or neglect”, liability was to be resolved on a 50:50 apportionment basis between charterers and shipowners.

The question was whether the word “act” involved some measure of culpability, or whether it had a purely causative meaning. The judge decided that as the ICA was a means to quickly and effectively resolve insurance disputes, “act” was not to be taken to have connotations of culpability.


Vinnlustodin v Sea Tank Shipping

Vinnlustodin HF and Another v Sea Tank Shipping AS (The “Aqasia”) [2016] EWHC 2514 (Comm) (reported at [2016] 2 Lloyd’s Rep 510), is another charterparty case awaiting hearing, in approximately mid-January 2018. The claimant owner in this case sought damages from the defendant carrier in respect of a damaged cargo of fishoil carried on board the tanker Aqasia, pursuant to a charterparty dated 23 August 2013. The Hague Rules were incorporated in the charterparty, and the cargo was described as “2,000 tons cargo of fishoil in bulk”.

The question here was whether the carrier was entitled to package limitation under the Hague Rules. The cargo claimant’s successful argument before the Commercial Court was that the word “unit” in article IV rule 5 of the Hague Rules could only refer to a physical item of cargo, or to a combination of physical items bundled together for shipment, so that package limitation did not apply to a liquid or other bulk cargo: when cargo is shipped in bulk, there are no relevant “packages” or “units”. The lack of package limitation, if this outcome is affirmed, will be a concern to carriers.


Gard Shipping v Clearlake Shipping

Meanwhile, the application for permission to appeal to the Court of Appeal in Gard Shipping AS v Clearlake Shipping Pte Ltd (The “Zaviv Baikal”) [2017] EWHC 1091 (Comm) was rejected on 23 October 2017. The first instance decision of Sir Jeremy Cooke in the Commercial Court (reported at [2017] 2 Lloyd’s Rep 38), handed down on 12 May 2017, therefore stands. The case involved the effect of a notice of readiness upon demurrage calculation where the vessel had in effect been used by charterers as floating storage.

It is not known what the precise subject was of the application for permission to appeal, but that is now a historical footnote.


Shagang Shipping v HNA Group

A case arising in connection with a charterparty transaction, but not directly involving its interpretation is Shagang Shipping Co Ltd (in liquidation) v HNA Group Co Ltd [2016] EWHC 1103 (Comm). Here, a charterparty for a newbuild vessel had been repudiated and the owner Shagang claimed under a guarantee, issued by HNA. HNA raised as its defence that the charterparty had been obtained by means of an illicit payment. There was allegedly a confession by a Shagang employee to the making of a relevant bribe. However, evidence was presented purporting to show that this confession had been obtained under duress by the Public Security Bureau. The employee had also pleaded guilty at trial.

At first instance (reported at [2017] Lloyd’s Rep Plus 39), Knowles J held that HNA must pay Shagang under the guarantee. On the balance of probabilities, regard being taken to the seriousness of the allegations, there had been no bribe by the Shagang employee. The case is not scheduled for hearing until June 2018.


Johanna Hjalmarsson, STL Editor


This is an extract of the full article by Dr Johanna Hjalmarsson, Institute of Maritime Law, University of Southampton. This first appeared in Shipping & Trade Law, November 2017.


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