JUR5401/JUR1401 – Maritime Law
 

I. On November 15 2008 Stella Smith, Birmingham, UK, entered into an agreement with Birger Bendtson, Oslo, Norway, regarding the sale of 5,000 metric tons of corn for use in Birger Bendtson’s pop-corn factory to be delivered no later than 29 January 2009. The sale was on C/F-terms, meaning that Stella had to procure and pay for the transport of the corn.

Stella contacted the owner of the shipping company Quicktrans Ltd, who undertook to carry out the transport. Quicktrans Ltd. did not own any vessels, but chartered them in on time charter parties. One of the chartered ships was M/S Sweet Pea, which was owned by Mr. Big Ltd, and chartered by Quicktrans Ltd. on a Baltime (2001) time charterparty. Due to the quantity of the product, Stella and Quicktrans Ltd. agreed that Stella should charter  M/S Sweet Pea from Quicktrans Ltd on a voyage charterparty.

Birger did not have a storagefacility at the port. Consequently, it was made a provision of the charterparty that the cargo should be pumped into Quicktrans Ltd.’s silos at the port. Birger would then take delivery by picking it up by truck.

In due course, Stella delivered the corn to Quicktrans Ltd. Upon delivery, Stella received a bill of lading for the whole cargo, signed by the first mate of M/S Sweet Pea “on behalf of the master.” The bill of lading was transferred to Birger in exchange for the agreed purchase sum.

In the bill of lading was the following clause: “The Hague-Visby Rules as enacted in the country of shipment to apply. The Carrier in no event to be responsible for loss of or damage to the cargo arising prior to loading or after discharge.”

When Birger came to pick up the goods in due course, the following was discovered:

1) Despite the B/L stating 5,000 metric tons, only 4,800 were received. After further investigations it turned out that only 4,800 tonnes were ever received unto the vessel in the first place, however the first mate had relied on Stella's statement as to the quantity.

2) 2,000 tons of the corn was damaged by water and had to be condemned. It turned out that the roof of the silo in which it had been stored was leaking.

Birger had paid NOK 450/ton for the corn. He stated his claim thus:

200 tons missing 90,000
2,000 tons condemned 900,000
Cost of destruction of the cargo, NOK 200/ton 400,000
 
Total, NOK 1,390,000

Birger claimed the full loss from both Quicktrans Ltd. and Mr. Big Ltd. Both refused liability; their main arguments being these:

Quicktrans Ltd. refused any liability as there was no direct contractual relation between themselves and Birger. Alternatively, Quicktrans Ltd. argued that they could not assume any liability for errors the first mate onbord M/S Sweet Pea had made in issuing the bill of lading, and that according to the bill of lading, they were not be liable for any damage to the goods after the discharge of the goods. It was not disputed between the parties that this would indeed be the position of the law in England, the country of shipment.

Mr. Big Ltd. principally refused to be liable for any of the damages whatsoever.

Alternatively, both Mr. Big Ltd. and Quicktrans Ltd. argued that irrespectively of the validity of the clause in the Bill of Lading, the cost of destruction of the cargo was irrelevant to them. 

Both Mr. Big Ltd. and Quicktrans Ltd. also argued that if they were liable for the 200 tons that were missing, Stella Smith would be liable in recourse for this claim. Stella disputed that any base for recourse existed.

No settlement could be achieved between the parties, and Birger ultimately initiated proceedings before the Courts of Oslo. To settle the issue once and for all, both Quicktrans Ltd. and Mr. Big Ltd. accepted the jurisdiction of the Court, and Stella accepted to be summoned to the proceedings.

Quicktrans Ltd. accepted that under the time charterparty Mr. Big Ltd. would have a claim in recourse against Quicktrans Ltd. in case Mr. Big Ltd. was found liable as towards Birger, so the question of recourse between Quicktrans Ltd. and Mr. Big Ltd. was left out of the proceedings.

How should the judge rule?

II.   Answer the following questions:

1. What are the characteristic features of maritime liens?
2. What is a bareboat charter party
3. Explain the common safety principle
4. Explain the difference between the insurable value and sum insured in hull insurance for ships.

All questions shall be answered