Sabo SA v United Arab Shipping Company (SAG)

A carrier does not breach its contract, or misrepresent the carriage arrangements, where transhipment forms part of the agreed delivery process and the shipper knows that this is so. A bill of lading may inaccurately identify the ocean-going vessel and omit a feeder voyage, but that inaccuracy does not constitute a misrepresentation to a shipper who was party to the arrangement and was not deceived by it. A counterclaim for container, storage or related losses requires proof of the contractual or other duty said to have been breached and of the relevant causation and loss.

SABO contracted to supply machinery to a Saudi Arabian customer under a letter of credit which prohibited transhipment. It arranged carriage from Greece to Jeddah through UASC’s agent, using a feeder vessel from Piraeus to Gioia Tauro and an ocean vessel from Gioia Tauro to Jeddah. The bill of lading identified only the ocean vessel and contained wording referring to the letter of credit.

After the feeder vessel stranded and the cargo was damaged, SABO alleged that UASC had misrepresented the carriage arrangements and breached the contract. UASC counterclaimed container rental, storage and replacement costs. The central issues were whether transhipment had been agreed or concealed and whether either party had established liability for the consequences of the casualty.

1. SABO’s claim dismissed. The court found that, by the end of the factory meeting, SABO’s relevant personnel knew that UASC’s service involved a feeder voyage to Gioia Tauro followed by transhipment onto an ocean-going vessel. The contract of carriage therefore included transhipment, and UASC did not breach it by engaging the feeder vessel.
2. There was no actionable misrepresentation to SABO. Although the bill of lading inaccurately stated that the ocean vessel carried the goods from Piraeus to Jeddah, SABO knew the true position and participated in producing documentation intended to satisfy the letter of credit and mislead later document-holders, including the paying bank. The inaccuracy was therefore not relied upon by SABO.
3. The court relied materially on the subsequent Greek shipment, which used materially identical documentation after SABO knew that transhipment had occurred. That conduct strongly supported the finding that SABO treated the prohibition as a matter of documentary compliance rather than actual compliance.
4. UASC’s counterclaim not made out. UASC had not proved that SABO was under a contractual or other duty to collect or dispose of the cargo after the salvage lien ended. There had been no formal abandonment of the voyage and no effective demand to collect the goods. The parties’ legal position remained uncertain on the evidence.
5. The court indicated that cooperation with the insurers was required to realise any remaining value in the cargo and release the containers. Costs were expected to follow the event, subject to submissions, with a possible reduction concerning the counterclaim.