Glencore International AG v MSC Mediterranean Shipping Company SA & Anor

A negotiable bill of lading ordinarily requires delivery of the goods to the lawful holder, or provision of a delivery order containing the carrier’s undertaking to deliver them. An electronic release code is not a delivery order merely because it enables collection. Delivery requires the carrier to relinquish possession and control, subject to any valid contractual arrangement. Background knowledge available only to the original parties, including their previous dealings, cannot ordinarily give a negotiable bill different meanings for different addressees. An implied term must be consistent with and harmonious with the express contract. An agent authorised to operate an electronic release system is not thereby authorised to surrender the principal’s substantive delivery rights. Estoppel requires a sufficiently clear representation.

Glencore claimed damages from MSC for breach of contract, bailment and conversion after two of three containers of cobalt briquettes shipped under a negotiable bill of lading were collected by unauthorised persons at Antwerp. The bill required surrender of the original bill in exchange for the goods or a delivery order. MSC had used an electronic release system under which, after presentation of the bill and payment of charges, it sent pin codes to Glencore’s Antwerp agent, Steinweg.

MSC argued that the pin codes were delivery orders, or that their use was authorised by an implied term, variation, or estoppel arising from previous dealings. It also disputed causation. The central issue was whether MSC had discharged its delivery obligations by issuing the pin codes and placing the containers in its terminal.

Judgment for Glencore against MSC.

1. A carrier’s delivery obligation is not ordinarily discharged by merely discharging goods or placing them in storage. Delivery requires a bilateral act involving receipt by the consignee or its agent and the carrier’s relinquishment of possession and control. MSC retained power to invalidate the pin codes and therefore had not divested itself of control.
2. The expression “Delivery Order” in the bill of lading meant a ship’s delivery order. It required an undertaking by the carrier, or an undertaking assumed by attornment, to deliver the goods to an identified person. The pin codes contained no such undertaking and were therefore not delivery orders. This interpretation avoided the improbable result that surrender of the bill deprived its holder of contractual rights without the goods or a substitute undertaking in return.
3. Previous dealings did not alter the construction of the negotiable bill. Such a document is addressed to a range of persons, including merchants and bankers, and cannot ordinarily have different meanings according to knowledge confined to the original parties. Glencore did not know that MSC used the electronic system, and Steinweg’s knowledge was not relevant to Glencore’s contractual intention because Steinweg was not authorised to contract for carriage.
4. No term could be implied permitting the issue of pin codes to discharge MSC’s delivery and bailment liabilities. Such a term would sit uneasily with, and effectively contradict, the express provision requiring goods or a delivery order. The previous dealings did not establish necessity or business efficacy.
5. Steinweg was authorised to use the electronic system, but not to agree that discharge constituted delivery or otherwise varied the bill. There was no sufficiently clear representation by Glencore that delivery to anyone presenting the correct code was acceptable. The causation argument also failed: the breach was the failure to deliver the goods or provide a proper delivery order, not the mere use of the electronic system.

Glencore established its claim in breach of contract and bailment. The conversion claim was not separately argued and was left open for further submissions.