Australia: Transport & Logistics News - March 2017: part 2

This article is part of a series: Click Transport & Logistics News - March 2017: part 1 for the previous article.

Sino Dragon Trading Ltd v Noble Resources International Pte Ltd [2016] FCA 1131

This was an attempt to set aside an arbitration award in a commodity transaction involving the sale from Noble Resources to Sino Dragon of 170,000 mt of iron ore. There had been previous attempts to have two of the arbitrators removed. The award which was given in Sydney was recognised in Hong Kong and leave to enforce it was given in that jurisdiction where the applicant, Sino Dragon, was incorporated.

The applicant sought to set aside the original award in the Federal Court pursuant to Article 34(2) of the UNCITRAL Model Law which is given the force of law in Australia by the International Arbitration Act 1974.

The application was unsuccessful and Beach J dismissed it. The challenges which were made were summarised by Beach J in his judgment as being that:

  1. the arbitration dealt with a dispute not contemplated by the arbitration clause in the Contract of Sale. His Honour commented that: "this ground is in substance a challenge really going to the merits of legal and factual questions, but superficially characterised and cloaked as an excess of jurisdiction question." His reasons dealt at length with the material upon which he relied to support his comments in that regard.
  2. the evidence of two witnesses called by Sino Dragon via video conference facilities was beset by technical difficulties, giving rise to a lack of procedural fairness. This issue, according to his Honour, caused him some difficulty. It raised the issues of whether Sino Dragon was given a reasonable opportunity to present its case and whether there was a lack of equality of treatment. His Honour did not believe either issue was made out by Sino Dragon. In particular, there had been no "real unfairness" or "real practical injustice". Once again his Honour dealt with all the competing arguments in considerable detail.
  3. two of the three arbitrators were not appointed in accordance with the agreement of the parties and there was a real apprehension of bias. His Honour rejected this ground, again, in considerable detail.

The case is also significant as Sino Dragon was ordered to pay two-thirds of the costs on an indemnity basis and the remaining one-third on a party and party basis. In reaching that decision, Beach J rejected the suggestion that it would be justified by reason of a special rule. However, in applying current principles of Australian law to the issue, his Honour was of the opinion that the first and third challenges that were made in the application to set aside the award did not have reasonable prospects of success.

Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Limited [2016] FCAFC 150

We reported on the first instance decision of this case in Transport & Logistics in June 2016. It involved a claim for contribution by one of the two insurers (the Pantaenius policy) of the same yacht against the other insurers of a second policy (the Nautilus policy). At first instance, Nautilus had unsuccessfully defended the claim in reliance on a provision in this policy which suspended cover in the event that the yacht intended to enter foreign waters. It had entered foreign waters prior to its claim arising but was within the geographical scope of the cover at the time when it ran aground. The central legal issue before Foster J at first instance and the Full Court of the Federal Court (Allsop CJ, Rares and Besanko JJ) was whether or not section 54(1) of the Insurance Contracts Act 1984, which permits the court to overlook acts or omissions of insureds (in certain circumstances), was engaged for the benefit of the claim being pursued by the other insurer who had paid the insured's claim under the Pantaenius policy.

Foster J had held that it did apply as "the suspension provision was in the nature of an exclusion and did not operate as one of the contractually prescribed elements of the geographical limits on the scope of cover itself".

The Full Court agreed, and carried out a full examination of the recent cases in the High Court and Court of Appeal of New South Wales (as well as other courts), but especially Meagher JA's judgment in the NSW Court of Appeal in Prepaid Services Pty Ltd v Atradius Credit Insurance NV [2013] NSWCA 252 and the High Court decision of Maxwell v Highway Hauliers Pty Ltd [2014] HCA 33.

The following extract of the judgment (at [46]) explains how the Full Court came to determine the issue that section 54 was engaged:

The Nautilus policy provided cover where, as here, the yacht suffered a casualty within its stated geographical limits of 250 nautical miles off mainland Australia and Tasmania. But for the operation of the suspension of cover, after the insured's act of causing the yacht to clear Australian customs for the purpose of leaving Australian waters and the insured's omission to clear Australian customs after the yacht had re-entered the geographic limits on the return voyage, the Nautilus policy would have responded to the casualty. The act of clearing Australian customs and the omission (as yet at the time of the casualty) on the yacht's return to clear Australian customs, can each be seen to be an act or omission of the insured that occurred after the inception of the Nautilus policy, during its period of cover and within its geographic limits. That was sufficient to engage s.54(1) because the effect of the suspension of cover in those circumstances entitled Nautilus to refuse to pay the insured's claim: Maxwell 252 CLR at 599 [26]-[27].

The Full Court also held (at [52]) that the applicability of section 54 was just as relevant to circumstances in which another insurer sought recovery as when the insured made a claim under that policy because "contribution between insurers is founded in equitable principle... It is the existence of co-ordinate liabilities of two parties that gives a right of contribution. A payment under one policy relieves the other policy of what would be a liability were a claim to be made on it... Natural justice and equality underpin the right."

Bibin v Mainfreight International Pty Ltd [2016] NSWCATCD 70

The decision of Member French in the New South Wales Civil and Administrative Tribunal provides an example of the evidential difficulties faced in small cargo damage claims.

The applicant had imported building products from China. At the time of despatch, the supplier had sent a very apologetic email to the applicant purchaser regarding damage which had been sustained to the products prior to shipment. The supplier apologised for the rough cutting of building panels and advised there would also be some damage on loading and unloading the shipping containers owing to the size of items shipped.

When the cargo arrived and was unpacked, the applicant refused delivery of much of the cargo, purchased replacement goods and brought a claim against Mainfreight for the cost of the goods, storage, customs clearance and port charges, replacement costs and for consequential costs, including additional rental costs and interest, a claim in excess of the Tribunal's AU$40,000 jurisdiction. It was conceded by the applicant that the Tribunal could not compensate it beyond AU$40,000 and to that extent abandoned the excess claim.

It was argued by Mainfreight that the Tribunal lacked jurisdiction to determine the dispute because the claim was one in the federal Admiralty jurisdiction as it concerned issues regarding international shipping. The Tribunal rejected this argument, the claim instead being one based on breach of the New South Wales Fair Trading Act and the Australian Consumer Law which arose from the unloading of the shipping containers.

However, the Tribunal found that while there was evidence that the arrived condition of the goods was worse than that on loading of the containers, there was insufficient evidence to discount the possibility of damage having been sustained during the voyage. There was also a lack of evidence of any fault or neglect on the part of Mainfreight in the manner in which the cargo was unloaded by its employees.

In all the circumstances, the applicant's claim was dismissed for lack of substantiation.

International decisions

Oldendorff GmbH and Co KG v Sea Powerful II Special Maritime Enterprises & Ors (2016) EWHC 3212

This case involved the sale of a cargo of 17 mt of iron ore to Xiamen C&D Minerals Co Ltd by SCIT Trading. It had a contract of affreightment with SCIT Services, who concluded a voyage charter with Oldendorff Carriers GmbH & Co KG for the carriage of cargo to China from Western Australia. Oldendorff Carriers had a long-term contract with Oldendorff GmbH & Co KG which in turn concluded a time charter trip with the owners of the "Zagora".

A letter of indemnity seeking delivery of the cargo without production of the original bill of lading was provided by Xiamen, which had itself on-sold the cargo, ultimately, to Shanxi Haixin International Iron & Steel Co Ltd.

Delivery of the cargo took place to Sea-Road Shipping Agency Co Ltd who had been appointed agent at the discharge port by Shanxi Haixin, and all the way up the chain to Oldendorff. The vessel had arrived at the discharge port on 25 December 2013 and discharge of the cargo was completed on 31 December 2013. The cargo was ultimately transported from Lanshan, the port of discharge, to the ultimate receiver between the 14 January and 8 February 2014. On 20 February 2014, the Bank of China paid the purchase price on behalf of Shanxi Haixin, who were not required to reimburse the Bank of China for 150 days. The Bank of China was in possession of the original bills of lading and arrested the vessel in Lanshan on 27 August 2014. The vessel was eventually released on 24 September 2014 when Oldendorff provided security to obtain its release, without prejudice to its rights to argue that the LOI had not been engaged. The bank's claim was therefore being litigated in China. The arbitrations and appeal therefrom were heard in London.

Although the arbitrations, down the line from the owners to Xiamen, had all been consolidated, the only parties who were represented at the hearing before Teare J were the owners and the Oldendorff companies. The issue in all cases was whether the LOIs were engaged, i.e. were the parties who had sought delivery of the cargo without production of the bill of lading liable to indemnify those to whom they had addressed the letter of indemnity? Teare J found that they were and they were enforceable down the line of the chain of charters. The only factual-legal issue that might have prevented that finding related to the capacity in which the entity to whom delivery of the cargo was made, Sea-Road, was serving. Was it the agent of the ship or the receiver of the cargo? The Court found that Sea-Road had been appointed as agent for the cargo receiver, it being improbable that the owners appointed those agents for the purposes of the delivery of the cargo. The owners had thereby complied with the instructions contained in the letter of indemnity.

Transgrain Shipping (Singapore) Pte Ltd v Yangste Navigation (Hong Kong) Co Ltd (MV "Yangste Xing Hua") (2016) EWHC 3132

This case involved an issue of construction of the Inter-Club New York Produce Exchange Agreement 1996 ("ICA") and whether the term "act" in the phrase "act or neglect" means a culpable act in the sense of fault, or whether it means any act, whether culpable or not.

The cargo in this case was soya bean meal being carried from South America to Iran. The vessel arrived off the discharge port in December 2012, but the charterers ordered the vessel to wait off the discharge port for over four months as they had not been paid for the cargo. The arbitrators had found "it seemed very clear that it actually suited the shippers/charterers, in money terms, to use the vessel as floating storage, at the receiver's expense, rather than unloading it ashore into a bonded warehouse". When ultimately discharged, the cargo in two of the holds was found to be lumpy and discoloured. The tribunal found that the monitoring of the cargo temperatures by the owners was not at fault and that the cause of the damage was a combination of the inherent nature of the cargo (and its oil and moisture content) together with the prolonged period at anchor at the discharge port. The delay was too prolonged, given the moisture content.

Clause 8(d) of the ICA requires cargo claims to be apportioned on a 50/50 basis between charterers and owners, "unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of the one or the other... in which case that party should bear 100% of the claim".

Arbitrators had found that the proviso was engaged in this case and charterers should bear 100% of the consequences, despite finding that there was no "neglect" by charterers, in loading the cargo, "albeit that what in fact they loaded, together with instructions to wait outside the discharge port, was in all probability the cause of the damage...". They therefore had held that "act" was to be distinguished from something suggesting "fault, breach or neglect".

It was submitted in the appeal to Teare J by charterers that "act" means "culpable act" and the phrase "act or neglect" compendiously meant "fault".

Having examined the history of the ICA and other cases, Teare J found that the arbitrator's interpretation was correct; the word "act" in this context did not require fault.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

This article is part of a series: Click Transport & Logistics News - March 2017: part 1 for the previous article.
This article is part of a series: Click Transport & Logistics News - March 2017: part 3 for the next article.
Andrew Probert
Andrew Tulloch
Marcus Saw
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions