Noble Chartering Inc v Priminds Shipping Hong Kong Co Ltd "Tai Prize"

A bill of lading statement that cargo was shipped in apparent good order and condition concerns only its external condition as reasonably apparent to the master or the carrier’s servants at shipment. Reasonable examination is assessed in the actual loading circumstances; the master need not interrupt normal loading. A draft bill tendered by the shipper is ordinarily an invitation to the master to make that assessment, not a representation or warranty by the shipper or charterer as to condition visible before loading. Where damage was not reasonably visible to the master, the statement was accurate even if the shippers could have discovered it. The Hague Rules did not support implying a guarantee or indemnity for apparent condition. The appeal was dismissed.

Priminds Shipping Hong Kong Co Ltd were voyage charterers and Noble Chartering Inc were disponent owners of the vessel Tai Prize. Brazilian soya beans were damaged before shipment, but the damage was not reasonably visible to the master or crew during loading. The shippers could have discovered it by reasonable means.

An LMAA arbitrator found the charterers liable under an implied warranty and indemnity arising from the tender of a draft bill of lading. On an appeal under the Arbitration Act 1996, the High Court allowed the appeal and varied the award, holding that the bill was accurate and that no indemnity arose: [2020] EWHC 127 (Comm). The owners appealed, raising the meaning of apparent condition, the accuracy of the bill, and any resulting indemnity.

Lord Justice Males gave the leading judgment, with Lady Justice Rose and Lord Justice Bean agreeing. The appeal was dismissed.

1. Meaning of apparent condition. A statement that cargo was shipped in apparent good order and condition concerns its external condition as it would appear on reasonable examination. What amounts to reasonable examination depends on the circumstances at the load port. The master must take reasonable steps, but need not disrupt normal loading procedures, such as stopping continuous grain loading to allow dust to settle. The relevant viewpoint is that of the master or the carrier’s servants, at the time of shipment.
2. Application. The damage was not reasonably visible to the master or crew during loading. The bill therefore accurately stated that the cargo was in apparent good order and condition. The shippers’ ability to discover the damage was irrelevant. Nor was it reasonable to assess the cargo by reference to hypothetical loading conditions in which the process was paused.
3. Draft bill. Tendering a draft bill containing the statement ordinarily requests the master to assess the cargo and decide whether to sign or qualify the bill. It does not itself amount to a representation or warranty by the shippers or charterers as to the cargo’s apparent condition before loading. The court left open whether actual knowledge of hidden defects might support a different implied representation, but that issue was not argued and there was no finding of actual knowledge.
4. Indemnity. The Hague Rules distinguish shipper-furnished particulars, for which guarantees and indemnities are provided, from apparent order and condition, which is assessed by the master. The indemnity authorities were distinguishable because they concerned different matters, including contractual terms, cargo marking and weight. The third question assumed an inaccuracy and therefore did not arise. In any event, imposing an indemnity on these facts would conflict with the scheme of the Hague Rules.
5. The court’s role on the appeal under section 69 was confined to determining the questions of law arising from the award. The owner’s application for permission to appeal to the Supreme Court was refused, and the owners were ordered to pay the appeal costs.

1. Court of Appeal (Civil Division) [2021] EWCA Civ 87: appeal dismissed. The application for permission to appeal to the Supreme Court was refused, with costs ordered against the appellant.
2. High Court, Queen’s Bench Division, Commercial Court [2020] EWHC 127 (Comm): HHJ Pelling QC allowed the appeal under section 69 of the Arbitration Act 1996, held that the bill was not inaccurate and that no indemnity arose, and varied the award so that the owners’ claim was dismissed.
3. LMAA arbitration: the arbitrator found the charterers liable under an implied warranty and indemnity arising from the tender of the draft bill of lading.