Under a fob-sale it is normally the duty of the buyer to arrange for the sea carriage of the goods. Under a cif-sale it is the responsibility of the seller to take care of the sea-carriage. In this case, both circumstances point in the direction that it is the duty of HT Export to enter as (contractual) shipper into a contract of carriage with a carrier. The facts of the case do not state who the carrier is, however the bill of lading is issued by the master in the name of ship-owners. In all likelihood therefore the contract of carriage which gave rise to the issuance of the bill of lading is between HT Export as (contractual) shipper and ship-owners as carrier.
A bank is not entitled to a refund. It has accepted the document and is therefore estopped to go back on its taken position.
Jansen was entitled to the Bill of Lading notwithstanding the fact that HT Export was contractual shipper under the contract of carriage. Under the contract of sale between Jansen and HT Export, Jansen was entitled to the bill of lading because of the “cash against documents”-payment term. Under the contract of carriage it is the duty of HT Export as contractual shipper to give instructions to ship-owners as carrier, as to how to fill in the bill of lading. As follows from the facts of the case, the bill of lading states Jansen as (documentary) shipper, which implies that ship-owners as carrier had the consent of HT Export to issue the Bill of Lading to Jansen as documentary shipper under the bill of lading.
HT Import is not a party to the Bill of Lading contract. Under English law the consignee of a B/L does not receive contractual rights according to common law. Section 2 COGSA does attribute such contractual rights to a consignee, who thereafter is treated as if he was a party to the B/L contract, but only if there is a proper endorsement. Since there is no valid endorsement HT Import did not obtain contractual rights. But on the facts of the case (ship-owners delivered the cargo to HT Import who paid the handling costs) HT Import and ship-owners have concluded a collateral, so-called Brandt v Liverpool-contract, on the terms of the Bill of Lading. On the basis of this collateral contract HT Import can claim for loss and damage.
HT Import does qualify as owner of the cargo. Ownership is not dependent on endorsement of the B/L, but only on the intention of the parties (Section 17 Sale of Goods Act 1979). The intention to transfer ownership is evident from the facts. If HT Export were still the owner, the liquidator in the bankruptcy could have claimed the cargo, since ownership has priority above contractual rights (Kum v Wah Tat Bank).
A third-party consignee of a B/L may rely on the terms of the B/L. Since the B/L is a “freight pre-paid” B/L, ship-owners are estopped from claiming unpaid freight from the consignee. Because HT Import is a party to the collateral contract on B/L terms, ship-owners are likewise estopped from claiming unpaid freight from HT Import.
Liability of the stevedore does not take away the liability of the carrier, since the stevedore is an independent subcontractor of the carrier and his duties remain the duties of the carrier.
The Before and After clause is indeed of importance. Although HT Import is not party to the B/L, it is party to the collateral contract on the B/L terms. Therefore ship-owners may invoke the protection of the Before and After clause in the bill of lading.
According to English law, a certificate to bearer is not a negotiable instrument and the insurer can hold the avoidance against a third party in good faith. However, under Dutch law an insurer cannot invoke avoidance of the insurance contract as against a third party, holder of a certificate to bearer, in good faith. Such a third party is under the protection of art. 6:146 Dutch Civil Code.
As a main rule the party that bears the risk of the cargo at the moment the damage occurs has an insurable interest. In order to determine who bears that risk, the trade terms fob and cif are important. According to both terms the risk of the cargo passes from seller to buyer when the cargo is loaded on board the ship. So we have to look where the damage occurred. The rotting damage occurred before loading. That means that the risk of the cargo still was for farmer Jansen in his contract with HT Export and for HT Export in its contract with HT Import. The loss happened after loading, so the loss was for risk of HT Export in its contract with farmer Jansen and for HT Import in its contact with HT Export. On that basis Underwriters have to pay HT Import for the loss damage. Underwriters would not have to pay HT Import for the rotting damage, but for the assignment of the insurance certificate. (The insurance claim of HT Export is embodied in the certificate and transferred to HT Import).
Comments