John Habergham, Myton Law, Hull U.K.

The recent Commercial Court judgement, MVV Environment Devonport Limited v NTO Shipping GmbH and Co KG was a challenge to a final arbitration award but really it was all about who is a party to a bill of lading contract.

The case involved the carriage of a waste product, a fatal accident occurring on board and the vessel owner seeking an indemnity from the shipper under a bill of lading for liability arising out of that incident.

The claimant challenged the award upon the basis that – yes it appeared as a shipper on the bill of lading; but, in reality, it was no such party.

There was a useful precis of the law in this regard, the Court noting the appearance of a party on a bill of lading is a starting point only and it is a presumption that can be rebutted.  The Court found that a contract of carriage is concluded before any bill of lading is issued evidencing its terms.  It is, therefore, open for a party to show that it was wrongly inserted in the bill of lading.

The Court agreed with the claimant.

Amongst other things, the Court noted that the claimant disposed of the waste product on terms which were akin to an ex works sale.  Title and risk of loss or damage to the goods passed at the claimant’s plant.  As an “ex works seller”, it had no obligation in and about procuring a contract of carriage.

The Court found, in looking at the relevant underlying contracts – the contract for disposal of the waste produce and the contract between the recipient of the ash and the relevant loading wharf that there was no clause making for any party granting authority by the claimant to name them as a party on the bill of lading.

It seems that, at its highest, the vessel owner’s case was that there had been 33 prior occasions when the product had been shipped and the claimant had appeared as a shipper on the bill of lading (even though this actual defendant carrier had not been a carrier in any of the 33 prior occasions).

In the absence of any express authority, the defendant carrier was driven back on an argument that, in effect, the claimant had passively allowed itself to appear as a shipper in 33 other bills of lading, was aware of this, but had not spoken up.

But the Court found that silence was the answer to both allegations by the defendant carrier that there had been express authority or implied actual authority.  Silence, in itself, was simply insufficient.  There had to be some other indication of an agency for and on behalf of the claimant, something upon which to hang the silence; something else other than silence before this allegation could be made good.

There was nothing.

So the claimant’s challenge succeeded.

Silence can be golden.