P&O Nedlloyd BV v Arab Metals Co & Anor

A bill of lading remains operative while contractual obligations remain outstanding. A consignee who demands delivery may become subject to contractual liabilities, even if it has rights to reject the goods against its seller and regardless of title. An expressly authorised instruction varying the delivery place binds the principal according to its objective meaning.

Specific performance of a commercial contract remains discretionary. Where the claimant also has a damages remedy, the court asks whether justice requires specific performance or permits the claimant to be confined to damages. Delay is relevant, but the wider effect of the parties’ conduct is decisive. Failure to keep the defendant informed, causing it reasonably to believe that the problem had been resolved and depriving it of an earlier opportunity to act, may make specific performance inequitable.

P&O Nedlloyd carried two containers of scrap metal from Felixstowe to Ireland Alloys’ premises in Hamilton at Ireland Alloys’ request. The containers were found to contain radioactive material, and Ireland Alloys refused delivery. The containers remained at P&O’s depot for several years while efforts were made to secure their return or disposal.

P&O sought summary judgment or a mandatory injunction requiring Ireland Alloys to take delivery. Ireland Alloys denied contractual liability, relied on the alleged exhaustion of the bill of lading, and pleaded laches. The central issues were whether Ireland Alloys was contractually obliged to take delivery and whether equitable relief should be granted.

1. Contractual obligation. The bill of lading had not been accomplished when it was presented at Felixstowe. P&O’s obligations to provide onward carriage or to retain and deliver the goods remained outstanding. Ireland Alloys’ demand for delivery at Felixstowe, followed by the expressly authorised fax requesting delivery at Hamilton, was sufficient to engage contractual liabilities under section 3(1)(a) of the Carriage of Goods by Sea Act 1992.
2. Variation and delivery. The fax objectively varied the contractual delivery place from Felixstowe to Ireland Alloys’ Hamilton premises. It was immaterial whether the variation was agreed in prior telephone conversations, evidenced by the fax, or accepted by performance. Express specific authority made the fax binding, regardless of the agent’s general authority or Ireland Alloys’ subjective intention. Ireland Alloys therefore breached its contract by refusing to take delivery. Its possible right to reject the goods against Stena did not affect its separate obligation to P&O.
3. Repudiation. P&O’s decision not to tender the second container did not unequivocally demonstrate acceptance of a repudiation or termination of the carriage contract. The surrounding correspondence continued to hold Ireland Alloys responsible for costs, disposal and the consequences of non-delivery.
4. Specific performance. The court treated specific performance as discretionary. The relevant question was whether, in all the circumstances, justice required P&O to receive performance or permitted it to be confined to damages. Delay was only one factor. P&O’s failure to keep Ireland Alloys informed for nearly six years induced the belief that the containers had been returned and deprived Ireland Alloys of an earlier opportunity to address the problem. The overall conduct made an order for specific performance inequitable.
5. The application for a mandatory injunction was refused. P&O’s damages claims, including demurrage, storage and consequential loss, were not suitable for summary determination and remained for trial.