TRANSGRAIN SHIPPING (SINGAPORE) PTE LTD V YANGTZE NAVIGATION (HONG KONG) CO LTD (THE "MV YANGTZE XING HUA")

[2017] EWCA Civ 2107, Court of Appeal (Civil Division), Lord Justice Longmore, Lord Justice Hamblen and Lord Justice Henderson, 13 December 2017

Contracts - Interpretation - Meaning of "act or neglect" - Whether "act" meaning any act or only culpable acts - Inter-Club Agreement

The arbitration claimants were the owners of the motor vessel Yangtze Xing Hua which they chartered to the arbitration respondents, for a time charter trip carrying soya bean meal from South America to Iran. The charterparty was dated 3 August 2012 and was on the New York Produce Exchange Form. The vessel arrived off the discharge port in Iran in December 2012. Not having been paid for the cargo, the charterers ordered the vessel to wait off the discharge port for over four months. The vessel thus came to be used as floating storage. The cargo, or part of it, started to overheat. When the vessel was brought alongside and discharged in May 2013 damage was found and a claim was made against the vessel for €5 million, settled in the sum of €2,654,238. The owners claimed that sum together with hire in the sum of US$1,012,740 from the charterers. It was common ground that liability was to be settled in accordance with the Inter-Club Agreement (the ICA), which had been incorporated into the charterparty. Clause 8(d) of the ICA provided, in effect, that in the absence of evidence of the damage arising out of an "act or neglect" by the charterers or shipowners, claims were to be apportioned 50-50 between them. The arbitration tribunal held that the charterers' decisions resulting in the cargo remaining on board for a prolonged period of time, although not culpable, were an act out of which the claims arose so that the charterers should be apportioned with 100 per cent of the claim. Upon charterers' appeal, the judge agreed. Charterers appealed to the Court of Appeal.