Straight Bill Of Lading Leaves Cargo Interests In Dire Straits

Sumanu Natural Resources Ltd v Mediterranean Shipping Co SA [2016] EWCA Civ 34

In this case cargo interests brought a claim against the carriers, MSC, seeking damages of $3 million in relation to the alleged loss of a cargo of coltan ore. In 2014 the English High Court ruled that MSC was entitled to summary judgment. The English Court of Appeal has now rejected an application by cargo interests for permission to appeal that decision.

Sumanu v MSC is not a groundbreaking judgment. However, it does illustrate a number of pitfalls that can arise where straight bills of lading are used, and more generally the dangers of not aligning the parties to a sale contract with the parties to the bill of lading contract. Indeed, from the point of view of buyers and sellers of goods carried by sea, it serves as a timely reminder of what not to do!

FACTS

The key facts are as follows:

in May 2012 a consignment of coltan ore worth around US$3 million was shipped from Tanzania to China. Col-tan ore is a key component in many electronic devices; the ore was sold by SJM Gems International Ltd to Sumanu Natural Resources Ltd (together the "Claimants"), who on sold the cargo to King Tan Tantalum Industry Ltd (the "Buyers"). Originally the sale was to have been on FOB terms, but it was later changed to a CIF sale; a straight bill of lading was issued naming a freight for-warder, CMF Investment Ltd, as shipper, and the Buyers as consignee. The only reference to either Claimant on the face of the B/L was to Sumanu Natural Resources Ltd as the notify party; the ore was packed into 266 sealed drums, which were then placed in a number of containers. The containers were themselves subsequently sealed and placed in storage awaiting export clearance, to be arranged by CMF Investment Ltd; upon arrival of the cargo at the discharge port in China, the Buyers discovered that the drums were full of sand and pebbles rather than coltan ore, and refused to take delivery. Clearly a major fraud of some kind had been perpetrated, although the judgment does not address the question of who the perpetrator(s) was, or how the fraud was carried out; the Claimants commenced proceedings in the English-High Court against the carriers, MSC, alleging that the substitution of the contents of the drums must have occurred during the period when MSC was responsible for the safe carriage of the containers. They claimed $3 mil-lion by way of damages which, although unclear from the judgment...