Jindal v. Islamic Solidarity Shipping

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The decision in this case has been upheld by the Court of Appeal (13 February 2003) and  by the House of Lords (25 November 2004). To access the note on the Court of Appeal judgment, click here; to access the note on the House of Lords judgment, click here

Jindal Iron and Steel Co Limited and Others -v- Islamic Solidarity Shipping Co (Jordan) Inc and another
English Commercial Court: Nigel Teare QC: 25 June 2002
Simon Rainey QC and Nicholas Craig, instructed by Jackson Parton, for the claimant cargo interests
Timothy Young QC and Sudhanshu Swaroop, instructed by More Fisher Brown, for the defendant shipowners
This case effectively set out to challenge the established position under English law that cargo interests, and not the carrier, are responsible for loss of or damage to the cargo occurring during the operations of loading, stowing, trimming and discharging the cargo, where those operations were performed at their cost. This principle had been first enunciated by Devlin J. as he then was, in the case of Pyrene v. Scindia [1954] 2QB 402, and approved in the judgment of the House of Lords in Renton v. Palmyra [1957] AC 149. The court dismissed the challenge, holding that Article III Rule 2 of the Hague-Visby Rules only requires a carrier carefully to load, stow, and discharge the goods where he has undertaken responsibility to carry out those operations.

DMC’s Category Rating: Confirmed

This case note is based on an Article in the September 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website.

The claimants (the shippers and receivers of a cargo of steel and the voyage charterer of the Jordan II) claimed against the defendant shipowners for damage to cargo, which, they alleged, was caused by defective loading, stowage, lashing, securing, dunnaging, separation and discharge. The owners argued that, under the terms of the charterparty and the contract of carriage evidenced by the bills of lading, they were not responsible for those cargo operations and, even if they were, they could recover an indemnity from the charterers.

The charterparty was on the Stemmor Voyage Charterparty form, designed for the carriage of ore, but on this occasion, used for the carriage of steel coils from India to Spain. It incorporated the Hague-Visby rules and was expressly governed by English law. Clause 3 was entitled "freight" and provided "Freight to be paid at and after the rate of US$… per metric tonne F.I.O.S.T. ["free in and out stowed and trimmed"] - lashed/secured/dunnaged….". The term F.I.O.S.T meant that the shipowner did not have to pay for the work of loading, stowing and trimming, including the work of lashing, securing, and dunnaging, and discharging the cargo.

Clause 17 of the charter provided:
"Shipper/Charterers/Receivers to put the cargo on board, trim and discharge cargo free of expense to the vessel. Trimming is understood to mean levelling off of the top of the pile and any additional trimming required by the Master is to be for Owners' account."

The bills of lading were in the Congenbill form incorporating the terms of the charterparty (including clauses 3 and 17) and the Hague-Visby Rules. The claimants argued that, once incorporated into the bills of lading, clauses 3 and 17 of the charter were inconsistent with Article III Rule 2 of the Hague-Visby Rules, which provides that "the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried" . As such, the clauses would be invalid in accordance with Article III Rule 8, which renders null and void any provision in a contract of carriage relieving or lessening the liability of the carrier as set out in the Rules.

At common law, it is the obligation of the shipowner to load, stow and discharge the cargo. Clear words will be needed if responsibility for the proper performance of this obligation is to be transferred to the charterer. The judge was satisfied this was the case here. Clause 17 expressly provided that certain activities were to be carried out by the shippers/charterers/receivers and so the responsibility for the proper performance of those tasks was transferred to them. Although the requirement for "trimming" made no sense in the context of a cargo of steel coils, clause 17 had to be read in conjunction with clause 3 where the words "lashed/secured/dunnaged" clearly referred to the cargo activities that this particular cargo would require.

The combined effect of clauses 3 and 17 was, therefore, to transfer the obligations to load and stow the cargo to shippers/charterers/receivers. Consequently, the charterers could not now claim against the shipowners.

The cargo interests’ arguments in relation to Article III Rule 2 of the Hague-Visby Rules rested on the assumption that the Rules placed an obligation on the carrier to load, stow, carry and discharge the goods. But that provision only sets out the standard to which the carrier must perform those duties, if the carrier has undertaken to perform them, which in this case it had not (Renton v Palmyra [1957] AC 149 approving Pyrene -v- Scindia [1954] 2 QB 402).

Whilst there might be feasible alternative constructions of Article III Rule 2, the claimants were unable to show a clear and indisputable legal intention in the working papers to the Rules to support a different interpretation.

The judge therefore found that clauses 3 and 17, incorporated into the bills of lading, effectively transferred responsibility for cargo work to the shippers at the port of loading and to the receivers at the port of discharge. Consequently, the shippers and receivers could not claim against the shipowners under the bill of lading for damage to the cargo.


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