Pace Shipping Co Ltd of Malta v Churchgate Nigeria Ltd of Nigeria

Section 2(4) of the Carriage of Goods by Sea Act 1992 does not create a separate cause of action. A bill of lading holder sues on the rights vested in it under section 2(1), but may recover, for the benefit of the person who sustained the loss, to the extent permitted by section 2(4). The holder need not plead the statutory subsection by name. However, where recovery for another’s loss is advanced, the case should ordinarily be properly particularised, including the relevant alternative heads of loss and the person for whose benefit recovery is sought. Procedural prejudice or late articulation of the point is not determinative on a section 69 appeal where the issue is a point of law.

The appellant challenged a majority arbitration award concerning cargo damage under bills of lading. The arbitrators found that NBIC owned the cargo, while the respondent, Churchgate, had contractual title to sue under section 2 of the Carriage of Goods by Sea Act 1992. They awarded Churchgate the cargo loss, although it had not itself suffered that loss, on the basis that section 2(4) allowed recovery for NBIC’s benefit.

The appellant argued that reliance on section 2(4) involved a separate cause of action. It relied on The World Era, where an amended claim brought in the right of another had been treated as a new cause of action. The central issue was whether the statutory mechanism required a separate cause of action and, consequently, a separate amendment to the arbitration claim.

1. The appeal was dismissed. The court was determining an appeal on a point of law under section 69 of the Arbitration Act 1996, not an application under section 68. Questions of procedural misconduct or unfairness therefore did not arise for determination.
2. Section 2(4) of the Carriage of Goods by Sea Act 1992 operates where the bill of lading holder has rights of suit under section 2(1), but another person has sustained the loss. The holder exercises its own vested rights of suit and may recover the other person’s loss for that person’s benefit. The subsection does not create a separate cause of action.
3. The World Era was not in point. It concerned the common-law consequences of an agent seeking to recover in the right of an undisclosed principal. It did not consider the statutory scheme in section 2 of the 1992 Act. The present case concerned Churchgate’s own statutory rights of suit, not a claim asserting another person’s cause of action.
4. The practical consequences of section 2(4), including possible disclosure involving the actual loser, issue estoppel or double-jeopardy concerns, and special defences, did not alter that construction. They instead supported the need for proper particularisation.
5. Although it was unnecessary to plead the statutory formula itself, a holder seeking recovery for a third party should ordinarily plead, expressly or by further information, the alternative case, the relevant heads of loss, and the person for whose benefit recovery is sought. The court nevertheless dismissed the appeal because the appellant’s legal premise was wrong.

1. High Court (Commercial Court): Mr Justice Burton dismissed the section 69 appeal from the majority Third Award of the arbitrators.
2. The arbitration had followed an earlier appeal in which Beatson J allowed Churchgate’s appeal on title to sue and remitted the issue to the arbitrators. The judgment does not give a neutral citation for that decision.