Trafigura Beheer BV v Navigazione Montanari SPA

An in-transit loss clause in a voyage charterparty ordinarily addresses shortage incidental to carriage or encountered on a normal voyage. Without clear words, it does not make the owner an insurer against every cause of cargo loss. Contractual clauses must be read together. Where the charterparty incorporates the Hague-Visby exceptions for any claim, those exceptions remain effective alongside an amended in-transit loss clause. A permanent right to deduct freight under an in-transit loss clause is distinct from a cargo-loss claim. Piracy loss therefore remains exempt where the incorporated exceptions apply.

Trafigura, the charterer, claimed the FOB value of 5,291 metric tonnes of oil transferred by armed pirates from the vessel Valle di Cordoba during its voyage from Abidjan to Lagos. The charterparty contained an amended in-transit loss clause and clause 46, incorporating provisions of the Hague-Visby Rules.

Andrew Smith J determined preliminary issues in favour of the owner. He held that the transferred cargo was not in-transit loss within the clause and, alternatively, that any liability was subject to clause 46. The appeal concerned the proper construction of the in-transit loss clause and whether the Hague-Visby exceptions excluded liability for piracy loss.

Appeal dismissed. Longmore LJ delivered the leading judgment and Ryder LJ agreed with his construction. Briggs LJ agreed with the result and with the effect of clause 46, but differed on the construction of the in-transit loss clause.

1. On the majority view, the words in-transit loss connote loss incidental to the carriage of cargo, or loss of a kind encountered on a normal voyage. The clause was directed to the familiar difficulty of measuring unexplained oil shortages. It was not sufficiently clear to make the owner an insurer against every cause of cargo loss, including piracy.
2. The parties had to read clause 4 and clause 46 together. The amendment to clause 4 did not disapply clause 46, particularly since the parties had expressly maintained clause 46 as printed. Neither clause made the other otiose.
3. Clause 46 incorporated Article IV of the Carriage of Goods by Sea Act 1971 and applied its exceptions to any claim made under the charterparty. Piracy loss was therefore excluded by one or other of Article IV rule 2(c), rule 2(f) or rule 2(q), even if the in-transit loss clause otherwise applied.
4. The Court distinguished The Olympic Brilliance concerning a permanent deduction from freight. That decision did not remove the Hague or Hague-Visby exceptions from a separate claim for the value of lost cargo.
5. Briggs LJ considered that the language of clause 4, read alone, covered loss regardless of cause. He nevertheless held that clause 46 excluded piracy and other no-fault losses when the charterparty was read as a whole.

The High Court order was upheld and the appeal was dismissed.

• Court of Appeal (Civil Division) dismissed the charterer's appeal and upheld the High Court's answers.
• High Court of Justice, Queen's Bench Division, Commercial Court Andrew Smith J held that the transferred cargo was not in-transit loss within the clause and, alternatively, that any liability was subject to clause 46. The decision's citation is not stated in the judgment.