Trafigura commenced proceedings in London against the owners on March 27 2001, claiming US$2,908,812, principally in respect of damage to the cargo and the additional costs incurred in carrying it to and discharging it at Agioi Theodori. The shipowners then sought summary judgment on the grounds that the claim was timebarred under Article III Rule 6 of the HVR. This Article provides for the shipowners’ liability to be discharged unless "suit was brought within one year of the delivery [of the goods] or of the date when they should have been delivered". The question was whether time started to run from the date of delivery in Greece, which was within the one-year limit, or from the date when the cargo "should have been delivered" at Lagos, namely, at the latest by 6 February 2000.

The charterers’ argument was that the cargo had been delivered in Greece and that the proceedings were commenced within one year from that date. Accordingly, the second part of Article III Rule 6 of the HVR (the "should have been delivered" part) did not come into play. 

At first instance, the judge, Morison J. found in favour of the owners, holding that the time limit ran from the time that the cargo should have been delivered in Lagos. Charterers’ claim was therefore timebarred. Charterers appealed.

Judgment
The judgment in the Court of Appeal was given by Lord Justice Clarke, with whom the other members of the court agreed.

He held that the court should adopt a process of construction of Article III Rule 6 which was appropriate to the interpretation of a set of rules agreed internationally and enacted into UK law. Such a process should be both purposive and practical. In his view, the rule naturally meant "that the carrier’s liability is only to be discharged if suit is not brought either within a year of delivery or within a year of the date when the goods should have been delivered. It was important to note that the rule did not include such words as "whichever is the earlier" or "whichever is the later". Thus, if suit is brought within a year of delivery, the carrier is not discharged from liability even if suit is not brought within a year of the date when the goods should have been delivered."

The essential question in the present case was whether there was delivery of the cargo within the meaning of Article III Rule 6. After examining passages from Carver on Bills of Lading and Cooke on Voyage Charters on the meaning of the term "delivery", Clarke LJ. then considered certain American authorities, in particular the case of Western Gear Corp. v. States Marine Lines Inc. [1966] F 2d 328, a decision of the Ninth Circuit of the United States Court of Appeals. The importance of that case was that it "stresses that delivery under an entirely separate and distinct transaction will not be ‘delivery’ of the goods for the purposes of Article III Rule 6."

The conclusion that he drew from these authorities was that "if, looking at all the circumstances of the case, it can fairly be said that there was delivery under the contract of carriage, even if that contract has been varied in some respects in the light of problems that have arisen during the voyage, it will in general be appropriate to hold….. that there has been ‘delivery’ within the meaning of Article III Rule 6. If, on the other hand, the delivery is under an entirely separate and distinct transaction, it will in general be appropriate to hold that there has been no such ‘delivery. It might be said that there cannot be delivery under the contract of carriage unless delivery takes place at the original contracted place of delivery or at a place of delivery in accordance with an amended contract of carriage where the amendment is made without reference to the breach of contract of either party. However, for my part, I would not so hold. There is nothing in Article III Rule 6 to restrict the meaning of ‘delivery’ in that way. In my opinion, so to restrict it would be to give Article III Rule 6 too narrow a meaning."

In the present case, he held that there was delivery of the goods at Agioi Theodori within the meaning of Article III Rule 6. The principal considerations which led him to this conclusion were the following:
1 The cargo delivered was the same jetoil as was shipped [in Saudi Arabia]. It remained on the ship and was delivered by the same shipowners at the same charterers’ request to receivers nominated by the charterers, albeit at a different destination.
2 Although the voyage to Agioi Theodori was a new voyage, it was made necessary because of the problems at Lagos, whatever the causes of those problems were.
3 Both the voyage to Abidjan and the subsequent voyage to Greece arose out of the original charterparty and the fact that the cargo remained on board the vessel. Whether the oral agreement was a variation of the charterparty or a new charterparty, it was not, in the judge’s view, an entirely separate and distinct transaction.4 There was no transhipment of the cargo and no new bill of lading was issued in respect of it. Both parties regarded the delivery at Agioi Theodori, in one sense at least, as delivery under the bill of lading, even though the bill of lading was not the contract of carriage between as between the owners and the charterers.
5 The contractual bailment, which began in Saudi Arabia, only came to an end when the cargo was delivered at Agioi Theodori.

The judge concluded therefore that, taking into account all the circumstances of the case, there was ‘delivery’ of the goods within the meaning of Article III Rule 6 at Agioi Theodori and that suit was therefore brought within a year of that delivery. The charterers’ appeal was allowed.