Will Cargo Receivers Or Financiers Be Responsible For Discharge Of Cargoes And The Related Cost Under A Contract Of Carriage?

• Published date: 02 December 2020
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Contracts and Commercial Law
• Law Firm: ONC Lawyers
• Author: ONC Lawyers

Introduction

A voyage charter usually provides for a remedy of demurrage to the owner of the vessel against the charterer in circumstances where there is delay in unloading or discharge of the cargo. However, where demurrage cannot be recovered owing to the charterer's insolvency, the Court will be slow to imply terms into a contract of carriage so as to make other parties liable to the delay in the discharge of the cargo. In the recent English case of Sea Master Shipping Inc v Arab Bank (Switzerland) Limited Yousef Freiha & Sons Sal [2020] EWHC 2030 (Comm), the Commercial Court (the "Court") considered whether terms relating to the discharge of cargo should be implied into a contract of carriage against the cargo receivers or a bank involved in financing the cargo.

Background

The claimants (the "Owner") were the assignees of the registered owners of a vessel (the "Vessel") who chartered the Vessel to a charterer (the "Charterer") by a voyage charter (the "Voyage Charter"). The cargo (the "Cargo"), which was carried by the Vessel under a contract of carriage (the "Contract of Carriage") evidenced by a bill of lading (the "Bill of Lading"), was discharged late. The Owner could not recover demurrage from the Charterer under the Voyage Charter as the Charterer was insolvent. As such, the Owner sought remedies against the Cargo receivers who took delivery of the Cargo (the "Receivers") and/or the bank which was involved in financing the Cargo (the "Bank") for demurrage or, alternatively, damages for breach of two implied terms of the Contract of Carriage.

Both of the Owner's claims were dismissed by the arbitral tribunal (the "Tribunal"). In the present case before the Court, the Owner only appealed against the Tribunal's finding that there would be no implied terms.

The Owner's arguments

The Contract of Carriage evidenced by the Bill of Lading contained a clause incorporating all the terms of the Voyage Charter. As such, by relying on clauses 10 and 11 of the Voyage Charter that "...Cargo is to be discharged free of expense to the Vessel..." and that "...Stevedores at discharging ports are to be appointed and paid for by the Charterers/Receivers", the Owner argued that there should be an implied term in the Contract of Carriage where the Bank and/or the Receivers should discharge the Cargo within a reasonable time (the "First Issue"). Further or alternatively, the Owner argued that there should be an implied term in the Contract of Carriage where the Bank...