Glencore Energy UK Ltd & Anor v Freeport Holdings Ltd (The 'Lady M')

Article IV rule 2(b) of the Hague-Visby Rules exempts the carrier from liability for loss caused by fire however started, including deliberately or barratrously by a crew member. The exception is subject to its express proviso concerning the carrier’s actual fault or privity and to a causative breach of article III rule 1. The provision contains no implied qualification for crew fault, neglect or barratry. The Rules must be construed by reference to their ordinary meaning, context, object and purpose, without allowing earlier domestic law to control clear language. Preliminary issues based on agreed facts should not be expanded by introducing unpleaded hypotheses.

Glencore, cargo owners, claimed losses arising from a fire on the vessel ‘Lady M’. The fire had deliberately been started by the Chief Engineer with intent to cause damage. The parties agreed or assumed that he had acted alone, but left open whether he was suffering from mental illness or other relevant conditions.

The Commercial Court held that whether the conduct amounted to barratry depended on further facts. It also held that article IV rule 2(b) could exempt the Owners from liability for deliberately or barratrously caused fire, but that article IV rule 2(q) did not provide an exemption. Glencore appealed on the barratry issue and on the construction of the fire exception.

The appeal was allowed in part. The appeal on the fire exception was dismissed. The appeal concerning barratry was allowed.

1. The Hague-Visby Rules are an international code and must be construed by broad principles of interpretation, giving their ordinary meaning in context and in the light of their object and purpose. Earlier English law does not control clear language, although a recognised term of art may carry its established judicial meaning. This approach was consistent with Stag Line v Foscolo, Mango & Co [1932] AC 328, Volcafe Ltd v Compania Sud America de Vapores SA [2018] UKSC 61 and the Vienna Convention approach.
2. Article IV rule 2(b) uses “fire” without qualification as to how the fire was caused or who caused it. It therefore covers an accidental, negligent, deliberate or barratrous fire, unless the fire was caused by the carrier’s actual fault or privity, or by a causative breach of article III rule 1. No additional exception for fault or neglect of the crew could properly be implied. The fact that barratry involves wrongdoing against the owner did not alter that construction.
3. The travaux préparatoires were supplementary material only. They could be decisive in a case involving truly feasible alternative interpretations and material clearly and indisputably establishing a definite legal intention. Those conditions were not met, and the ordinary meaning of article IV rule 2(b) was sufficient.
4. The preliminary issue concerning barratry should not have been determined on the basis of hypothetical facts about insanity. Mental illness had been pleaded, but insanity had not, and the Owners lacked evidence enabling such a case to be advanced. A preliminary issue on agreed or assumed facts may be answered by stating that its resolution depends on further facts, but the court should not enlarge it by introducing unpleaded possibilities or answer a merely hypothetical question.
5. Whether the Chief Engineer’s conduct constituted barratry was left unresolved. It was unnecessary to decide that question because the deliberately caused fire was within article IV rule 2(b) on the agreed and assumed facts, subject to the stated qualifications.

• Court of Appeal (Civil Division): [2019] EWCA Civ 388. Appeal allowed on issue 1 concerning barratry and dismissed on issue 2 concerning the article IV rule 2(b) fire exception.
• High Court of Justice, Queen’s Bench Division, Commercial Court: determined preliminary issues by holding that barratry depended on further facts, article IV rule 2(b) could apply to deliberately or barratrously caused fire, and article IV rule 2(q) did not provide an exemption. The lower judgment’s citation was not stated in the judgment.