Lloyd's Maritime and Commercial Law Quarterly
CONTRACTS WITH CONSIGNEES AND INDORSEES
P. N. Todd.*
The decision of the Commercial Court in K/S A/S Seateam & Co. v. Iraq National Oil Co. and others (The Sevonia Team)1 is welcome in interpreting the transfer of contractual rights and obligations in the Bills of Lading Act 1855, s. 1 as we may presume the diafters of that legislation intended. On the other hand, the ratio of the case is narrow, and there are probably still situations where the Act does not apply.
The relevant facts are as follows. The plaintiffs were owners of the vessel Sevonia Team, which was on charter to Colocotronis S.A. The case arose out of a cargo of crude oil shipped f.o.b. by INOC at Khor-al-Amaya for delivery at Portland, Maine, the eventual owners to be Petrofina Canada. Property passed to Petrofina on shipment, when the oil passed through the vessel’s permanent hose connection. Freight was payable at destination.
The bill of lading, signed by the master on behalf of the owners, provided for delivery:
“unto order Portland Pipeline Corporation for Order of Petrofina Canada on behalf of Pannac Limited or to their assigns upon payment of freight as per charterparty all conditions and exceptions of which charterparty including the negligence clauses, are deemed to be incorporated in this Bill of Lading”.
The oil was delivered and discharged, but not all the freight due under the charter was paid. Though originally a number of claims were made by the shipowners, the only live issue remaining before the court was for freight outstanding, claimed from Petrofina Canada as eventual consignees2.
The main interest in the case, and the issue that is examined in this article, is a question on which up to now there has been surprisingly little authority considering its importance. The specific issue was whether Petrofina Canada, as f.o.b. buyers, to whom property had passed on shipment, were liable for freight on a bill of lading on which they were named as consignees, by virtue of the Bills of Lading Act 1855, s. 1. Of course this raised the general question of the operation of that section. Though the most interesting, this was not, however, the only issue. It was also necessary for the shipowners to argue that the charter incorporated by the bill of lading meant the head charter to which the owners were party, rather than a sub-charter to which the consignees, but not the owners were party3. On both issues Lloyd, J., found in favour of the shipowners.
* University College, Cardiff.
2 There were originally four defendants, including the shippers and the other two parties mentioned in the bill of lading. But the claim against the shippers was settled, and in the case of Portland Pipeline Corporation and Pannac Ltd., writs were either not served or service was set aside. “Thus the claim against the third defendants, Petrofina Canada, is the only live issue before the Court”. [1983]
2 Lloyd’s Rep. 640, 642 (col. 2).
3 [1983] 2 Lloyd’s Rep. 640, 644. Lloyd, J., held, following The San Nicholas [1976] 1 Lloyd’s Rep. 8, distinguishing The SLS Everest [1981] 2 Lloyd’s Rep. 389, and citing Scrutton on Charterparties (18th edn.), p. 63, that “a general reference will normally be construed as relating to the head charter” (to which the shipowner was a party). The SLS Everest was distinguished because the terms of the head charter there were largely inapposite.
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