The claimant shipowners chartered a vessel on the terms of an amended BPVOY4 form and certain additional clauses. Bills of lading were subsequently issued for the carriage of a cargo of oil on the vessel from St Petersburg to Singapore, which provided for “freight as per charterparty”. In the event, the first defendant was the holder of all of the bills of lading and the receiver of the cargo in Singapore. Following the seizure of the vessel in the Gulf of Aden by pirates and its subsequent release on payment of a ransom, the cargo was delivered in Singapore. General average was declared, the general average expenditure being the payment of the ransom. The shipowners brought a claim in arbitration under a general average bond provided by the cargo owners. They defended the claim on the ground that on a true construction of the bills of lading, the shipowners’ only remedy in the event of having to pay a ransom to pirates was to recover the same under the terms of their war risks and kidnap and ransom insurance policies, the premium for which had been paid, pursuant to the terms of the charterparty, by the charterers. The arbitral tribunal agreed with the cargo owners. The shipowners appealed pursuant to section 69 of the Arbitration Act 1996. There were two questions on the appeal. (1) Whether the war risks clause, the additional war risk clause and/or the Gulf of Aden clause in the charterparty were incorporated into the bills of lading by reason of being directly germane to the shipment, carriage or delivery of the goods. The war risks clause conferred on the shipowners liberties not to continue on the voyage or to deviate and imposed on the charterers an obligation to bear additional expenses caused by the exercise of such liberties. The additional war risk clause imposed on the charterers the obligation to pay for the extra costs of insurance if the shipowners decided to transit the Gulf of Aden, subject to a maximum of $40,000. The Gulf of Aden clause made provision, inter alia, for additional costs incurred as a result of having to follow a route for protective reasons to be shared equally between shipowners and charterers, and for the charterers to pay for additional insurance premium in respect of kidnap and ransom risks. (2) Whether an agreement between a shipowner and bill of lading holder concerning the allocation of responsibility for the payment of war risks and kidnap and ransom insurance premia gave rise to an exclusive insurance fund precluding the shipowner from recovering in general average a contribution from cargo interests in respect of any losses suffered as a result of perils falling within the insurances. The tribunal had answered both questions in the affirmative.
On the appeal—
Held, appeal allowed. (1) The shipowners’ liberties in the war risks clause not to continue with the voyage or to deviate from the usual route were directly germane to the loading, carriage and discharge of the cargo, since they directly impinged on the question whether the cargo would be carried to the intended destination, and permitted certain deviations from the normal or expected route. Those liberties were therefore incorporated into the bills of lading. However, there was no rule that a clause that was directly germane was presumed to be incorporated in the bill of lading and, in circumstances where the bill of lading holders agreed to pay freight as per the charterparty as the price for the performance by the shipowners of the contract of carriage and the amount of such additional sums would at the outset be unknown and unlimited, it was not appropriate to impose the charterers’ obligation in the charterparty to bear the expense caused by the exercise of such liberties on the bill of lading holders. For the same reasons it was not appropriate to manipulate the wording of the Gulf of Aden clause when it was written into the bill of lading so as to require the bill of lading holders to share the additional costs imposed by that clause equally with the shipowners. In relation to the additional premium liability in the additional war risks and Gulf of Aden clauses, the obligation to pay for such additional insurance was again directly germane to the carriage and delivery of the cargo. Moreover, transit through the Gulf of Aden on a voyage from St Petersburg to Singapore would be expected, and the risk of piracy in the area and the consequent growth of kidnap and ransom insurance was well known. The liability to pay the additional premium was also limited, and to a modest sum. However, the bills of lading provided that the holders’ obligation was to pay freight as per the charterparty, and therefore clear words would be required to impose upon the bill of lading holders a liability not only to pay freight but also the additional insurance premium. Given that there was no clarity on matters such as how much of the premium each holder was to pay or how apportionment of the premium between the holders was to be assessed, it was also not appropriate, when reading into the bills of lading the terms of the Gulf of Aden and additional war risks clauses, to substitute “the holders of the bills of lading” for “the charterers” (paras 42–44, 48, 51, 53–54, 55, 59, 60–61, 63–64, 65, 115).
(2) Where shipowners and charterers agreed that if the shipowners took out insurance against a certain risk, the charterers would pay the insurance premium, the prima facie position was that under the charterparty the parties had agreed to look to the insurers for indemnification in respect of losses caused by such risks rather than to each other and so a claim in general average was precluded. However, in such circumstances the charterers would have paid the premium so as not later to be liable for general average, whilst in the instant case the holders of the bills of lading had not agreed to pay the premium. That distinction in position as between the charterers and the holders of the bills of lading meant that there was no proper basis for concluding that, as between the shipowners and the holders of the bills of lading, there was an agreement that where a general average expenditure had been incurred as a result of an insured peril the shipowners could look only to an insurance policy and not to a contribution in general average from the cargo interests. Accordingly, on a true construction of the contract of carriage contained in or evidenced by the bills of lading, it did not contain an agreement by the shipowners not to seek a contribution in general average from the holders of the bills from liability in respect of losses covered by the additional insurance taken out by the shipowners (paras 81, 90, 92, 96, 102, 103–104, 108–109, 110, 111, 114, 115).
Guy Blackwood QC and Oliver Caplin (instructed by HFW LLP) for the claimant.
Stephen Hofmeyr QC and Mark Jones (instructed by Tatham & Co) for the defendant.