Shipowner's Unfettered Right To Collect Bill Of Lading Freight

• Published date: 24 May 2021
• Law Firm: Quadrant Chambers
• Author: Paul Toms

OVERVIEW

Alpha Marine Corp v Minmetals Logistics Zhejiang Co. Ltd (The M/V Smart) [2021] EWHC 1157 (Comm)

In a judgment handed down on 5 May 2021, Mr Justice Butcher held that a bill of lading carrier has an unfettered right to collect freight under the bill of lading even where the vessel has been time chartered and freight is to be payable "as per charterparty" i.e. to someone other than the carrier. In so doing he decided a point left open by the Court of Appeal in The Bulk Chile [2013] 2 Lloyd's Rep 38.

Facts

The MV Smart ("the vessel") was chartered by Alpha Marine Corp ("Owners") to Minmetals Logistics Zhejiang Co Ltd ("Charterers") on a time charter trip on an amended NYPE form ("the Charterparty") from Richards Bay, South Africa. Charterers sub-chartered the vessel on a voyage charter to General Nice Resources (Hong Kong) Ltd ("GNR"). GNR was also the lawful holder of the Bills of Lading.

Shortly after departing from Richards Bay the vessel ran aground just outside the channel and later broke her back.

Charterers issued a freight invoice to GNR under the voyage charter because freight was deemed to be earned "whatever vsl/cargo lost or not" and was to be paid on or before 45 days from the date of sailing from the load port.

Prior to the date for payment, Owners notified GNR that they had revoked Charterers' authority to collect freight under the Bills of Lading and directed that freight should be paid to them and not Charterers ("the Notice"). Charterers objected to that course of action and as a result freight was not paid to Owners or, indeed, Charterers.

Nearly two years later a small proportion of freight was paid by GNR into escrow pursuant to a tripartite agreement but prior to all the freight being paid, GNR was wound up.

The Arbitration

Owners brought a claim in arbitration contending that the vessel had been lost by reason of a breach of the safe port warranty in the Charterparty claiming sums in excess of US$100 million. They also claimed a sum of c. US$450,000 in respect of bunkers consumed prior to the loss of the vessel which claim was advanced in the alternative on the basis that its primary claim failed.

Charterers contended that the Notice was in a breach of an implied term of the Charterparty that freight would not be collected by Owners under the Bills of Lading unless sums were due under the Charterparty and claimed (i) damages in the amount of the freight that should have been paid by GNR but was not, (ii) payment of the freight...