Yilport Konteyner Terminali Ve Liman Isletmeleri AS v Buxcliff KG & Ors

An indemnity given to enable a damaged vessel to enter and discharge at a port does not, without clear language, guarantee payment of the port’s ordinary charges. It covers fortuitous loss, liability or damage arising from the operation, including qualifying damage to port equipment, but not anticipated payment for the discharge itself.

Contractual terms incorporating a port’s general terms and conditions may permit enhanced and additional charges for work involving damaged vessels or containers. Where those terms concern the primary price payable for services, the charges are subject to an implied requirement of reasonableness, assessed in the circumstances of the particular emergency. The court should not impose an unrealistically demanding standard of detailed proof.

The claimant operated a Turkish container port. Following a collision, the defendants’ damaged vessel and its cargo were discharged at the claimant’s port under a letter of undertaking from the first and second defendants and a letter of indemnity from the third defendant.

The claimant sought payment for discharge services, additional labour, storage, equipment work and related expenses. The first and second defendants disputed the contractual basis and reasonableness of the charges. The third defendant denied liability for the charges under the indemnity.

The issues were the construction and effect of the letter of undertaking, the scope of the letter of indemnity, and the amount properly recoverable under the incorporated terms and conditions.

1. The first and second defendants were liable for US$3,059,955, less the US$2,000,000 already paid. Judgment was entered for the claimant for US$1,059,955.

2. The letter of indemnity did not impose direct liability for the claimant’s charges and did not operate as a guarantee of the first and second defendants’ payment obligations. The discharge work itself was not fortuitous. The indemnity covered fortuitous consequences, liability, loss or damage arising from the discharge, including qualifying damage to the claimant’s equipment and installations, but not mere maintenance or wear and tear.

3. The reference in the letter of undertaking to charges levied in accordance with the port’s terms and conditions referred to the claimant’s general terms and conditions. It did not incorporate the special reduced rate applicable to regular CMA CGM vessels or the standard tariff for undamaged vessels. The incorporated terms permitted enhanced and additional charges where the vessel or containers were damaged.

4. The claimant’s right to determine charges was not subject merely to the narrow standard of Wednesbury unreasonableness. Read in context, the provisions recorded an entitlement to charge a higher price for the work required in the specified circumstances. The charges were subject to an implied term that they be reasonable. What evidence was reasonably required depended on the circumstances, including the emergency nature of the operation, the evolving task and the inability to assess the work in advance.

5. The fourth clause of the letter of undertaking did not restrict the rights conferred by the third clause. It separately protected the claimant by providing an indemnity for additional precautions and safety measures required by the vessel’s damaged condition.

6. The third defendant was liable under the letter of indemnity for US$113,250 representing cleaning and repair of equipment damaged or contaminated during the discharge. The indemnity did not cover software updates, precautionary crack detection tests, or expenditure incurred merely to facilitate customs inspections.

Not stated in the judgment.