Glencore Energy UK Ltd & Anor v Freeport Holdings Ltd

For the purposes of the Hague-Visby Rules, barratry requires a deliberate wrongful act or omission by a servant, causing prejudice to the owner without the owner’s privity. Wrongdoing may consist of a generally recognised crime or a serious breach of duty knowingly or recklessly committed.

The expression “fire” in Article IV rule 2(b) is unqualified. It includes deliberately or barratrously caused fire, unless caused by the carrier’s actual fault or privity. Article IV rule 2(q), however, does not protect the carrier where fault or neglect of its servant contributed to the loss. A servant acts in that capacity where the conduct occurs while performing, or misperforming, a function entrusted by the carrier in dealing with the ship or cargo.

The claimants claimed approximately US$3.8 million from the owners of the vessel Lady M after a deliberate fire in the engine control room caused salvage costs and related losses. They also sought a declaration that they were not liable to contribute in general average.

The parties agreed or assumed facts for the determination of preliminary issues. The chief engineer had deliberately started the fire, but his precise mental state remained open. The issues were whether the conduct constituted barratry, whether Article IV rule 2(b) applied to deliberately or barratrously caused fire, and whether the owners could rely on Article IV rule 2(q).

1. The preliminary issues could properly be answered by stating that the result depended on further facts. The agreed facts did not establish whether the chief engineer possessed the state of mind necessary for barratry.

2. Barratry is a deliberate act or omission by the master, crew or another servant of the owners, which is wrongful, prejudicial to the interests of the owner of the ship or goods, and committed without the owner’s privity. The wrongful character must arise either from conduct generally recognised as criminal, including the necessary mental element, or from a serious breach of duty knowingly committed or undertaken recklessly as to whether it constituted a breach. Intention to prejudice the owner is unnecessary.

3. Article IV rule 2(b) was construed according to the ordinary meaning of the Hague Rules, read in their international context. “Fire” means fire however caused, including fire deliberately or negligently started by servants or agents. The express reference to the carrier’s actual fault or privity, and the contrast with rule 2(q), supported that construction. The deletion of barratry as a separately enumerated exception did not restrict the scope of the retained fire exception.

4. The causative event was not avoided by describing the loss as caused by the barratrous act of setting fire to the vessel rather than by the fire itself. The French text and marine insurance authorities supported treating the setting alight and the resulting fire as falling within rule 2(b).

5. Rule 2(q) was different. The chief engineer was a servant of the owners for the purposes of the proviso. He had been placed on board to manage the engines and to assist in carrying and caring for the cargo and vessel. Starting the fire was a misuse or misperformance of functions within that entrusted field, whether or not he was on duty at the time. The owners were therefore not exempt under rule 2(q).

6. The conclusions were: barratry might or might not be established depending on further facts; rule 2(b) was capable of exempting the owners from liability for deliberately or barratrously caused fire; and rule 2(q) did not exempt the owners.

First-instance determination of preliminary issues in the High Court (Commercial Court). No appellate history was stated in the judgment.