Agile Holdings Corporation v Essar Shipping Ltd

Under the Inter-Club Agreement, a “similar amendment” to adding “and responsibility” to an NYPE cargo clause must have the same effect: it must transfer all cargo-handling responsibilities back to the owner. A provision dealing only with stowage, even if it makes the Master responsible for stowage, seaworthiness and safety, is insufficient. The 50/50 apportionment in clause (8)(b) therefore does not apply. Absent the separate unseaworthiness proviso, liability remains 100% with the charterers. On a section 69 appeal under the Arbitration Act 1996, a permission-stage determination that the tribunal was asked to decide the question should receive considerable weight, particularly where the materials are substantially unchanged.

Agile, the owner of the vessel Maria, time-chartered it to Essar for a voyage carrying direct reduced iron. The charterparty incorporated the Inter-Club Agreement. Clause 8 allocated cargo-handling responsibilities to the charterer, while clause 49 made the Master responsible for proper stowage and the vessel’s seaworthiness and safety.

The arbitrators held that clause 49 was a similar amendment for the purposes of clause (8)(b) of the Agreement and apportioned liability 50/50. Agile appealed under section 69 of the Arbitration Act 1996, contending that a similar amendment had to transfer all cargo-handling responsibilities to the owner. Essar also raised a preliminary objection that the relevant question had not been submitted to the tribunal.

1. Appeal allowed. The arbitrators’ 50/50 apportionment was wrong in law. There was no need to remit the matter because the issue was binary and the tribunal had rejected the alternative unseaworthiness proviso. Agile was entitled to a complete indemnity for any later claim by the cargo interests.
2. Section 69 procedure. The route under section 69 of the Arbitration Act 1996 is deliberately narrow. Once permission has been granted, the requirements concerning substantial effect on the parties’ rights, general public importance, and whether it is just and proper for the court to determine the question cannot be reopened. The questions whether there was a question of law and whether the tribunal was asked to determine it may require consideration on the appeal, but the permission decision should receive considerable weight, especially where substantially the same materials were before both judges. The court explained the limited scope of The Ocean Crown [2010] 1 Lloyd’s Rep. 468 and declined to adopt the jurisdictional approach in Motor Image v SCDA Architects [2011] SGCA 58.
3. Construction of the Agreement. The Agreement establishes a simple and mechanistic allocation of responsibility. The expression “similar amendment” means an amendment of the same kind or effect as adding “and responsibility” to clause 8. Since those words transfer all cargo-handling responsibilities to the owner, a similar amendment must transfer cargo handling generally, not merely one function. The wording of clause 4(b) reinforced that construction. The court found no basis for adding a further causation inquiry to the first proviso.
4. Application. Clause 49 concerned stowage only. Stowage was not equivalent to loading, discharge, trimming, or other cargo-handling functions. The reasoning in The Sea Miror [2015] 2 Lloyd’s Rep. 395 supported that distinction. Clause 49 therefore did not engage the first proviso to clause (8)(b). Clause 93, requiring compliance with IMO and local regulations, likewise did not transfer all cargo-handling responsibilities back to the owner. Essar was consequently liable for 100% under clause (8)(b).

1. Arbitration tribunal: An award dated 24 April 2017 held that clause 49 was a similar amendment under clause (8)(b) of the Inter-Club Agreement and apportioned liability 50/50.
2. High Court (Commercial Court): Popplewell J granted permission on 4 October 2017. The appeal under section 69 of the Arbitration Act 1996 was allowed. The tribunal’s legal conclusion was set aside, with no remittal.