TRANSGRAIN SHIPPING (SINGAPORE) PTE LTD v YANGTZE NAVIGATION
(HONG KONG) CO LTD  EWHC 3132
This was an appeal from an LMAA arbitration award, considering
the true construction of clause 8(d) of the Inter-Club Agreement
1996 ("ICA"); specifically, whether the
meaning of the term "act" in the phrase
"act or neglect" should be restricted to a
The dispute concerned a trip time charter where the charterers
(also the shippers) had, for their own purposes, ordered the ship
to wait off the discharge port for over four months before
discharging the cargo. During this time part of the cargo was
damaged due to overheating, which was found by the Tribunal to have
been caused by a combination of the prolonged delay at the
discharge port and the inherent nature of the cargo.
The owners, as carrier, settled the receivers' claims under
the bills of lading and then sought to recover their losses
(including hire) from the charterers.
The ICA had been incorporated into the time charterparty and it
was common ground that liability was to be settled in accordance
with it terms and that Clause 8(d) was the relevant part.
For the purposes of clause 8 of the ICA, sub-clause (d) is the
sweep-up provision and provides that:
"All other cargo claims whatsoever (including claims
for delay to cargo):
unless there is clear and irrefutable evidence that the
claim arose out of the act or neglect of the one or the other
(including their servants or sub-contractors) in which case that
party shall then bear 100% of the claim."
The Tribunal found that the charterers whilst not in
"neglect" had, by their decisions to load the
cargo and delay discharge ("to not only protect their
position but we sense actually profit from it"),
performed an "act" for the purposes of clause
8(d). Accordingly, the charterers were 100% liable under the
The charterers argued on appeal that this decision was wrong as
a matter of law, on the basis that, for these purposes, the word
"act" must take its "colour"
from its combination with "neglect" and thus be
limited to a "culpable act"; and there was
nothing culpable in the charterers'
However, the learned Admiralty Judge, Teare J, found that the
meaning of the word "act" was not to be coloured
by its association with "neglect" and upheld the
broader, non-culpable, interpretation at which the Tribunal had
In the judgment, the origin of the ICA (as a blunt tool by which
P&I insurers might circumvent perceived uncertainties
associated with Clause 8 of the NYPE '46 form), and its
subsequent incorporation into NYPE based time charters, is
rehearsed for the sake of finding the colour behind the
Ultimately the learned judge found that the meaning of the word
can only be determined in the context of the ICA and that other
constructions surrounding the phrase in other contexts (with or
without the additional word "fault") were not of
As such the judgment means that the word
"act" in Clause 8(d) of the ICA must now include
any positive conduct of the parties (or their servants and
Although the decision is robust in its assertion that the ICA
provision is a "more or less" or
"broadly" mechanical process, for the
charterers, the Tribunal's view as to the benefit of their
decision might seem to have offered its own colour to the
The learned judge gave permission to appeal and it would seem
surprising if this opportunity were not taken up. Whatever the
outcome though, the judgment prompts further thought as to the role
of the ICA within time charters.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In January of this year the findings of "Project MARTHA", a three year study into the causes and effects of crew fatigue, were released – along with proposals as to how best to mitigate against the risks posed by crew fatigue.
It is common practice for traders, usually when they are the sellers of the goods and the charterers of a vessel, to instruct the carrier to discharge cargoes without production of the original bills of lading and to agree to indemnify the carrier against the consequences of doing so.
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).