Unicredit Bank A.G. v Euronav N.V.

A bill of lading issued to a voyage charterer is usually a mere receipt, because the charterparty governs the parties’ relationship. That is a presumption based on contractual intention and yields to contrary terms or circumstances. If the charterparty is novated during the voyage and the ex-charterer remains the bill holder, the bill presumptively contains or evidences a contract for the remainder of the voyage. Under section 2 of the Carriage of Goods by Sea Act 1992, rights of suit arise retrospectively as if the bill contract had existed from issue. For causation, the claimant must show that the breach was an effective cause of loss. Here, the bill contract existed, but the appeal was dismissed because the Bank would have consented to the same discharge in any event.

BP sold oil to Gulf and voyage-chartered the vessel from Euronav. The bill of lading was issued to BP. After Gulf acquired the cargo, the charterparty was novated to Gulf, while BP intended to indorse the bill to the Bank as financier. Euronav discharged the cargo at Sohar by ship-to-ship transfer against Gulf’s instructions and without production of the bill. BP later indorsed the bill to the Bank, which claimed the value of the cargo for contractual misdelivery.

The High Court dismissed the claim, holding that the bill was not a contract of carriage in BP’s hands at discharge and, alternatively, that the breach caused no loss: [2022] EWHC 957 (Comm). The appeal concerned the bill’s status after novation, the retrospective effect of the Carriage of Goods by Sea Act 1992, and causation.

1. Disposition. The appeal was dismissed unanimously. Ground 1 succeeded, but the claim failed on causation.
2. Status of the bill. The mere-receipt principle is a rule of contractual construction. A bill issued to a charterer ordinarily operates only as a receipt because the charterparty governs the carrier–charterer relationship. The principle is prima facie and yields to contrary wording or circumstances. The approach is illustrated by Rodocanachi v Milburn (1886) 18 QBD 67, Temperley S.S. Co. v Smyth & Co [1905] 2 KB 791, and President of India v Metcalfe (The Dunelmia) [1970] 1 QB 289.
3. When a charterparty ceases to govern during the voyage and the ex-charterer remains holder of the bill, the bill presumptively contains or evidences a contract of carriage for the remainder of the voyage, subject to a contrary agreement or mutual intention. The novation did not evidence an intention to end all contractual relations between BP and Euronav. BP remained holder, and the continued operation of clause 30.7 contemplated a contractual claim for delivery without production.
4. Statutory effect. Section 2(1) of the Carriage of Goods by Sea Act 1992 operates retrospectively. On becoming lawful holder, the indorsee is treated as if it had been party to a contract on the bill’s terms from the date of issue, even where the bill was initially a mere receipt. Section 2(2), including section 2(2)(a), preserves that possibility where the bill is acquired after becoming spent pursuant to pre-existing contractual arrangements. Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker [1949] AC 196 supported that conclusion.
5. Delivery and waiver. The carrier’s obligation to deliver only against production of the original bill is contractual. Delivery to a person otherwise entitled to the goods may still constitute breach: Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576 and Kuwait Petroleum Corporation v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. BP’s communications about the deemed letter of indemnity, the novation, and silence after receiving operational communications did not amount to consent as bill holder. A charterer’s waiver cannot bind a subsequent indorsee where the bill contract springs up on indorsement, although the wider waiver question was left open.
6. Causation. The Bank’s alleged loss was the loss of an opportunity to enforce its security against the cargo. It was insufficient to show merely that, absent breach, the cargo would initially have remained aboard. The Bank had to prove that it would have enforced its security and recouped the lending. On the Bank’s own case, Euronav would have sought instructions from BP and then the Bank. The Judge found that the Bank would have expressly permitted discharge at Sohar by ship-to-ship transfer. Delivery would then no longer have been a breach and the initial failure to deliver would have caused no loss. The separate issue whether the Bank caused its own loss therefore did not arise.

• Court of Appeal (Civil Division): dismissed the appeal. It held that the bill contract existed after novation and that section 2 of the Carriage of Goods by Sea Act 1992 operated retrospectively, but upheld dismissal on causation.
• High Court of Justice, King’s Bench Division, Commercial Court: Mrs Justice Moulder dismissed the claim, holding that the bill was a mere receipt at discharge and, alternatively, that any breach caused no loss: [2022] EWHC 957 (Comm) .