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Update Volume 2020/19 Priminds Shipping (HK) Co Ltd v. Noble Chartering Inc (MV Tai Prize) [2020] EWHC 127 (Comm) - No implied indemnity regarding statement of cargo’s apparent condition on loading

Published on 28 may 2020

A recent ruling of the English High Court has confirmed that if a shipper presents a bill of lading to the Master containing a description of the cargo, it should not be considered as a warranty as to the condition of the cargo but merely an invitation to the captain to make his own assessment of the external condition of the goods at the time of cargo. 

The MV “Tai Prize” was time chartered by the vessel’s head owners (“Head Owners”) to Noble Chartering Inc (‘Noble’) who in turn voyage chartered her to Priminds Shipping (HK) Co Ltd (‘Priminds’) for a voyage from Brazil to China. The vessel loaded a consignment of soybeans for which a clean B/L was issued by agents on behalf of the master without any reservations. The B/L was claused with ‘SHIPPED at the Port of Loading in apparent good order and condition on board the Vessel for carriage to the Port of Discharge …Weight, measure, quality, quantity, condition, contents and value unknown …

In the port of discharge it was found that part of the cargo was damaged by heat and mould prior to loading. As a result, the receivers filed a claim against the Head Owners and were subsequently awarded a sum in excess of USD 1m by a Chinese Court. The Head Owners settled with the receivers and then claimed a 50% contribution from Noble under the terms of the head charter. Noble paid USD 500,000 to Head Owners in settlement of their claim after which Noble sought to be indemnified by their charterer Priminds, in respect of its settlement (although there was no express provision in the voyage charter on which Noble could rely). Noble argued that the presentation of clean bills should be construed as shippers warranty that the goods were indeed in “clean” or good condition.

In the arbitration proceedings the tribunal found in favour of Noble. By presenting a clean bill of lading, the shipper had given a guarantee that the cargo was in an externally good condition. Under this guarantee, shippers and Priminds were implicitly bound to indemnify Noble. Priminds lodged an appeal against this arbitral award with the High Court in London. The High Court overturned the arbitration award. The inscription "clean on board" on the draft bill of lading presented by the agent could only be seen as an 'invitation' from the shipper to issue such a bill of lading. The captain himself was still obliged to check the condition of the cargo and to clause the bill of lading if necessary. The High Court further ruled that Noble could not invoke an implicit guarantee of indemnity because the Hague-Visby Rules did not oblige the shipper to guarantee the correctness of remarks.

This judgment emphasizes that a captain must always check the external condition of the goods at the time of loading and must correctly describe the cargo on the bills of lading. 

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