Sea Success Maritime Inc v African Maritime Carriers Ltd.

A charterparty clause requiring the master to reject cargo subject to clausing of the bill of lading must be construed in its commercial context. “Clausing” means adding a notation which qualifies existing statements about the description or apparent condition of the goods. The obligation to reject does not arise merely because the first draft description is inaccurate or incomplete. The charterer or shipper may revise the proposed description before loading. Rejection is required only where the shipper persists with wording which would require the master to qualify the statement of apparent order and condition, so that the signed bill would otherwise be inaccurate.

Sea Success Maritime Inc appealed under section 69 of the Arbitration Act 1996 from a final declaratory award concerning the construction of clause 52 of a time charterparty. The clause provided that the master had the right and must reject cargo subject to clausing of the bills of lading.

Damaged steel cargo had been tendered at Novorossiysk. The arbitrators held that rejection was required only where the cargo, as ultimately proposed to be described by the shipper, would require qualification of the statement of apparent order and condition. They further held that those circumstances did not exist because the charterers proposed to incorporate the accurate description identified by the owners’ surveyors. The appeal concerned the construction of clause 52 and its application to the cargo.

1. The appeal was dismissed. The arbitrators had not erred in law.

2. Per Aikens J, the construction of a commercial document is partly a question of fact and partly one of law. Clause 52 had to be construed against the factual and commercial background of a time charterparty, including the established roles of owner, master, charterer and shipper.

3. In its context, “clausing” meant a notation on the bill of lading by the master or his agent which qualified existing statements concerning the description and apparent condition of the goods. Cargo properly described as damaged or imperfect could nevertheless be stated to be in apparent good order and condition if that wording meant proper order and condition of the goods as described.

4. The master was required to inspect the cargo before loading and take a reasonable, non-expert view of its apparent order and condition. If the proposed wording required qualification, the charterer or shipper could reformulate the description. The master acquired the right and duty to reject only if the shipper persisted in wording which would make the signed bill of lading inaccurate.

5. That construction was commercially workable and consistent with the implied requirement that the parties act reasonably to make the charterparty work. At Novorossiysk, the charterers proposed to incorporate the apparent order and description found by the club surveyors. No qualification was therefore required, and the master had no right to reject the cargo.

The appeal was brought under section 69 of the Arbitration Act 1996 from a Final Declaratory Award dated 3 March 2005 made by three London maritime arbitrators. Leave to appeal was granted on 26 May 2005. The High Court dismissed the appeal.