Sevylor Shipping And Trading Corp v Altfadul Company for Foods, Fruits & Livestock & Anor

A bill of lading holder who receives cargo damaged through the carrier’s breach may recover the full value of the cargo damage, despite a recovery or credit obtained from an intermediate seller. Under section 2(4) of the Carriage of Goods by Sea Act 1992, the loss sustainer need not previously have held and then lost contractual rights of suit. However, section 2(4) does not enable a holder to recover a charterer’s loss where the charterer’s contract with the carrier governs that loss and the bill of lading is merely a receipt.

The claimant carrier appealed under section 69 of the Arbitration Act 1996 against an arbitration award concerning bananas discharged in damaged condition. The arbitrators found the carrier liable and awarded the full cargo loss to SIAT, as assignee of Altfadul’s bill of lading rights, rejecting a deduction for a credit agreed between Altfadul and its seller, CoMaCo.

The appeal raised whether section 2(4) of the Carriage of Goods by Sea Act 1992 required the loss-sustaining party previously to have held rights of suit, whether a lawful holder could recover a head charterer’s loss, and whether full damages were recoverable despite the seller’s credit.

1. Appeal dismissed. The award of full damages was correct in law, independently of the arbitrators’ reasoning under section 2(4) of the Carriage of Goods by Sea Act 1992.
2. A bill of lading holder who receives damaged goods from the vessel may recover the full cargo loss. The recovery is not reduced by an earlier recovery or credit from an intermediate seller. R&W Paul Ltd v National Steamship Co Ltd was applied. The reasoning was consistent with The Sanix Ace, which was not confined to cases where the claimant owned the goods when they were damaged.
3. Section 2(4) is not limited to cases where the loss sustainer once held rights of suit but lost them through section 2(1). It addresses the dislocation between the incidence of loss and the statutory title to sue.
4. Section 2(4) requires the court to assume only that the rights of suit under the bill were vested in the loss sustainer rather than the actual holder. Where the loss sustainer is a head charterer to whom the mere receipt rule applies, The Dunelmia establishes that recovery of charterparty losses under the bill is unavailable.
5. On the award’s findings, CoMaCo was such a charterer. SIAT therefore could not recover CoMaCo’s loss under section 2(4), although the full-damages award stood on the independent common-law basis.

Costs and consequential matters were adjourned.

The claimant appealed under section 69 of the Arbitration Act 1996 against the arbitrators’ final award dated 7 August 2017. Leave to appeal was granted by Bryan J on 31 October 2017. The High Court dismissed the appeal.