Compania Sud American Vapores v Hamburg & Anor

Under an unamended clause 8 of an NYPE time charter, responsibility for loading and stowage is allocated to the charterers as between the owners and charterers. The master’s supervisory power protects the vessel and permits intervention, but does not ordinarily impose on the owners a duty to correct the charterers’ stowage or relieve the charterers of responsibility. That remains so where improper stowage renders the vessel unseaworthy. Incorporation of the Hague-Visby Rules does not, without more, displace that contractual allocation. For the Article IV.2(a) exception, the question is whether the act causing the damage was done as part of caring for the cargo or as part of running the ship for a purpose not specifically related to the cargo. Heating bunker oil to facilitate its transfer to the engines was ship management, although it indirectly damaged cargo.

The applicant appealed under section 69 of the Arbitration Act 1996 against a final declaratory arbitration award concerning an explosion aboard a vessel on time charter. The owners claimed loss of hire and other losses, alleging that a container of calcium hypochlorite had been improperly stowed near a heated bunker tank. The charterers counterclaimed.

The appeal concerned two issues. First, whether clause 8, read with the clause paramount incorporating the Hague-Visby Rules, transferred responsibility for stowage which rendered the vessel unseaworthy. Secondly, whether excessive bunker-tank heating was an act, neglect or default in the management of the ship within Article IV.2(a), so as to afford a defence to an alleged breach of Article III Rule 2.

1. Stowage and seaworthiness. The appeal on the construction of clause 8 failed. The clause placed the primary contractual responsibility for loading and stowage on the charterers. The master’s supervision was a right to inspect, veto or require re-loading, not a duty owed to the charterers to assume responsibility for the operation.
2. The effect was not altered because the defective stowage might render the vessel unseaworthy. The court followed the reasoning in The “IMVROS” and rejected the proposed distinction between bad stowage which endangered cargo and bad stowage which endangered the vessel. Such a distinction would produce the commercially unreasonable result that the worse the charterers’ loading, the less responsibility they bore.
3. The clause paramount did not prevent the parties from allocating loading and stowage functions contractually. The Hague-Visby Rules did not impose on the owners, as against the charterers, a duty to intervene which was inconsistent with clause 8. Canadian Transport Ltd v Court Line Ltd was a complete answer to the principal argument. The “KAPITAN SAKHAROV” concerned unseaworthiness but did not decide the contractual issue arising here.
4. Bunker-tank heating. The arbitrators had applied the correct legal test under Article IV.2(a). The issue was essentially one of fact. Heating bunker oil was undertaken to facilitate transfer to the engines. It was therefore part of running the ship and was not specifically related to caring for the cargo. The fact that the act indirectly damaged cargo did not change its character.
5. Both grounds of appeal were dismissed. The court nevertheless handed down judgment after being informed that the claim and counterclaim had been settled.

• High Court (Commercial Court): appeal under section 69 of the Arbitration Act 1996 against a final declaratory arbitration award dated 1 March 2005. The appeal was dismissed on both issues.