Songa Chemicals AS v Navig8 Chemicals Pool Ltd (Rev 1)

Under a standard letter of indemnity for delivery without production of bills of lading, delivery to the named receiver may be effected through a party acting on that receiver’s behalf. Whether that relationship exists is determined from the facts and the commercial context.

A carrier’s belief for the purposes of the standard wording is ordinarily the belief of the person effecting delivery, usually the master. A clause limiting the validity of an indemnity to three months does not create a claims-made time bar where its natural meaning is that it covers deliveries made during that period. The indemnity is engaged where the delivery occurs within the applicable period.

Songa Chemicals AS sought relief against Navig8 Chemicals Pool Inc under letters of indemnity issued for delivery of cargo without production of original bills of lading. Navig8 brought corresponding proceedings against Glencore Agriculture BV under the upstream letters of indemnity.

The cargo was delivered to Ruchi Soya Industries Ltd, although the letters of indemnity issued up the charterparty and sale chain named Aavanti Industries Pte Ltd as the intended receiver. The applications were presented as interim applications but were argued as applications for summary final judgment. The central issues were whether Ruchi took delivery for Aavanti, whether the carrier had the relevant belief if it did not, whether delivery was deemed correct under paragraph 4 of the indemnities, and whether clause 38 of the voyage charter defeated Glencore’s liability.

1. Summary judgment and delivery for the named receiver. The court held that there was no real prospect of defending the claim that Ruchi, in taking delivery, represented or was acting on behalf of Aavanti. Aavanti had nominated Ruchi, had an established practice of delivering cargo to Ruchi without production of bills of lading, had no practical ability or intention to receive the cargo itself, and had arranged delivery to Ruchi despite non-payment. The cumulative evidence admitted only one answer: Ruchi was taking delivery for Aavanti.
2. The principle from The Bremen Max [2009] 1 Lloyd’s Rep 81, that delivery must be to the party identified in the delivery request before the substantive indemnity can be engaged, was accepted and applied. Delivery to a representative or person acting on behalf of that party satisfied the requirement.
3. Had the factual route failed, the relevant belief would ordinarily have been that of the carrier effecting delivery, in practice the master or officer responsible for cargo operations. The reasoning in The Zagora [2017] 1 Lloyd’s Rep 194 at [39] was accepted as sensible and correct. However, the evidence was insufficient for summary determination of belief if Ruchi had not in fact acted for Aavanti.
4. Paragraph 4 of the standard indemnity did not apply. The indemnities requested delivery at New Mangalore or Kakinada, not at a specified bulk liquid terminal or facility. If the charterers’ further discharge instructions had consequences, those would be matters for the charterparty, not paragraph 4.
5. Clause 38 of the voyage charter did not impose a three-month claims-made time bar. Read with paragraph 5 of the standard indemnity, it gave the indemnity fixed but renewable validity for deliveries made during the relevant period. The deliveries occurred within that period. The clause did not defeat Navig8’s claim against Glencore.
6. The paragraph 1 and 2 indemnities were engaged. Glencore was obliged to indemnify Songa through the contractual chain and to provide sufficient funds to defend the misdelivery claim. The court granted final declaratory relief, with liberty to apply concerning the practical funding and defence arrangements.