MVV Environment Devonport Ltd v NTO Shipping GmbH & Co KG & Ors

A party named as shipper in a bill of lading may establish that it was wrongly identified. The contract of carriage is concluded when goods are presented for and accepted by the carrier, before the bill of lading is issued. The central question is therefore whether the alleged shipper authorised the person who contracted with the carrier to act as its agent.

Actual authority, whether express or implied, requires an underlying authority from which any incidental authority can arise. Silence alone will not ordinarily establish agency or implied actual authority. Ostensible authority requires a representation by the principal to the third party and reliance on that representation. A representation made only by the alleged agent is insufficient. The challenge under section 67 of the Arbitration Act 1996 succeeded.

MV Environment Devonport Ltd challenged under section 67 of the Arbitration Act 1996 a tribunal’s award on jurisdiction. The tribunal had held that the claimant was party to a contract of carriage evidenced by a bill of lading for unprocessed incinerator bottom ash carried on the MV Nortrader.

The bill of lading named the claimant as shipper and RockSolid BV as consignee. In the underlying disposal contract, however, RockSolid had responsibility for transporting the material and title passed to it when the material was loaded onto its vehicles. The claimant had not contracted directly with the vessel owner, nor authorised the shipping agent to contract on its behalf. The issue was whether actual or ostensible authority could nevertheless be established.

1. Disposition. The section 67 challenge was allowed in substance. The claimant was not party to the contract of carriage evidenced by the bill of lading and was therefore not party to the incorporated arbitration agreement. The tribunal’s contrary conclusion was wrong.
2. Contract of carriage. A contract of carriage is concluded when the goods are presented for and accepted by the carrier. The bill of lading subsequently evidences that contract. The persons named as shipper and carrier provide the starting point, but a named shipper may prove that it was wrongly identified. The court relied on Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 and Cho Yang Shipping Company Limited v Coral (UK) Limited [1997] 2 Lloyd’s Rep 641.
3. Actual authority. Neither RockSolid nor the shipping agent had express actual authority. The disposal contract was principal-to-principal, not an agency agreement, and gave no authority to contract for the claimant. Implied actual authority is inferred from the actual relationship and conduct of principal and agent, but ordinarily requires an existing express authority to which the implied authority is incidental. Silence or failure to object to documents is generally insufficient. The court applied the principles discussed in Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549, Freeman & Lockyer v Buckhurst Park Properties (Mangal) Limited [1964] 2 QB 480, Sino Channel Asia Limited v Dana Shipping & Trading Pte Singapore [2018] 1 Lloyd’s Rep 17 and Jiangsu Shagang Group Company Limited v Loki Owning Company Limited [2018] EWHC 330.
4. Ostensible authority. This requires words or conduct by the claimant representing to the defendant that the shipping agent was authorised, together with reliance on that representation. The defendant was unaware of the earlier bills of lading and could not rely on them. There was no holding out by the claimant. A representation by the agent alone was insufficient.
5. The court directed that counsel be heard on the consequential order.

This was a first-instance jurisdiction challenge under section 67 of the Arbitration Act 1996. The court stated that such a challenge proceeds by way of rehearing, referring to Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs of the Government of Pakistan [2011] AC 763. The tribunal’s jurisdictional conclusion was held to be wrong.