Petroleo Brasileiro Sa v Ene Kos 1 Ltd (‘The MT Kos’): SC 2 May 2012

The MT Kos had been chartered by the appellants. The respondents failed to make payments, and notice was given to withdraw the vessel. The contract said that such a notice was without prejudice to any claim. At the time, the vessel was laden. The ship was unavailable for a further 2 days whilst being unladen. The ship owners now appealed against rejection of ther claim for payment for this time.
Held: The appeal was allowed. That a delay arose from a need to discharge the cargo was neutral both morally and at law.
The contract contained an employment and indemnity clause (clause 13) which is found in most time charters, which provided that the charterers must indemnified the owners against all consequences or liabilities arising from the master complying with orders. The clause was drafted widely, but it was not unlimited. It was to be read in the context of the owners’ obligations under the entire charterparty and the legal context. The real question here was whether the respondent’s order to load the cargo was an effective cause (not necessarily the only one) of the appellant having to bear a risk or cost which he had not contractually agreed to bear. The detention of the vessel in the appellants’ own time and at their own expense after the charter had come to an end was not an ordinary incident of the chartered service and nor was it a risk that the appellant had assumed under the contract. It therefore fell within the indemnity. The appellant was entitled to the market rate of hire for 2.64 days and the value of the bunkers consumed. Lord Manse would have the same result but not in this point.
The claim also succeeded under the law of bailment.

Lord Phillips, President, Lord Walker, Lord Mance, Lord Clarke, Lord Sumption
[2012] UKSC 17, [2012] 2 WLR 976, UKSC 2010/0157
Bailii, Bailii Summary, SC Summary, SC
England and Wales
CitedRoyal Greek Government v Minister of Transport (The Ann Stathatos) 1949
The ship had been chartered, but the crew refused to sail without an escort, in war conditions. The charterer sought to be excused liability under a clause making allowance for ‘insufficiency of crew’.
Held: The presumption against surplusage . .
CitedTriad Shipping Co v Stellar Chartering and Brokerage Inc (‘The Island Archon’) CA 8-Jul-1994
A ship owner had an implied right of indemnity against the acts of charterers, even under their own orders where they lead to false claims. The more foreseeable the owners’ loss, the more likely it is to be an ordinary incident of the chartered . .
Appeal fromENE 1 Kos Ltd v Petroleo Brasileiro Sa CA 6-Jul-2010
If a shipowner withdraws his vessel from a charterer’s service for non-payment of hire while cargo is on board the vessel and the shipowner requires the charterer to remove the cargo from the vessel, is the shipowner entitled to remuneration outside . .
At First InstanceENE Kos v Petroleo Brasileiro SA (Petrobas) ComC 23-Jul-2009
The claimant shipowners withdrew the vessel for non payment, but at the time they gave notice, the vessel was already laden. They now claimed for the further two days taken for unloading.
Held: The claim succeeded. The proper cause of the . .
See AlsoPetroleo Brasilieiro SA v ENE Kos 1 Ltd CA 30-Oct-2009
The parties disputed the effective date of a payment into court where the cheque lodged was not in pounds sterling.
Held: The rules were silent on the exact point, but the date was the date of receipt in the court funds office of the cheque in . .
CitedGaudet Geipel and Others v Brown (The Ex Cargo Argos) PC 18-Feb-1873
Petrol was shipped in London on the Argos under a bill of lading to deliver at Le Havre. It arrived in the later stages of the Franco-Prussian war, when the port was full of munitions, and the landing of flammable cargoes was forbidden. The master . .
CitedGreat Northern Railway Co v Swaffield CEchC 22-Apr-1874
Mr Swaffield sent his horse by railway to a station at Sandy. The horse arrived late at night, and the railway company lodged the horse overnight for their own account at a livery stable. Mr Swaffield failed to collect it on the following morning. . .
CitedFalcke v Scottish Imperial Insurance Co CA 1886
The owner of a policy of life assurance mortgaged the policy to secure repayment of a loan. Subsequently the owner, now the owner of an equity of redemption in the policy, paid two annual premiums which became due under the policy. The policy was . .
CitedLeyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd HL 1918
The ship was insured against the perils of the sea by a policy containing a warranty against all consequences of hostilities. While voyaging to Le Havre, she was torpedoed by a German submarine 25 miles from port. She began to settle by the head, . .
CitedYorkshire Dale Steamship Co Ltd v Minister of War Transport HL 1942
Treatment of Merchant as War Vessel
The House considered when a merchant vessel may be treated on the same footing as a war vessel and be deemed to be engaged on a warlike operation.
Held: This depended on the nature of the cargo and the voyage: ‘She was then in the act of . .
CitedLarrinaga Steamship Co Ltd v The King HL 1944
The vessel, discharging at St. Nazaire, was ordered by charterers to return to Cardiff. Despite severely deteriorating weather conditions a Sea Transport Officer instructed the vessel to sail on completion of discharge to Quiberon Bay to join a . .
CitedMidland Mainline Ltd and others v Eagle Star Insurance Company Ltd CA 28-Jul-2004
There can be more than one proximate cause of a loss. . .
CitedWhistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) HL 8-Dec-2000
A master, engaged to fulfill a charterparty, was not free to choose a longer and slower route, when the shorter route was recommended and safe. His own perception of the safety of the route was not determinative. His rights to control navigation did . .
CitedA/B Helsingfors Steamship Co Ltd v Rederiaktiebolaget Rex (The White Rose) 1969
A Finnish vessel had been ordered to load in Duluth, Minnesota, where Mr de Chambeau, an employee of charterers’ stevedores was injured while on board. He had left his proper place for purposes unconnected with his work, but owners were liable to . .
CitedHarbutt’s Plasticine Ltd v Wayne Tank and Pump Co Ltd CA 1970
The plaintiffs’ factory in an old mill, burned down because Wayne Tank had installed a pipeline made of unsuitable and dangerous plastic material and wrapped in heating tape attached to a useless thermostat. It had been switched on and the plant . .
CitedWayne Tank and Pump Company Ltd v Employers Liability Assurance Corporation Ltd CA 1973
The court discussed the effect of an exception clause in an insurance policy: ‘The effect of an exception is to save the insurer from liability for a loss which but for the exception would be covered. The effect of the cover is not to impose on the . .
CitedTropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) 1982
The court considered ‘the nature of a shipowner’s right to recover from charterers remuneration for services rendered after a ship has been withdrawn from the charterers’ service under a time charter, pursuant to an express contractual right of . .
CitedChina Pacific SA v Food Corpn of India (The Winson) HL 1982
A cargo of wheat was loaded in the US for delivery to Bombay. The ship was stranded on a reef in the South China Sea. Salvors entered into a salvage agreement with the shipowners and cargo owners on Lloyds open form. In performance of that contract . .
CitedTotal Transport Corporation v Arcadia Petroleum Ltd (‘the Eurus’) CA 18-Nov-1997
Arcadia chartered the Eurus, and had succeeded in their application for an award in arbitration proceedings against Total. The award had been reversed, and they now appealed against that order. The parties disputed whether the amount was an award of . .
CitedJ J Lloyd Instruments Ltd v Northern Star Insurance Co Ltd ‘The Miss Jay Jay’ 1985
Mustill J considered liability under a marine insurance where damage was suffered when the sea state was within what might reasonably be anticipated: ‘The cases make it quite plain that if the action of the wind or sea is the immediate cause of the . .
CitedThe Athanasia Comninos 1990
Two ships carrying coal to Birkenhead suffered explosions. The parties disputed the respective roles of the time charterer, the shipper, as to responsibility for an indemnity on damages.
Held: The shipper was a named party to and liable on the . .

Lists of cited by and citing cases may be incomplete.

Transport, Contract

Updated: 09 November 2021; Ref: scu.453697