Navig8 Chemicals Pool Inc v Glencore Agriculture BV

A letter of indemnity issued under a charterparty is ordinarily a self-contained commercial agreement. A time-limit clause in the charterparty is not incorporated into the indemnity merely because the charterparty required an indemnity to be issued. This is especially so where the indemnity contains its own liability provision, the agreements have distinct dispute-resolution clauses, and the indemnity may be relied on by third parties. If incorporated, a clause providing that an indemnity expires after three months imposes a primary, but extendable, time limit for claims running from the date of the letter.

Navig8, as disponent owners, chartered the vessel Songa Winds to Glencore on voyage terms. When the original bills of lading were unavailable, Glencore issued two standard-form letters of indemnity to Navig8 for delivery of cargo without production of the bills.

Glencore relied on clause 38 of the voyage charter, which required an indemnity in the owners’ P&I club form and stated that its validity would expire after three months unless extended. The High Court held that the clause did not limit claims under the letters of indemnity: [2018] EWHC 397 (Comm). The appeal concerned whether clause 38 formed part of the indemnities and, if so, whether it barred claims made after the three-month period.

1. Appeal dismissed. The letters of indemnity were stand-alone agreements and did not incorporate the expiry provision in clause 38 of the voyage charter.
2. Written terms are presumed to contain the parties’ bargain. In the context of a standard-form letter of indemnity, that presumption is particularly strong. This approach was supported by Gillespie Brothers [1896] 2 QB 59 and The Jag Ravi [2011] 2 Lloyd’s Rep 309. Clause 5 of each indemnity was self-contained and dealt with when Glencore’s liability ceased.
3. The voyage charter and the indemnities created separate rights and obligations and provided different dispute-resolution mechanisms. The charterparty required arbitration, whereas the indemnities provided for the High Court’s jurisdiction. This was inconsistent with treating clause 38 as an ambulatory term of the indemnities.
4. Clause 38 gave Glencore a contractual right to require the relevant limiting terms to be included in the indemnities. Glencore instead issued indemnities in the standard form without reservation or reference to the charterparty. The possibility that agents or other third parties could rely on the indemnities reinforced the conclusion that an undisclosed limitation could not be attached to them. The Laemthong Glory (No.2) [2005] EWCA Civ 519 illustrated that possibility.
5. Had clause 38 been incorporated, its wording imposed a primary three-month limit for making claims, running from the date of the letter of indemnity. The period could be extended in the manner specified by the clause. The wording was not ambiguous, so the contra proferentem rule did not apply.

• Court of Appeal (Civil Division): Appeal dismissed. The court agreed with the High Court that clause 38 of the voyage charter did not limit claims under the letters of indemnity, while construing clause 38 in the appellant’s favour on the alternative issue.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Mr Justice Andrew Baker held that clause 38 did not limit the validity of the letters of indemnity or claims under them: [2018] EWHC 397 (Comm).