Americas Bulk Transport Limited (Liberia) -v- Cosco Bulk Carrier Limited (China) MV “GRAND FORTUNE” [2020] EWHC 147 (Comm)

In this appeal from an arbitration award the court was required to identify the disponent owner where it was not named in a charter recap.

Background

COSCO was the disponent owner of the Grand Fortune (the Vessel). By a time charter dated 15 November 2007 (the Head Charter), Cosco chartered the Vessel to Britannia Bulkers A/S (Bulkers). Bulkers’ obligations under the Head Charter were guaranteed by Britannia Bulk Plc (Bulk). Bulkers was a wholly owned subsidiary of Bulk.

The proceedings related to a sub-time charter of the Vessel (the Sub-Charterparty) contained in or evidenced by an email dated 16 May 2008 (the Recap). The Sub-Charterparty was negotiated between a freight trader employed by Bulk and ABT’s exclusive broker. The Sub-Charterparty was made by reference to the Head Charter.

The Recap named ABT as charterer but did not identify the disponent owner. By an email of 12 September 2008, a draft Sub-Charterparty dated 16 May 2008 (the Draft Sub-Charterparty) was sent to ABT naming Bulk as owner and ABT as charterer. It was never finalised.

In October 2008 Bulk went into administration and shortly afterwards in November of the same year, Bulkers was placed into insolvent liquidation. Disputes arose between COSCO and Bulkers and as part of a settlement COSCO took an assignment of Bulkers’ rights against ABT. COSCO then brought a claim against ABT in arbitration.

ABT alleged that its counterparty was Bulk and therefore the tribunal had no jurisdiction. By a majority the tribunal held that the counterparty was Bulkers and therefore the tribunal had jurisdiction.

Legal analysis

In the appeal, ABT submitted that ascertaining the identity of the parties to a contract was a question of fact to be determined by reference to all the relevant evidence even if it post-dated the contract in issue and even if it was not something known to both parties but only to one of them. COSCO submitted that identification of a party to a contract was a matter of contractual construction, which might be supported by extrinsic evidence known to both parties at the time the contract was made, however, material coming into existence after that time was immaterial to the issue.

The judge summarised the applicable principles as follows:

(i) Where a contract is contained in a document, the first question is whether the document sufficiently unequivocally identifies the parties. If it does not, then the question is one of construction of the relevant document and there is no factual investigation.

(ii) Where a contract is contained in, or evidenced in writing, but the document(s) do not enable the parties to be ascertained, then recourse to extrinsic evidence is permitted of what the parties said to each other and what they did down to the point at which a contract was concluded for the purpose of determining who the parties to the agreement were intended to be.

(iii) The approach to be adopted under (ii) was objective: the question the court had to ask is what a reasonable person furnished with the relevant information would conclude.

The Recap was evidence of an underlying agreement but it did not contain it. It did not identify expressly, impliedly or by reference who the disponent owner was. Principle (i) was of no assistance in the circumstances.

It was next necessary to consider the extrinsic evidence of what the parties said to each other and what they did down to the point at which the contract was concluded for the purpose of determining who a reasonable person, furnished with the relevant information, would conclude was the disponent owner.

The judge found that down to the date when the Recap was sent and received, it was known to ABT’s broker and the freight trader employed by Bulk that:

(a) Bulkers was charterer of the Vessel under the Head Charter;

(b) therefore Bulkers had the power to sub-charter the Vessel;

(c) the terms of the Head Charter as disclosed reinforced this view by providing that Bulkers’ performance of its obligations under the Head Charter was guaranteed by Bulk;

(d) the trader had not suggested that any entity within the Britannia Group other than the entity that had chartered the Vessel under the Head Charter was to be disponent owner under the Sub-Charterparty, because he had not been instructed to that effect; and

(e) if there had been an internal charter of the Vessel from Bulkers to Bulk (something which in light of the evidence was implausible) that was not something known to the broker and, therefore to ABT.

With regard to the internal charter in particular, there was no evidence of there being any disclosure, or even suggestion in the course of the negotiations of the existence, of a sub-charter between Bulkers and Bulk. The judge further noted that Bulk guaranteed the liabilities of Bulkers under the Head Charter. It would have been far more straightforward for Bulk to had become charterer in place of Bulkers when the Head Charter was being negotiated rather than guarantee Bulkers’ obligations if the intention was then to internally charter the Vessel from Bulkers to Bulk.

The fact that the trader was employed by Bulk and was based at Bulk’s London office and used a Bulk email address and phone number was in the circumstances plainly outweighed by the other extrinsic evidence, as above.

In those circumstances, the extrinsic evidence of what the parties knew, said to each other and did down to the date when the Recap was sent and received would have led a reasonable person, furnished with the relevant information, to conclude that Bulkers was the disponent owner. Everything that was said and done thereafter was irrelevant and immaterial.

The claim was dismissed.

Comments

It is important to note that the judge emphasised that the only admissible evidence relevant to the question who was the disponent owner was evidence of what the parties’ agents said to each other and what they did to up to the point at which the contract was concluded. ABT’s submission that post-contractual conduct was admissible to determine the parties to an agreement was rejected.

In any event, the judge noted that to the extent that evidence of conduct occurring after the event was relevant, then the terms of the letters of indemnity (with each having been issued by ABT and addressed to Bulkers) and the instructions to pay all hire due under the Sub-Charterparty to Bulkers was much more significant than the terms of the Draft Sub-Charterparty, which erroneously identified the wrong Britannia entity as the disponent owner and on which ABT was heavily relying.