UK: The Global Santosh: The Supreme Court Provides Guidance On A Charterer's Responsibility For Its Agents

NYK Bulkship (Atlantic) NV (Respondent) v Cargill International SA (Appellant) ("The Global Santosh") [2016] UKSC 20 (overturning the Court of Appeal [2014] EWCA Civ 403)

The Supreme Court last week handed down an important decision concerning the issue of when a charterer will be held responsible for its agents under a charterparty.

Contractual position

NYK was the disponent owner of the m.v. Global Santosh ("the Vessel"). NYK time chartered the Vessel to Cargill on an Asbatime form, which is a variation of the NYPE 1946 form. Cargill sub-chartered the Vessel to Sigma Shipping Limited under a voyage charter. The Vessel carried a cargo of cement in bulk from Sweden to Nigeria under a sale contract between Transclear SA ("Transclear") and IBG Investments Ltd ("IBG"). It is likely that Transclear was a further sub-charterer of the Vessel.

The charterparty between NYK and Cargill contained the usual array of off-hire clauses, including an additional clause 49, which read:

"Should the vessel be captured or seizured [sic] or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents. ..."

Under clause 8 of the charterparty, Cargill were to "perform all cargo handling at their expense". They were at liberty to sublet the Vessel, but they remained responsible for fulfilment of the charterparty.

Under the sale contract between Transclear and IBG, discharge operations were ultimately to be carried out by IBG, and demurrage was payable by IBG to Transclear for any delay in discharge beyond the agreed laytime.

Factual background

The Vessel arrived at the discharge port on 15 October 2008 and tendered notice of readiness. Due to congestion in the port, however, she did not proceed to berth until 18 December 2008; over 2 months later. The congestion was caused at least in part by the breakdown of IBG's off-loader.

When the Vessel tried to berth on 18 December 2008, she was turned away by the port authority and ordered to return to anchorage. A dispute had arisen between Transclear and IBG in relation to demurrage, and Transclear sought to secure their claim for demurrage by arresting the cargo. Mistakenly, however, the Court's order also directed the arrest of the Vessel, which was therefore prevented from berthing and discharging.

Transclear and IBG eventually came to an agreement, and the Vessel berthed and commenced discharge on 15 January 2009.

Cargill continued to pay hire to NYK under the time charter while the Vessel was delayed due to congestion in the port. They also paid hire during the period of discharge. Cargill withheld hire, however, during the period that the Vessel was under arrest, in reliance on clause 49. NYK disputed the withholding of hire on the basis of the proviso "unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents" in clause 49; their argument being that Transclear and IBG were the charterer's agents and it was their conduct that occasioned the arrest.

Supreme Court

After NYK's successful arbitration appeal and an adverse decision in the Court of Appeal, Cargill appealed to the Supreme Court, where the question before the Court was whether the arrest can be regarded as having been occasioned by the time charterer's "agents" in the sense in which that word is used in the proviso.

Before the Supreme Court it was accepted that the proviso does not apply only to agents in the strict legal sense, and that in the sense that Transclear and IBG were the parties ultimately entitled to the facility that Cargill enjoyed of directing where and when to discharge, Transclear and IBG were, for that purpose, the agents of Cargill.

Leading judgment

The Supreme Court allowed the appeal, disagreeing with the reasoning of both the Commercial Court and Court of Appeal and accepting the conclusion of the arbitrators. Lord Sumption gave the leading judgment, which was approved by Lord Neuberger, Lord Mance and Lord Toulson. In summary it was held that:

  • The main purpose of clauses such as clause 49 is to protect the time charterer; therefore, the proviso in respect of the situation where the arrest or detention is caused by the charterer or their agents should be narrowly construed.
  • There was in this case no personal default on the part of Cargill as time charterer, as there was no duty to discharge at any particular time under the charterparty. In order to rely on clause 49, NYK must therefore rely on an act or omission of Transclear or IBG, as the parties to the dispute that caused the arrest.
  • The rights of the charterer are made available to those further down the contractual chain, and at least some of the charterer's obligations are satisfied by the acts of subcontractors. To the extent that they are "availing themselves of the facility contractually derived either directly or indirectly from the charterers" such subcontractors are the "agents" of the time charterer for the purposes of clause 49.
  • Transclear and IBG were Cargill's "agents" under the time charter for purposes of calling for and carrying out the discharge operations. That did not mean, however, that Cargill were responsible for everything that Transclear and IBG might do which resulted in detention of the Vessel. There must be some nexus, i.e. connection, between the reason for the arrest and the function that they were performing as "agent" of Cargill.
  • The question was therefore to what acts or omissions did the "agency" extend.
  • Under the time charter, Cargill were required to carry out (or procure the carrying out of) cargo handling at their expense, but there was no obligation to discharge at or within any particular time. Transclear and IBG did have obligations as to the timing of discharge under the sale contract, but neither Cargill nor NYK were parties to that contract.
  • Cargo handling operations were carried out on Cargill's behalf, but the issue here was not, for example, the defective performance of cargo handling operations, but rather an absence of cargo handling operations. During the period of delay, IBG were doing nothing on behalf of Cargill. IBG's inactivity would only be relevant for the purposes of clause 49 if it amounted to the vicarious breach of the time charter by Cargill, which it did not. Cargill's responsibility was only for acts or omission in the actual performance of the cargo handling operations at the discharge port.
  • Incurring or enforcing a liability for demurrage under the sale contract could not be regarded as the vicarious exercise of any facility made available to Cargill under the time charter.
  • Consideration should always be given to the connection between the acts leading to the arrest and the performance of functions under the time charter.
  • It was concluded that the arrest could not be regarded as having been occasioned by the time charterer's "agents" in the sense in which that word is used in the proviso, and Cargill's appeal was upheld.

This approach involves a much more detailed analysis than the broad brush review of the owners' and charterers' spheres of responsibility adopted by the Court of Appeal, and means that each case will need to be looked at carefully on the basis both of the wording of the relevant clause/(s), and the facts involved.

A more detailed review including a consideration of the earlier decisions and the dissenting judgment of Lord Clarke will follow shortly.

The full judgment of the Supreme Court can be found here.

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.

Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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