When is the ‘shipper’ not the shipper?
24 June 2020
MVV Environment Devonport Ltd v NTO Shipping GmbH & Co. KG “Nortrader”
It is important to know who you are contracting with and who can sue or be sued where claims arise. In this case, the question was whether the ‘shipper’ named in a bill of lading was, in fact, a party to the contract of carriage evidenced by that bill when it had given no authority to an agent to name it. The answer was “sometimes it is not”.
MVV specialised in the conversion of waste products into energy. A Dutch company, RockSolid BV (RS) contracted with MVV to collect a waste product (unprocessed incinerator bottom ash or UIBA) from MVV’s plant in Plymouth. MVV paid a fee to RS and RS arranged and paid for shipping of the UIBA to RS’s recycling plant in the Netherlands. RS took title on collection, so the arrangements made by RS included paying for storage at the loading port, chartering a vessel and arranging for bills of lading to be issued, through the port agent. The judge noted that the contractual arrangements between MVV and RS were akin to an ex works sale agreement.
33 shipments of MVV material were arranged by RS between 2015 and early 2017. In each case, MVV was named as shipper and received a draft copy of the bill of lading. Unfortunately on the 34th shipment an explosion occurred on board the vessel Nortrader. The owners of the vessel brought a claim for damages and commenced London arbitration against MVV as the named shipper on the bill of lading. MVV said they were not a party to the contract of carriage evidenced by the bill of lading and therefore no arbitration agreement between the two existed, so the Tribunal had no jurisdiction.
The tribunal held that it did have jurisdiction. MVV appealed to the High Court.
As the bill of lading is only evidence of a contract of carriage concluded at an earlier point in time, the judge held that it was open to either party to show that they had been wrongly identified. Being named as ‘shipper’ in the bill of lading was not decisive, it was only a starting point.
In this case, MVV was not the correct party. MVV had given no express or implied authority to the port agent, or to RS, to enter into contracts of carriage on its behalf.
Although the port agent had named MVV as a shipper on a bill of lading not less than 33 times previously and had sent the draft bills to MVV on each occasion, MVV had never responded (or complained). The court said, however, that a failure to object on the part of MVV was insufficient to imply that it had granted any ostensible authority to the agent. The 33 previous shipments were not known to the owners of the Nortrader and they could not be said, therefore, to have relied on a course of previous dealing. Mere silence by MVV did not amount to assent to be named as shipper.
In conclusion, it cannot be assumed that the party named on the bill of lading as ‘shipper’ is the counterparty to the contract of carriage with the carrier; normal rules of contractual construction still apply in establishing the correct parties.
This is a very important reminder that the written details on a bill of lading are just a starting point. Carriers (and NVOCs) often look to a shipper where dangerous goods have been shipped or goods have been abandoned by a consignee, but if the shipper has been named without their knowledge or involvement (for example, because the export documentation needs to tally) problems may arise. Similarly, freight forwarders and other agents need to take particular care to ensure they have appropriate authority to name the shipper in the bill of lading.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2020.