• Volcafe v. CSAV [2018] UKSC 61: Who has to prove what, when? Cargo damage claims and the burden of proof under the Hague (and Hague-Visby) RulesView More

    Wed, 05 December, 2018

    The Supreme Court’s judgment in Volcafe v CSAV, handed down today, is essential reading for all involved in the carriage of goods by sea, whether lawyer, insurer, cargo owner or carrier. John Russell QC and Benjamin Coffer appeared for the Appellants, instructed by Andrew Nicholas from Clyde & Co. Simon Rainey QC and David Semark appeared for the Respondents, instructed by Mark Doyle from Mills & Co.

    Argued as test case on the Hague Rules, Volcafe provides the first authoritative analysis of the burden of proof under the Hague and Hague-Visby Rules, the continuing relevance of the English common law of bailment where the Rules apply, and the interaction between the carrier’s duty to care for cargo under Article III.2 and the defences available to the carrier under Article IV.2.

    Upholding the cargo claimants’ appeal, the Supreme Court has held that, as a bailee, a carrier is liable for loss or damage during the voyage unless it proves on the balance of probabilities that the loss or damage was not caused by any breach by it of its Article III.2 cargo care duties, or that one of the defences in Article IV.2 applies. In order to bring itself within one of the Article IV.2 defences, the carrier must also prove that the loss or damage was not caused by its own negligence or breach of Article III.2. In practice, the burden is therefore on the carrier in any cargo claim to disprove causative negligence.

    In reaching that conclusion, the Supreme Court has overturned the decision of the Court of Appeal in The Glendarroch [1894] P 226, which had proven controversial for more than a century, and rejected dicta, previously thought to be authoritative, of the House of Lords in Albacora SRL v Westcott & Laurence Line Ltd 1966 SC(HL) 19 and of the High Court of Australia in Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The Bunga Seroja) [1999] 1 Lloyd’s Rep 5.

    The judgment also illustrates, again, the high threshold which must be met before an appellate court can interfere with primary findings of fact. Although Lord Sumption expressed some doubt about the weight given to the evidence by the Judge at first instance, he was clear that there had been no sound legal basis for the Court of Appeal to interfere with those findings. The Supreme Court therefore restored the findings made by the Judge at first instance.

    The facts and decisions below

    The claim in Volcafe was a routine low value cargo claim. It concerned condensation damage to a number of cargoes of coffee beans, which had been stuffed into containers by the carrier. Coffee beans, a hygroscopic cargo, emit moisture during carriage which causes inevitable condensation on the walls of the container. The damage caused by the condensation can be mitigated by lining the containers with paper or card. The carrier argued that the condensation damage was caused by an inherent vice of the cargo, its inherent propensity to emit moisture, and that it was therefore entitled to rely on the defence in Article IV.2(m) of the Rules. The cargo claimants argued that the carrier had failed to apply sufficient card or paper to the walls of the container.

    At first instance, the Judge decided the claim on the burden of proof. He held that proof of damage gave rise to an evidential inference that the damage had been caused by a breach of the carrier’s obligations under Article III.2, and that the carrier had not displaced that inference by showing that it had complied with its obligations under Article III.2. In those circumstances, it could not rely on the Article IV.2(m) defence.
    The Court of Appeal overturned the Judge’s decision. It accepted the cargo interests’ argument that the carrier, as a bailee, bears a legal burden of bringing itself within one of the defences in Article IV.2. Applying the long-standing decision in The Glendarroch, Flaux J (giving the leading judgment) held that the carrier could establish a ‘prima facie’ case of inherent vice merely by proving that the moisture which caused the damage had originated in the goods themselves. The burden would then ‘shift’ to the cargo interests to prove that the cause of the damage was not inherent vice, but some failure by the carrier to exercise reasonable care.

    The Supreme Court’s decision

    (1) On the burden of proof in a cargo claim

    In the Supreme Court, the argument concentrated on whether the Court of Appeal had been right to hold that the carrier bears a legal burden, or whether (as the Judge at first instance had held) the carrier’s burden was merely an evidential one (as arguably suggested by Albacora v Westcott & Laurence and The Bunga Seroja).

    The Supreme Court held that the carrier’s burden was legal. The contract of carriage is a contract of bailment, and the carrier is therefore a bailee. The bailee’s reverse burden of proof is not displaced by anything in the Hague Rules. Like any other bailee, a carrier is therefore liable for damage to goods in its possession unless it can prove that the damage was not caused by any breach of the required standard of care, or unless it can bring itself within a contractual exclusion clause.

    The Court rejected the carrier’s argument that the positive obligations of cargo care under the Hague Rules are inconsistent with any continuing role for common law bailment principles: the Court held that the Rules are “not exhaustive of all matters relating to the legal responsibility of carriers for the cargo”. Where the Rules are silent, English common law continues to apply.

    Because the carrier as a bailee bears the legal burden, it must therefore prove on the balance of probabilities that that the loss or damage was not caused by any breach of Article III.2, or that one of the defences in Article IV.2 applies. The Supreme Court held that “so far as [Albacora v Westcott & Laurence and The Bunga Seroja] suggest that the cargo owner has the legal burden of proving a breach of article III.2, they are mistaken”.

    (2) On the burden of proof under Article IV.2 defences and The Glendarroch

    In The Glendarroch (a pre-Hague Rules case), the Court of Appeal had held that where a cargo claimant alleged that the carrier could not rely on the perils of the sea defence because of its own negligence, the burden of proving negligence was on the cargo claimant: negligence was “an exception to an exception”.  

    Lord Sumption described the The Glendarroch as “technical, confusing, immaterial to the commercial purpose of the exception and out of place in the context of the Hague Rules”, and declined to follow it. He held that there is no general principle of law that a cargo claimant bears the burden of proving negligence. If the carrier seeks to rely on one of the defences in Article IV.2, the carrier must prove that the effective cause of the loss or damage was the excepted peril, and not the carrier’s own negligence or breach of Article III.2.

    (3) On ‘inherent vice’ under Article IV.2(m) and generally

    The Supreme Court judgment also provides useful guidance on the meaning of inherent vice. As an alternative ground for the decision, the Court held that inherent vice meant the unfitness of the goods to withstand the ordinary incidents of the voyage, given the degree of care which the shipowner is required by the contract to exercise in relation to the goods. To establish the defence, the carrier would therefore have had to prove either that the shipowner provided the contractual degree of care, or that even had it done so the damage could not have been prevented. As it had not proven either of those matters (on the Judge’s findings of fact), it could not rely on the defence.

    The impact of the decision

    The decision is a landmark one which brings decisive clarity to a much debated area, both generally in relation to the burden of proof upon the cargo claimant and the carrier in a case of cargo damage and in particular in relation to the correct application of the Article IV.2(m) defence of inherent vice.

    The universal approach adopted to the pleading of any standard Hague or Hague-Visby Rules cargo claim is likely to undergo rapid reappraisal. Cargo claims will now proceed on the basis that the cargo claimant is able to rely on proof of damage to the cargo as setting up, by itself, a sustainable cause of action, which casts the legal burden on the carrier in all cases to disprove negligence.  A different approach will also need to be taken to the pleading by carriers of Article IV.2 defences with the necessary particularisation in most cases of how (well) the goods were carried and cared for.

    > Download a copy of the Judgment


    Appeared for the Appellants:

    John Russell QC

    John is an experienced and determined commercial advocate and has acted as lead Counsel in numerous Commercial Court trials, international and marine arbitrations and appellate cases, including in the Supreme Court. He has also appeared as counsel in inquests and public enquiries.

    He relishes both detailed legal argument and cross-examination of lay and expert witnesses. He will always ensure that a client's case is presented in the most persuasive manner possible, both in writing and orally.

    John provides advice to a wide range of clients. He combines first rate technical legal analysis with a pragmatic, commercial, problem solving approach to cases.

    John accepts instructions in many fields of commercial dispute resolution with a particular focus on shipping, commodities, international trade,  marine insurance, aviation and travel.

    He is ranked in the Legal 500 and Chambers & Partners in Shipping, Commodities, Aviation and Travel.

    To view full website profile, please click here.

    Benjamin Coffer

    Ben is described by the directories as  "a rising star" (Legal 500, 2019); “a standout shipping and commodities junior" (Chambers & Partners, 2018) and “a star of the future” (Chambers & Partners, 2017). He is also recognised as a leading junior in the Legal 500 Asia Pacific Guide. Ben undertakes the full spectrum of shipping work, including every species of charterparty and bill of lading claim, as well as shipbuilding and ship finance disputes. He has developed a particular specialisim in cases involving carriage of goods under the Hague and Hague-Visby Rules, and has appeared in several of the leading cases on such claims in recent years.

    To view full website profile, please click here. 

    Appeared for the Respondents:

    Simon Rainey QC

    Simon Rainey QC is one of the best-known and most highly regarded practitioners at the Commercial Bar with a high reputation for his intellect, advocacy skills and commercial pragmatism. He has a broad commercial advisory and advocacy practice spanning substantial international contractual disputes, energy and natural resources, trade and commodities, and shipping and maritime law in all its aspects, in arbitration and at all Court levels. His practice involves a steady diet of high profile and high value commercial fraud cases, typically involving heavy interlocutory stages centred around pre-emptive strike applications such as worldwide freezing injunctions and anti-suit and other injunctive relief, a recent example of which is the hard fought Gerald Metals v Timis litigation in England, Cayman and the BVI (2017-2018). He has been cited for many years as a Leading Silk in Commercial Litigation / Dispute Resolution by Chambers and Legal 500. He also sits as a Deputy High Court Judge in the Commercial Court. "A fantastically intelligent and tactically astute barrister who is immensely erudite." (Chambers UK 2019); ‘Absolutely charming and probably the best cross-examiner I’ve ever seen.’ (Legal 500 2019).

    To view full website profile, please click here.

    David Semark

    David ‘Produces excellent work and represents exceptional value for an experienced litigator.’ (Legal 500 2015). A former army officer David also previously trained in the Shipping Department of one of South Africa's leading maritime and international trade firms, before joining and later becoming a partner at what is now known as Reed Smith. He retrained as a barrister and became a member of Quadrant in 2010.

    David specialises in commercial law, with a particular emphasis on shipping and maritime law (especially dry shipping disputes), international trade and commodities, jurisdictional disputes and insurance. Although his practice is primarily as an advocate, he is also an LCIA arbitrator.

    He is the co-author of P&I Clubs: Law and Practice (2010, 4th ed.) and Maritime Letters of Indemnity (2014, 1st ed.)

    To view full website profile, please click here.

  • Stewart Buckingham is featured in Lloyd’s List Top 10 Maritime Lawyers 2018View More

    Tue, 04 December, 2018

    We are delighted to announce that Stewart Buckingham has been featured in the Lloyd's List Top 10 Maritime Lawyers of 2018.

    The top 10 maritime lawyers is one section of their feature on 2018's Top 100 most influential people in shipping. For the full list please click here.

  • Shortlisted for nine awards at the Legal 500 UK Awards 2019View More

    Tue, 04 December, 2018

    We are delighted to announce that Quadrant Chambers has been shortlisted for both Commercial Litigation and Shipping Set of the Year for the Legal 500 UK Awards 2019. In addition, Simon Croall QC, Simon Rainey QC, David Goldstone QC, Matthew Reeve, Nevil Phillips and Caroline Pounds have each received individual nominations:

    Commercial Litigation Set of the Year
    Shipping Set of the Year
    Simon Croall QC - Shipping Silk of the Year
    Simon Rainey QC – International Arbitration Silk of the Year and Shipping Silk of the Year
    David Goldstone QC - Shipping Silk of the Year
    Matthew Reeve - Shipping Junior of the Year
    Nevil Phillips - Shipping Junior of the Year
    Caroline Pounds - Shipping Junior of the Year

    A list of all the nominations can be viewed here.

  • Court of Appeal Flags Privilege Claim Offside - Joseph SullivanView More

    Tue, 04 December, 2018

    In the recent case of West Ham v E20 the Court of Appeal delivered a judgment clarifying the scope of litigation privilege in the light of SFO v ENRC and explained when a Judge should inspect controversial documents.

    In this important decision, which was the first televised appeal in the Court of Appeal, limits were set on the scope of litigation privilege and the circumstances in which a Judge may inspect a document over which a claim for privilege were expanded.


    The claim concerned a dispute between West Ham United and the owners of their stadium, E20. West Ham wished for the match-day capacity of the stadium to be increased and contended that it had a contractual right that E20 must act in good faith in deciding whether to make an application for permission for the increased capacity. E20 disputed this obligation but argued in the alternative that it had, in any event, acted in good faith as it had decided not to increase the stadium’s capacity due to legitimate safety concerns.

    Accordingly, the reason for E20’s decision not to apply to increase the permitted match-day capacity of the stadium was an important issue in the claim: West Ham contended that the real reason for E20’s decision was that it wished to use the issue to seek to extract commercial advantages in negotiations with the club.

    E20 had asserted litigation privilege over the only contemporaneous documents evidencing its decision-making process, stating that those six documents were composed with the dominant purpose of discussing a commercial settlement of the dispute between the parties at a time when litigation was in reasonable contemplation.

    West Ham challenged this assertion of privilege, contending that the documents cannot have been concerned with obtaining information or advice for use in the litigation and so could not fall within the scope of litigation privilege. They requested an order that the Judge inspect the documents to ascertain whether the assertion of privilege was sound.

    First instance decision

    At first instance, Norris J refused West Ham’s application in connection with the six documents. He held, in reliance on the recent Court of Appeal decision in ENRC v Serious Fraud Office, that litigation privilege was not limited to documents concerned with obtaining information or advice for use in the litigation but also included any document prepared for the purpose of settling or avoiding a claim.

    He went on to hold, following the guidance set down by Beatson J in the West London Pipeline case, that he could only inspect the documents if he was reasonably certain that the test for privilege had been wrongly applied by E20’s solicitors.  Since he was not reasonably certain that this was the case, he found that he could not inspect the documents.

    Norris J granted West Ham permission to appeal to the Court of Appeal and the appeal was expedited since the trial of the claim was due to commence less than four weeks after Norris J’s decision.

    Court of Appeal decision

    A unanimous Court of Appeal (the Master of the Rolls, Lewison and Asplin LJJ) allowed West Ham’s appeal.

    The Court analysed its earlier decision in ENRC and held that this did not expand the scope of litigation privilege to encompass documents which neither seek advice nor information for the purpose of conducting litigation. It held that ENRC only clarified that settling litigation formed part of conducting litigation. The requirement that the documents must be concerned with obtaining information or advice remains.

    It rejected E20’s argument that “conducting litigation” encompassed documents which merely comprised discussions as to a commercial settlement of that litigation. It also rejected its suggestion that internal communications within a company which are made for the dominant purpose of conducting litigation are, without more, necessarily subject to privilege, and overruled the earlier decision of Mayor and Corporation of Bristol v Cox.

    The Court provided a useful summary of the scope of litigation privilege:

    1. Litigation privilege is engaged when litigation is in reasonable contemplation
    2. Once litigation privilege is engaged it covers communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with the conduct of the litigation, provided it is for the sole or dominant purpose of the conduct of the litigation.
    3. Conducting the litigation includes deciding whether to litigate and also includes whether to settle the dispute giving rise to the litigation.
    4. Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by the privilege.
    5. There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege as described above.

    The Court also examined the circumstances in which a Judge should inspect a document to test a challenged assertion of privilege. It considered that the formulation set out in all the leading textbooks, taken from West London Pipeline, was too narrow. The power to inspect is not limited to cases in which, without sight of the documents in question, the court is “reasonably certain” that the test for litigation privilege has been misapplied. Instead, the Court has a broader discretion to inspect, though the power should be exercised cautiously. In exercising its discretion, the Court should taken into account the nature of the privilege claimed, the number of documents involved and their potential relevance to the issues.

    Paul Downes QC and Joseph Sullivan acted for West Ham in the Court of Appeal, instructed by Neil Warner, Gateley Plc. 

    > download a copy of the judgment

    Joseph Sullivan

    Joe specialises in commercial law, banking and finance, commercial fraud and professional negligence. He is recommended as a leading junior in the Legal 500 for banking & finance. He often appears unled against silks and has a particular specialism in multi-jurisdictional disputes both in court and in arbitration and in claims involving both personal and proprietary remedies. This year his instructions have included appearing as lead counsel for the respondent in the Supreme Court in Takhar v Gracefield Developments - an appeal to determine the test for setting aside a judgment on grounds that it was procured by fraud and acting for West Ham United in the Court of Appeal in its claim against the operators of its stadium.

    To view full website profile, please click here. 

  • UKSC 26: The Implications of the Supreme Court’s Approach to Concurrent Causation for the Wider Insurance Industry - Craig WilliamsView More

    Fri, 30 November, 2018

    Navigators Insurance Company Limited and Others v Atlasnavios-Navegacao LDA (formerly Bnavios-Navegacao LDA (“the B Atlantic”) [2018]

    The recent decision of the Supreme Court in the B Atlantic ([2018] UKSC 26.) in which Quadrant Chambers’ Guy Blackwood QC represented the successful insurers, was not only an important decision for the marine insurance market but the insurance industry as a whole.

    An area of particular interest to the wider insurance industry is the Supreme Court’s comments on the correct approach to the causation analysis in cases where the parties posit multiple potential causes for a loss. This is a topic which shall be dealt with in detail in an upcoming series of talks by Quadrant Chambers on the broader impact of the B Atlantic, however, the issue is briefly explored in this article.

    The Facts of B Atlantic

    After loading a cargo of coal in Lake Maracaibo, Venezuela, for discharge in Italy, an underwater inspection by divers discovered 132kg of cocaine strapped to the vessel’s hull below the waterline. This concealment constituted an offence contrary to Article 31 of the Venezuelan 2005 Anti-Drug Law. Articles 63-66 of the same law provided for the seizure of the vessel in such circumstances. The vessel was therefore seized by the Venezuelan authorities. The vessel remained in detention until August 2010, after which the Court ordered the final confiscation of the vessel. The owners, having abandoned the vessel to the Venezuelan court in September 2009, treated vessel as a constructive total loss and pursued a claim under their insurance.

    The hearing before the Supreme Court turned on the inter-relationship between perils identified in clauses 1.2, 1.5 and 1.6 of the policy[1] and the exclusion identified in clause 4.1.5. The premise upon which the case proceeded to the Supreme Court was that the concealment of the cocaine by unknown third parties constituted a malicious act (it was only on this basis that the owners were able to claim under clause 1.5 and argue that clause 4.1.5 was inapt to exclude liability).[2] However, the Supreme Court found that (despite the parties’ agreement to the contrary) the concealment of the cocaine did not in fact constitute a malicious act. This was sufficient to dispose of the appeal, nevertheless the Supreme Court helpfully considered what the position would have been if this premise had been accepted.[3]

    Competing or Concurrent Causes

    Where multiple “causes” are said to give rise to an incident, the general rule in insurance law is that the Court will identify the true proximate cause,[4] finding the other posited cause(s) to be too remote or not actually causative.[5] The identification of the proximate cause is an exercise in common sense, it is not necessarily the last event prior to the loss.

    An example of the general rule being followed is In re Etherington and the Lancashire and Yorkshire Accident Co[6] where the assured fell from his horse, suffered shock and wetting and later died from pneumonia. Whilst the policy in question covered death caused by and occurring within three months of an accident, it had an exception in respect of death caused by “disease or other intervening cause”. However, the accident was held to be the proximate cause of the death as the pneumonia was considered to be something usually attendant upon the particular accident and caused by it rather than an independent disease.

    The general rule is, of course, subject to exceptions and sometimes the correct analysis is that there are in fact two (or more) concurrent causes. The issue of concurrent causation usually arises in cases where there are potentially applicable exception clauses,[7] likely because of the increased commercial advantage in insurers running such arguments in those cases[8] and because the very existence of an exception clause affects the analysis of what is regarded as proximate.[9] The question of whether there is concurrent causation is in no way restricted to marine insurance disputes, a well-known example being Wayne Tank and Pump Co Ltd v Employers Liability Corporation Ltd[10] where the Court of Appeal had to consider whether the cause of a fire which burned down a factory was: (i) the defective nature of equipment; (ii) the negligence of one of the servants of the insured in leaving said equipment turned-on and unattended overnight prior to proper testing of the installation; (iii) or both as concurrent causes.

    Therefore the Supreme Court’s comments on this subject are of great interest to the wider insurance industry. The issue of concurrent causation was not argued at first instance or the Court of Appeal but was argued in the Supreme Court. The owners sought to avoid the loss being excluded by arguing that it was the malicious act,[11] not the detainment/seizure for the infringement of customs regulations (which was excluded), which fell to be regarded as the proximate cause of the loss. Therefore, the Supreme Court had to choose from the following posited causes:  (i) the malicious acts of third parties;[12] (ii) the seizure/detainment by reason of infringement of customs regulations; or (iii) both (acting as concurrent rather than independent causes). In rejecting the owners’ argument, the Supreme Court made the following comments:

    1. The Court is more likely find concurrent causes when the policy has a potentially applicable exceptions clause. [13]
    2. The likelihood of concurrent causes being found was increased by the fact that the owners had effectively used a clever construction of the policy to avoid relying on the most obviously applicable peril, which was itself obviously covered by the applicable exceptions clause, in order to side-step that otherwise wise applicable exception.
    3. The owners needed to rely upon the detainment/seizure of the vessel for 6 months in order to establish it as a constructive total loss under Clause 3. However, in order to avoid the effect of the exception clause at 4.1.5, they sought to argue that the detainment and its continuation were not causatively relevant as they were simply incidents of or sequela to the original malicious act. The Supreme Court rejected that the submission as “unreal in practical terms”[14] as they were “by no means bound to occur”. This appears to be a very high standard indeed.

    Therefore the Supreme Court held that it was the combination of the “malicious act” and the seizure/detainment which led to the loss, with the latter arising from the excluded peril of infringement of customs regulations and therefore that the owners’ claim failed. The case demonstrates the very real difficulties that an insured will encounter in attempting to recover in respect of a loss where the insurers are arguing that the loss was caused (in whole or concurrently) by an excluded peril.

    [1] The policy in question was a standard war risks insurance policy on the Institute War and Strikes Clauses 1/10/83 with additional perils.

    [2] This had been common ground from at least the first instance hearing before Flaux J: [2014] EWHC (Comm). The basis for this common ground was that those unknown third parties were reckless as to whether or not the concealment of drugs on the vessel led to the detention or confiscation of the vessel.

    [3] See [2018] UKSC 26, at [30]-[31]. The remainder of this article will therefore refer to the concealment of the cocaine as a malicious act.

    [4] What is referred to in this article as the “proximate” cause is also given other monikers in the case law, such as the “operative”, “dominant”, or “effective” cause. This article shall take the same approach as the Court of Appeal in B Atlantic and call this the “proximate” cause ([2016] EWCA Civ 808, at [23]).

    [5] [2018] UKSC 26, at [43].

    [6] [1909] 1 KB 591.

    [7] ENE Kos I Ltd v Petroleo Brasileiro SA (No 2) [2012] UKSC 17, [41]-[43].

    [8] Where a loss has two or more proximate causes both of which are necessary for the loss to occur (i.e. concurrent, not independent) but only one of which is insured (the other being excluded), the exclusion will prevent the insured from recovering for the loss despite the insured cause also applying: see John Cory & Sons v Burr (1883) 8 App Cas 393, pp. 400-401, and Wayne Tank and Pump Co Ltd v Employers Liability Corporation Ltd [1974] 1 QB 57, see Lord Denning MR at p 67B-68A, Cairns LJ at 69B-D and Roskill LJ at pp. 74E-75D.

    [9] See Royal Greek Government v Minister of Transport (The Ann Stathatos) (1949) 83 Ll L Rep 228, 237: “the whole of what one might call the area naturally appurtenant to the excepted event must be granted to it”.

    [10] [1974] 1 QB 57.

    [11] The argument was considered by the Supreme Court on the hypothetical that the concealment of drugs was considered to be malicious.

    [12] On the hypothetical that concealment of drugs constituted a malicious act.

    [13] [2018] UKSC 26, at [42]-[43].

    [14] [2018] UKSC 26, at [44].

    Craig Williams 

    Craig has an international commercial practice which encompasses banking, energy, international trade, and shipping. He regularly appears in the High Court (including the Commercial Court and Admiralty Court) and arbitration both as sole and junior counsel.

    Prior to joining Quadrant, Craig worked in the litigation team (EMENA) of an energy multinational. He has also worked in-house at a boutique commercial disputes firm and undertaken secondments at a leading London shipping law firm and in the insurance industry.

    > click to view Craig's profile here


  • Ship arrest remains a very powerful weapon: jurisdiction and security without risk - Jonathan ChambersView More

    Tue, 27 November, 2018

    Natwest Markets PLC v Stallion Eight Shipping Co SA (THE "MV ALKYON") [2018] EWHC 2033 (Admlty)

    In a decision which appears to have escaped the law reports until now, the often undervalued and neglected remedy of a ship arrest has been given new impetus by the judgment of Admiralty Judge in THE "MV ALKYON" [2018] EWHC 2033 (Admlty). Where it is available, an arrest is not subject to a duty of full and frank disclosure, or to a cross-undertaking and is available as of right.

    In a strongly worded judgment the English Admiralty Judge Mr Justice Teare has confirmed that an arrest of a vessel within the Admiralty jurisdiction of the English High Court (in support of specified maritime claims) is not subject to the same rules and protections afforded to those faced with freezing injunctions at general law.

    A Bank had lent US$15,700,000 to the Shipowner of the vessel ALKYON. The loan was secured by a mortgage on the vessel. The Bank notified the Shipowner of an alleged event of default issued an in rem claim form and applied for and obtained the issue of a warrant of arrest against the vessel.

    The Shipowner denied the event of default and argued that the Bank did not exercise its powers in good faith or in pursuit of legitimate commercial aims. It argued that it would lose gross hire of US$11,350 per day and a profit of some US$3,500 to US$4,000 per day.

    The Shipowner brought an application under CPR 61.8(4)(b) for an order releasing the vessel from arrest unless the Bank provided a cross-undertaking in damages in the form usually given in the context of freezing orders. It argued that the current practice of the Admiralty Court not to require a cross-undertaking in damages was anomalous and unjustifiable.

    Mr Justice Teare refused the application as it

    (i) ran counter to the principle that a claimant in rem might arrest of right;

    (ii) would be inconsistent with the court’s long-standing practice that such a cross-undertaking was not required; and

    (iii) would be contrary to authority.

    A claim in respect of a mortgage on a ship is within the Admiralty jurisdiction and may be brought in rem against the ship in connection with which the claim arises; see section 20(2)(c) and section 21(2) of the Senior Courts Act 1981.

    A claim in rem is started by the issue of an in rem claim form and a claimant in rem may apply for the issue of a warrant of arrest; see CPR 61.5. When the court receives an application for arrest that complies with the rules and the practice direction the court will issue an arrest warrant; see CPR Part 61 PD §5.2

    The purpose of an arrest is to enforce an admiralty action in rem. The arrest establishes the jurisdiction of the English Admiralty court to hear and determine a claim. This is so even if the ship is registered in a foreign country and that the claim has no connection with England. By arresting the claimant can enforce his claim and the ship may be sold by the Admiralty Marshal upon the order of the court and the claimant may recover his claim from the proceeds of sale.

    The issue of a warrant of arrest is of right and is not discretionary. There is no duty of full and frank disclosure as there is upon an application for an ex parte injunction: The Varna [1993] 2 Lloyd’s Rep 253. Since 1858 it has been established that only where an arresting party acted in bad faith or with such gross negligence as implies malice can it be made liable for damage caused by a wrongful arrest; see The Evangelismos (1858) 12 Moo PC 352.

    The claimant in rem obtains the issue of a warrant of arrest as of right. If the court were to say that in exercise of its discretion to order release, the vessel must be released from arrest unless a cross-undertaking in damages is provided, the exercise of its discretion would negate the principle that a claimant may obtain the issue of a warrant of arrest without providing a cross-undertaking in damages.

    Therefore, if a defendant has a vessel which is likely to visit English shores, it would be worth considering an arrest in England as the perfect weapon to secure a claim rather than the more usual freezing injunction.

    Jonathan Chambers

    Jonathan has a broad practice covering all aspects of commercial and transport law.  

    He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior, with Chambers UK (2018) commenting “A tenacious advocate with an admired intellectual capacity. His redoubtable practice focuses on complex cases involving personal injury and fatality”  and “He is easy to work with and responsive. He quickly identifies the issues”  and Chambers UK (2016) commenting that he is “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2016) describing him as “Very well prepared”

    Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.

    Jonathan acts on behalf of shipyards, ship-owners, rig owners, crewing agencies and shipping unions and the Royal Yachting Association. He is involved in a large volume of wet and dry shipping cases including cargo claims, pilotage, collisions and groundings. International ship-building, rig-construction and repair cases are also a strong feature of his practice.

    He frequently acts in inquests involving aviation and maritime incidents and the civil claims which follow.

    click to view Jonathan's full profile

  • Quadrant Chambers Special Edition: Cross-Border Insolvency and International Trade (Vol 2)View More

    Wed, 21 November, 2018

    Insolvency issues arise for businesses and clients in any sector. Quadrant Chambers has a well-established reputation in cross-border insolvency disputes in the specialist sectors in which we have in depth knowledge, such as aviation, commodities, energy, insurance and shipping.  We have acted in some of the largest insolvencies of recent times including OW Bunkers, Hanjin Shipping, Arik Airlines and Alpha Insurance.  

    Our sector expertise and experience in cross-border insolvency gives us a unique insight into legal and commercial problems which frequently arise from the interaction of cross-border insolvency legislation and choice of law rules, the law of property, international trade law and international conventions.

    Our barristers regularly contribute to the specialist journal International Corporate Rescue’. Here we bring you the Quadrant Chambers Special Edition: Cross-Border Insolvency and International Trade (Vol 2). The special edition looks at how the law continues to develop in this area.

    > Download the Quadrant Chambers Special Edition: Cross-Border Insolvency and International Trade (Vol 2).

    Articles include:

    • Proving for Foreign Currency Debts in a Solvent Administration or LiquidationMichael Howard QC
    • The Collapse of Hanjin Shipping: An English Lawyer’s PerspectiveRobert Thomas QC and Jeremy Richmond
    • If a Tree Falls in the Forest … Shouldn’t the Saplings in the Clearing Benefit?Thomas Macey-Dare QC on slots and airlines insolvencies
    • Insolvencies in the Supply Chain: Recourse against the Owner of the GoodsMatthew Reeve
    • Bakhshiyeva v Sberbank of Russia et al. [2018] EWHC 59 (Ch):Permanent Stays under the Cross-Border Insolvency Regulations 2006 – Jeremy Richmond
    • Subrogation Based on Unjust Enrichment: Menelaou v Bank of Cyprus PlcClaudia Wilmot-Smith
    • Unjust Enrichment and the Direct Transfer Rule: Investment Trust Companies v Revenue and Customs Commissioners - Claudia Wilmot-Smith
    • Thomas v Frogmore: COMI Factors and Improper Motive Reviewed Liisa Lahti
    • Ronelp Marine Ltd & Others v STX Offshore & Shipbuilding Co. Ltd [2016] EWHC 2228 (Ch) - Joseph England

  • New claims may be added relatively late in a proceeding if they are within scope of reference to arbitration - JJ GassView More

    Fri, 16 November, 2018

    This article was first published by the Practical Law Arbitration Blog here. 

    Arbitration specialists in solicitors’ firms are familiar with the evening phone call from transactional colleagues: “Can you look at our arbitration clause? We need to sign the contract tonight”. Frustrating as such entreaties can be, it is preferable to be asked in advance than to encounter a problematic clause for the first time after a dispute has arisen.

    It is not known whether that happened in a case that recently made its way to the Technology and Construction Court. What is apparent from the judgment in Bond v Mackay and others is that the contract’s dispute resolution clauses (plural) may have contributed to unnecessary expenditure of time and money.

    Another instructive point from the judgment is that a claimant may preserve its ability to bring new claims into an arbitration, even at a fairly late date, if it draws its notice of arbitration in wide and general terms.

    The case arose from a dispute between a land owner, Bond, and the owner of a gas pipeline running under his property, Southern Gas Networks plc. A deed between Bond and Southern Gas’s predecessor provided that Bond would not do anything on the land that would damage the pipeline. Bond leased to a third party the right to extract clay from the site. No clay could be extracted from the area adjacent to the pipeline because of Bond’s undertakings in the deed with Southern Gas. He claimed compensation for the partial sterilization of his mineral rights.

    The problem arose from the question of which particular provision of the deed Bond intended to rely on. There were three possibilities. Two were found in Clauses 5 and 6 of the deed. Each contained its own arbitration provision, similar in effect: arbitration before a sole arbitrator to be appointed by the Lands Tribunal (now the Upper Tribunal) if the parties could not agree. The other possibility was Clause 2, which was subject to a third arbitration provision, this time with the appointment to be made by the Royal Institution of Chartered Surveyors (RICS) if the parties did not agree.

    In most of the pre-arbitration correspondence referred to in the judgment, Bond’s solicitors claimed compensation under Clauses 5 and 6 and, it appears, never directly referred to Clause 2. When they referred the dispute to arbitration, however, they applied to RICS. The arbitrator referred to terms of reference under which, as he understood it, the dispute concerned “the compensation payable to [Bond] in respect of the sterilization” of clay. Bond’s statement of case referred to Clauses 5 and 6, but not to Clause 2. After his Clause 5 and 6 claims failed, he sought to introduce a claim under Clause 2. The arbitrator found he had no jurisdiction over that claim. Bond applied under section 67 of the Arbitration Act 1996 to set aside that determination.

    If it is surprising that the application succeeded, that is because I have omitted one key fact. In their application to RICS, Bond’s solicitors requested appointment of an arbitrator in respect of “a dispute as to valuation and compensation”. The Deputy High Court Judge (Jonathan Acton Davis QC) held that he must “take a broad view of the factual matrix as shown by the correspondence leading up to the appointment of the Arbitrator” and concluded that the claim under Clause 2 was for “compensation” within the scope of the reference to arbitration.

    Three observations may be in order:

    It may have made sense to those who drafted the deed that a chartered surveyor would be an appropriate arbitrator for a dispute under Clause 2, so RICS should make the appointment, while Clauses 5 and 6 differed in a manner that made the Lands Tribunal appropriate. But they may not have considered that a dispute could arise under all three clauses. Notably, the deed provided that if the same subject matter gave rise to disputes under the deed and between Bond and the owner of an oil pipeline running alongside the gas pipeline, the disputes would be resolved in a single arbitration. This showed foresight an arbitration practitioner would admire.

    The broad wording of the reference to arbitration gave the arbitrator jurisdiction over the Clause 2 claim, but it is not clear from the judgment whether he could still decline on discretionary grounds to permit the late amendment of Bond’s statement of case. Nonetheless, by phrasing the reference in general terms, Bond’s solicitors preserved their ability at least to attempt to introduce the Clause 2 claim.

    Matters might have been different had this been an institutional arbitration. The judge noted that the terms of reference to which the arbitrator referred were not those “required in a number of the Rules which govern international arbitrations”, an apparent reference to the ICC Rules. Article 22(4) of those rules precludes a party from introducing claims outside the scope of the terms of reference without the tribunal’s authorisation. Similarly, Article 22 of the UNCITRAL Rules permits amendment of a party’s pleading to add a new claim unless the tribunal considers it “inappropriate”. Both explicitly direct the tribunal to consider “the stage of the arbitration” (ICC) or “delay in making” the new claim (UNCITRAL) in deciding whether to exclude the claim, even though the claim is within the tribunal’s jurisdiction.

    JJ Gass, Pupil, Quadrant Chambers

  • Quadrant Chambers in the first civil appeal to be live streamed - Paul Downes QC and Joseph SullivanView More

    Thu, 15 November, 2018

    Paul Downes QC and Joseph Sullivan are live in the Court of Appeal in the first civil appeal hearing to be live streamed - WH Holding Limited & Anr v E20 Stadium LLP, instructed by Neil Warner at Gateley Plc

    The live stream can be viewed via the judiciary website: 

    Paul Downes QC

    Paul specialises in commercial law, and has specific expertise in banking and finance-related matters.

    After taking Silk in 2010, his reputation as a tough, commercially-minded barrister has continued to grow.

    Before coming to the Bar, Paul worked for Barclays Bank and was an assistant examiner for the Chartered Institute of Bankers. A direct understanding of the commercial and financial worlds means clients benefit from a practical and user-friendly approach. Paul has also acted as an expert witness overseas in relation to banking regulation in the UK, and is lead contributor to Butterworths LexisNexis Encyclopedia on Forms and Precedents.

    Paul also handles general commercial litigation, international trade, media and entertainment, and professional negligence. He acts as an arbitrator in LMAA shipping disputes, commercial disputes and insurance disputes.

    He is recommended as a leading silk for commercial dispute resolution in Chambers & Partners UK Bar 2019 and for Banking & Finance, Commercial Litigation, Financial Services and Fraud: Civil in Legal 500 2019. 

    > view Paul's full profile

    Joseph England 

    Joe practises in a wide range of commercial disputes.

    Joe began his legal career qualifying as a solicitor at Allen & Overy LLP before transferring to the Bar. Joe spent the first year of his practice as the Judicial Assistant to Lord Sumption and Lord Wilson at the Supreme Court. He soon returned as counsel to the Supreme Court in Bank of Cyprus UK Limited v Menelaou [2015] UKSC 66.

    Since starting practice in August 2013, Joe has been engaged, on a near full-time basis, in a major ICC oil and gas arbitration in London and Geneva, and subsequent related litigations, working and appearing with legal teams in Poland, The Netherlands, Ireland, Curaçao, Nigeria, Mauritius, Scotland, the US, London and Switzerland.

    > view Joseph's full profile

  • The Pacific Voyager - When is an owner under a voyage charterparty obliged to commence the approach voyage to the loadport?View More

    Mon, 05 November, 2018

    CSSA Chartering and Shipping Services SA v Mitsui OSK Limted Ltd  "The Pacific Voyager" [2018] EWCA Civ 2413

    > Download the judgment

    In this important decision, the Court of Appeal considered the obligation of an owner under a voyage charterparty to commence the voyage, in circumstances where the charterparty did not contain a date of expected arrival or expected readiness to load at the load port.

    It is well settled that, if a voyage charter contains a provision that the shipowner will proceed with all convenient speed or utmost despatch to a load port, and also gives a date of expected arrival or expected readiness to load at the load port, then the law imposes on the owner an absolute obligation to commence the voyage to the loading port at such time as it is reasonably certain that the vessel will arrive on or around the expected date. In effect, the shipowner is held to the estimated date of arrival or readiness to load which he has given in the charterparty. That was first settled by the Court of Appeal in Monroe Brothers Ltd v. Ryan [1935] 2 KB 28, and was followed by Devlin J. in Evera S.A. Commercial v. North Shipping [1956] 2 Lloyd’s Rep. 367. In those cases, the charterparties had specified a date when the Vessel could be expected to load. In The Myrtos [1984] 2 Lloyd’s 449, the principle was extended to a charterparty which had an expected time of arrival at the loadport rather than an expected readiness to load.

    Monroe Brothers Ltd. v. Ryan also decided that the general exceptions clause in a voyage charterparty does not apply until the approach voyage to the load port has commenced. Therefore, if an excepted cause has prevented the owner from commencing the approach voyage by the relevant date, the owner is unable to rely upon the exception as relieving him from liability.


    In the instant case, the charterparty was on an amended Shellvoy 5 form which provided that, subject to its terms, the Vessel was to perform her service with utmost despatch and proceed to the load port, but it did not contain an expected time of arrival or readiness to load. It did, however, give details of the anticipated timetable for completion of the voyage under the prior charter, on which the Vessel was currently engaged. Those details comprised the Vessel’s current position, and ETAs for transiting the Suez Canal, loading and then discharging at Antifer, all qualified “iagw/wp” (“if all going well/weather permitting”). The charterparty also contained a cancelling clause.

    Whilst the Vessel was transiting the Suez Canal, she struck a submerged object, leading to serious flooding. Lengthy repairs were required. The charterers exercised their right under the cancelling clause, and terminated the charter. They also claimed damages, alleging that the owners were in breach for failing to commence the approach voyage to the load port.

    The Issue

    The question for the Court was whether, in the absence of any date for the Vessel’s expected time of arrival or readiness to load, there was nevertheless an absolute obligation to begin the voyage to the loading port and, if so, the point in time at which that absolute obligation took effect. It was common ground that the rule identified in Monroe v. Ryan (that the exceptions in the charterparty did not apply until the approach voyage had commenced) could not be challenged in the Court of Appeal, and therefore was presumed to be correct for these purposes. The owners were therefore unable to rely on those exceptions in relation to the incident.

    Popplewell J. at first instance had decided that the ETAs contained in the charterparty relating to the performance of the Vessel’s current voyage were the equivalent of an expected time of arrival or readiness to load. Accordingly, he held that the owners were under an absolute obligation to commence the voyage to the load port at the end of a reasonable discharging period for the Vessel after the ETA given in the charterparty for final discharge at Antifer under the prior charter. He also held that, if it was wrong to use the ETA for discharge then, in the alternative, the owners were obliged to commence the approach voyage at a date when it would reasonable be expected that the Vessel could arrive by the cancelling date.

    Before the Court of Appeal, the owners argued in summary that:          

    a.   On a proper construction of the wording of the instant charterparty, the obligation to commence the approach voyage and proceed with “utmost despatch” could only attach when the Vessel had departed from the last discharging port, under the previous charter, and that, since she never did, the obligation in fact never arose. Therefore, the owners were not in breach. This followed from the absence of an expected time of arrival or readiness to load, and the fact that the obligation of utmost despatch was expressly made “subject to the terms of this charter”. The inclusion of the itinerary of expected dates for the previous charter made clear that the Vessel was performing a prior service before the voyage under the instant charterparty, which was underscored by the fact that these were qualified “bss iagw/wp”.

    b.   The cancelling clause was irrelevant because it merely gave the charterer an option to cancel, without any right to claim damages.

    The charterers argued that:

    a.   The reasoning of Popplewell J. should be upheld, in that the inclusion of the itinerary for the previous charter showed that it was intended as an equivalent to a statement in respect of the time at which the Vessel was expected to arrive or be ready to load.

    b.   Alternatively, the obligation to commence the approach voyage with the utmost despatch must at least arise at such time as it was reasonable to suppose that the vessel should sail to meet the cancelling date.

    The Decision

    The Court of Appeal upheld the decision of Popplewell J. Adopting the reasoning of Devlin J. in Evera, if the obligation to proceed with utmost despatch was to be given any effect at all, some time for sailing had to be put in. That meant that the Vessel had to proceed either “forthwith” at the date of the charter, or “within a reasonable time”. The inclusion of the itinerary showed that “forthwith” could not be meant. In Evera, Devlin J. had held that a shipowner was permitted to have recourse to the expected date of readiness to load. There was no particular magic in the concept of a date of expected readiness to load, and the itinerary for the prior charter was equally useable to enable the Court to decide what was the reasonable time at which the obligation of utmost despatch was to attach. The addition of the qualification “bss iagw/wp” was not merely intended to indicate that the Vessel was subject to a previous charter. It underscored that the itinerary consisted of estimates, given honestly and on reasonable grounds. If an owner wished to make the beginning of the chartered service contingent on the conclusion of the voyage under the previous charter, then much clearer words were required.

    The Court therefore did not need to consider whether, in the absence of the itinerary under the prior charter, reliance could be put on the cancelling date. That was a question for another day.


    This is an important decision, providing guidance on how the principles identified in Monroe v. Ryan are to be applied where there is no statement of the expected time of arrival or readiness to load at the load port. That is a not unfamiliar scenario in modern day voyage charters.

    Where such statements are absent, the question in any particular case will be whether an equivalent can be identified, which the parties can be taken to have intended be used as the basis for an absolute obligation requiring the owners to proceed to the load port by a particular date. In this case, the Court of Appeal considered that the itinerary for the voyage under the prior charter was just such an equivalent.

    The owners are applying to the Court of Appeal for permission to appeal to the Supreme Court.

    Simon Croall QC and Stewart Buckingham represented the owners, instructed by Michael Biltoo and Freddie Mehlig, Kennedys LLP, and John Russell QC represented the charterers, instructed by David Bennet, Harriet Defreyne Kelk, Clyde & Co LLP.


    Simon Croall QC

    Simon Croall QC is Head of Quadrant Chambers. He is an established commercial silk who has appeared in every court (including two recent appearances in the Supreme Court). He is a sought after trial advocate as well as being respected in the appellate courts. In recent years much of his work has been in the context of International Arbitrations.

    He led the team for Owners in the landmark House of Lords case on remoteness in contract damages Transfield Shipping v Mercator Shipping ("The Achilleas") [2009] 1 AC 61. Recent reported highlights include another important case on damages Fulton Shipping v Globalia (The New Flamenco) in the Supreme Court [2017] UKSC 43, the Court of Appeal [2015] EWCA 1299 and below [2014] 2 Lloyd’s Rep. 230; The Longchamp [2018] UKSC 68 first reported English authority on the interpretation of Rule F of the York Antwerp Rules, arising in the context of ransom piracy payments; ST Shipping & Transport Pte Ltd v Space Shipping Ltd (“The CV Stealth”) [2018] 1 Lloyd's Rep. 276; [2016] 2 Lloyd’s Rep. 17(claims arising out of the detention of a vessel by Venezuelan authorities); Jiangsu Shagang Group v Loki Owning Group (“MV Pounda”) [2018] 2 Lloyd's Rep. 359 and Essar Shipping v Bank of China [2016] 1 Lloyd’s Rep. 427.

    He also has a global practice with a depth of experience working with Chinese and south east Asian clients. This was recognised by his ranking as a leader in International Arbitration by Chambers Asia Pacific 2018 and Legal 500 Asia Pacific Guides. Simon was named one of the top 10 maritime lawyers of 2017 by Lloyd's List. Simon has been nominated for Shipping Silk of the Year at the Chambers & Partners Bar Awards 2018.

    He is also a recommended as a leading silk Shipping and Commodities (Legal 500 UK and Asia Pacific, Chambers UK, Asia Pacific and Global editions), Energy (Legal 500 UK) and Information Technology (Chambers UK).

    > view Simon's full profile

    Stewart Buckingham

    Stewart is a commercial barrister, specialising in commercial law, mainly focussing on commercial litigation and international arbitration. He has extensive trial, interlocutory and arbitration experience, and also undertakes advisory work and drafting. His takes a commercially driven approach tailored to the practical needs of his clients, and aims to deliver excellence in the services he provides. He is particularly adept at dealing with complex technical disputes.

    He has been consistently ranked as a 'Leading Junior' in both the leading directories for several years. Comments have included:

    "praised for his approachability and user-friendliness, and is further admired for his advocacy skills"; "a delight to work with"; "easily understandable advice and commercially minded, down-to-earth style" (Chambers UK).

    ‘A leading junior for many years now, he has a can-do attitude and a deep understanding of the legal and commercial issues.’ (The Legal 500).

    > view Stewart's full profile

    John Russell QC

    John is an experienced and determined advocate and has acted as lead Counsel in numerous Commercial Court trials, international and marine arbitrations and appellate cases, including in the Supreme Court. He relishes both detailed legal argument and cross-examination of lay and expert witnesses. He will always ensure that a client's case is presented in the most persuasive manner possible, both in writing and orally. John provides advice to a wide range of clients. He combines first rate technical legal analysis with a pragmatic, commercial, problem solving approach to cases. John accepts instructions in many fields of commercial dispute resolution with a particular focus on shipping, commodities, international trade and marine insurance.

    “Very easy to work with and a very good litigator.” “An excellent advocate whose assessment of cases is invaluable.” (Chambers UK, 2019)
    "He’s incredibly impressive, and is someone who always comes up with points that are insightful. He’s incredibly impressive, excellent on his feet and a joy to work with." (Chambers UK, 2018)
    "...Particularly highly rated, he has a sharp mind and provides clear advice...." (Legal 500, 2017)
    "The kind of barrister you would want to have on your side. He's not afraid to challenge anyone on anything." "He's bright, commercial, user-friendly and he delivers when you need it." (Chambers & Partners UK 2017)

    > view John's full profile