Sunday, October 16, 2016



Maintainability of civil suit against Steamer Agent: Plaint returned for non-compliance of sec. 20 CPC.

(V.M. Syam Kumar, Advocate, High Court of Kerala)

Mere issuance of insurance policy at a particular place does not confer jurisdiction on the civil court at that place to entertain a suit against the steamer agent when neither the port of loading nor the port of discharge or the place of delivery are within the jurisdictional limits of the said court. The requirements under sec. 20 of the Code of Civil Procedure, 1908 have to be satisfied before such a suit can be entertained. 
A civil Suit filed against the steamer agent by the insurer & the shipper at the latter’s place of business was recently rejected by the Civil Court pointing out that noncompliance of sec. 20 CPC is fatal.
It was contended by the steamer agent that the Contract of affreightment as evidenced by the terms and conditions of the bills of lading was entered in to in Mtwara and the contract was to be completed in Tuticorin. The defendant had no office and does not function from within the jurisdictional limits of the Munsiff’s Court, Kollam. No part of the cause of action has arisen within the jurisdictional limits of the Munsiff’s Court, Kollam.. Thus neither the contract of affreightment was entered in to between the parties within the jurisdiction of the Munsiff’s Court, Kollam nor was any part of the contract performed or to be performed within the said jurisdiction. Hence only the Courts at Mtwara or Tuticorin have jurisdiction to entertain any action pertaining to the relevant the Contract of affreightment. In the circumstances the above suit was liable to be dismissed; or in the alternative the plaint is to be returned for filing before the appropriate forum. Further in view of the specific provision contained in the Contract of affreightment as evidenced by the terms and conditions of the bills of lading, issued by the Carrier, the Munsiff Court, Kollam has no jurisdiction to try the matter, that being a condition agreed upon between the parties to the contract of affreightment. All persons claiming under the respective parties to the contract of affreightment are bound by all the terms and conditions contained in the contract.
The learned Judge accepted the contentions put forth by the steamer agent and held as follows:
“Merely because the office of the plaintiff is situated within the jurisdictional limits of this court it cannot be contended that this court has jurisdiction to entertain the suit especially where the plaintiff has no case that any part of the transaction took place in the office of the plaintiffs. As pointed out by the learned counsel for the defendant, the plaintiff has no case that the contract was executed within the jurisdiction of this court or that the contract was for transit from or to a place within the jurisdiction of this court. On the other hand admittedly, the contract was for carriage of goods from Port Mtwara Tanzania to Tuticorin, Tamil Nadu and admittedly the office of the defendant is situated at Tuticorin, Tamil Nadu. Hence it is found that this court has no jurisdiction to entertain the suit.”
Many a time the carrier or their agent and the discharge port are compelled to defend suits initiated in places which have no relevance or collection with the contract of carriage. Such suits are filed on the pretext that the goods carried are covered by an insurance policy which had been issued at the particular place were the suit had been initiated. Notwithstanding the fact that neither the carrier nor the steamer agent are privy to such insurance policies, they are compelled to defend civil action at such places which are alien to them.
The judgment rendered by the presiding judge Smt. Prasanna Gopan reiterates the well settled law that mere issuance of an insurance policy does not confer jurisdiction upon the courts at the place of such issuance to entertain a damage claim against the carrier or its agent if the requirements under section 20 of the code of civil procedure are not satisfied.
The Judgment of the Hon’ble Court rendered by Smt. Prasanna Gopan can be accessed at: 
https://www.scribd.com/document/327754997/Os-544-Final-Order-Bsv-Kollam-Pandi
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Thursday, August 25, 2016

MARINE POLLUTION FROM SHIP WRECKS ALONG INDIAN COAST - NATIONAL GREEN TRIBUNAL OF INDIA RENDERS A HISTORIC JUDGMENT.



(V.M. Syam Kumar, Advocate, High Court of Kerala)
In what could be termed as a magnum opus on the case law relating to marine pollution in India, Justice Swatanter Kumar former judge of the Supreme court of India and the Chairperson of the National Green Tribunal has recently rendered a judgment holding that “No party from any country in the world has the right/privilege to sail an unseaworthy ship to the Contiguous and Exclusive Economic Zone of India and in any event to dump the same in such waters, causing marine pollution, damage or degradation thereof.”
The erudite judgment was the culmination of a litigation initiated by a citizen inter alia seeking to make the Owner of a vessel and its charterer liable for the damage caused to the ecosystem and pay compensation of the loss to ecology and livelihood in accordance with the ‘Polluter Pays Principle’.
M.V. RAK was carrying coal for and on behalf of an Indian Company. The Ship was carrying more than 60054 MT coal in its holds. The Ship contained 290 tonnes of fuel oil and 50 tonnes of diesel. Its voyage was from Indonesia to Dahej. On its voyage to destination, the ship sank approximately 20 Nautical Miles from the coast of South Mumbai. There was an oil spill in August, 2011 which occurred in the Arabian Sea, off the coast of Mumbai due to the sinking of the ship. The spilled oil from the ship spread beyond Mumbai to Raigad District. Traces were noticed particularly between Uttan in Bhayandar and Gorai beach. Continuous trail of oil leak from the ship was observed upto 12 Nautical Miles. A very thick oil slick up to one nautical mile and a thick layer of oil upto two Nautical Miles was also observed. During the first few days, oil was leaking at the rate of 1–2 tonnes per hour and on August 12, 2011 according to the Applicant, the rate of oil spill was 7 to 8 tonnes per day as per the information of the Coast Guard. Press Information Bureau Report and the press release of the MoEF & CC indicated said statistics. It is reiterated that the ship was carrying more than 60000 MT of coal for Adani Enterprises Limited for its thermal power plant at Dahej in Gujarat. As a result of the oil spill, there has been damage to mangroves and marine ecology of the Bombay coast. Various press information and articles were published in the newspapers during August, 2011 and particularly from 8thto 12thAugust, 2011. The impact of the oil spill has been clearly noticed and is visible on the mangroves of Mumbai. The lower portion of mangroves at Bandra had turned dark because of a layer of oil and got destroyed. The Government had also taken the view that the oil seen at Juhu Beach is due to localized events and not due to oil spill, but this was a misconception. Other accidents of oil leak from other ships had also taken place in 2010 near Uran.
In a detailed judgment the Tribunal examined various national and international legal norms on marine pollution including crucial questions on coastal state’s jurisdiction over its adjacent maritime zones and came down heavily on the polluters.
On the facts of the case it was held that “It is not a case of sinking of a ship by accident simpliciter, but it is a case where element of mens rea can be traced from the unfolding of the events that finally led to the sinking of the ship on 4thAugust, 2011. Non-rendering of requisite help/assistance by Respondent no.5 and other persons interested and responsible, to the Master of the Ship, despite the fact that they had complete knowledge about the status of the ship prior to the occurrence of the incident on 4thAugust, 2011. Furthermore, these Respondents did not adhere to the Principle of Due Diligence pre-voyage, for which they had sufficient means and time. The ship had developed mechanical and technical snags at Colombo and Singapore and the Master of the ship had asked for help there during its onward journey. There is nothing on record to show that Respondent no.5 and other Respondents provided timely assistance to the Master of the ship. It is also on record that there were repeated requests for help and for stoppage of the voyage in the meanwhile. During the entire duration, the owners and the other Respondents directed the ship to continue with its voyage, even though one of the pumps and a generator of the Ship had been rendered non-functional. This is really a case where the doctrine of res ipsa loquitor comes completely into play and the events speak for themselves to the extent that it hardly requires any further evidence to establish the element of negligence, carelessness and ill-design for sinking of the ship with the cargo itself.”
The Tribunal further held that the reports on record exhibit the callous attitude of the persons interested in the ship towards its seaworthiness and safe voyage to Dahej in Gujarat.
It was held that the pollution is not limited to an individual or a singular item. It is a problem of multiple sources of pollution, resulting from oil spill, sinking of the ship and its cargo. It will affect the marine environment that includes sea water, quatic life, shore, seabed, mangroves, tourism and public life of the people living at the shore. The adverse impacts were not seen only at a singular point but at multiple beaches as afore-stated.
Pinning down those directly responsible for marine pollution, the Tribunal held that “We have discussed in great detail all concepts of this case and have held that Respondents no.5, 7 and 11 are liable for all the degradation, damage and pollution of marine environment and the consequences of the defaults in not complying with the Conventions and the law in force in the Indian Waters (Contiguous Zone). While Respondent no.6, who had chartered the ship is responsible and liable for damage and pollution resulting from the cargo, for which, despite the fact that years have gone by, it has made no effort either to remove the cargo or even take the minutest preventive or pre-cautionary measures for controlling and preventing pollution of marine environment.”
“The damage caused by pollution, cannot be computed in terms of money with exactitude and precision. This has to be on the basis of some hypothesizing or guess work as is necessary to be applied in such cases. For instance, the damage caused to the aquatic life, mangroves, sea shore and tourism are incapable of being computed exactly in terms of money. The mangroves were destroyed as a consequence of the oil spill. The quantum of leakage of oil during the first few days, was at the rate of 1–2 tonnes per hour and on August 12, 2011 according to the Applicant, the rate of oil spill was 7 to 8 tonnes per day as per the information of the Coast Guard. It shows the massive oil spill from the ship. Thereafter the ship has been lying at the present location (20 Nautical Miles from the baseline of the Mumbai shore). The ship itself has dead weight 63695 with a cargo of 60054 MT and with all other metallic and non-metallic substance such as asbestos, machines, oil, grease and other elements including the coal as cargo of the sunken ship.”
Evoking the ‘Precautionary Principle’ in light of the facts of the present case, the Tribunal held that the Owners and the Charterers  have completely ignored this principle and did not take due precautions at the appropriate time. Even after the accident, none of them have taken any steps to remedy the wrong since they are content with the dumping of the ship along with its cargo in Indian waters as they have not suffered any liability in that regard.”  This is a patent and flagrant violation of the Precautionary Principle. Serious pollution has been caused by the oil spill and by the sinking of the ship and the cargo. The environment as already noticed under the Indian jurisprudence has been given a very wide meaning and practically covers whatever one can think the term may include.
The judgment rendered by Justice Swatanter Kumar is an important milestone in the evolution of marine pollution law in India. Finally Indian legal system has a judgment albeit from a Tribunal, laying down the basic tenets of marine pollution jurisprudence. This judgment will serve as a beacon for further legal decisions on marine pollution.   
The Judgment of the National Green Tribunal can be read here:

Monday, August 8, 2016

Is the Arbitration clause in a Multimodal Transport Document/ Bill of lading binding ?



(V.M. Syam Kumar, Advocate, High Court of Kerala)
The High Court of Kerala has in the judgment dtd. 8th September, 2015 in Caravel Shipping Services Pvt. Ltd. v. Premier Sea Foods Exim Pvt. Ltd. [2015 (4) KLT 1035] held that the existence of an Arbitration clause in a Multimodal Transport Document/ Bill of lading by itself does not entitle the Carrier/ Multimodal Transport Operator to seek a dispute arising from the said contract of carriage to be referred to Arbitration.
The Carrier had the moved the Hon’ble High Court under Art. 227 of the Constitution of India challenging the Order of the Subordinate Judge’s Court, Kochi wherein the prayer for referring the dispute to arbitration under S.8 of the Arbitration and Conciliation Act, 1996 made by the  Multimodal Transport Operator was rejected by the Sub-Judge.
The relevant facts as stated in the judgment of the High Court are as follows:
The plaintiff company had entrusted to the defendant, a carrier, 28,000 kgs. Cargo of frozen sea food, stuffed in a container, and covered by a bill dated 25.10.2008 for delivery at Port - Bandar Abbas, Tehran, Iran. The Cargo was shipped on board from Cochin Port on the same day. On 18th November 2008, it was informed by the office of the defendant that the Cargo container got damaged and part of the Cargo perished. Consequently, the proposed buyer refused to accept the consignment. Alleging that the plaintiff sustained loss due to default of defendant, a claim for USD 53,959.80 with interest was set up, and after issuing a notice, the suit was instituted claiming `26,53,593.00 with 11.5% interest. The defendant appeared and filed I.A. 486/2009 contending that the entrustment of cargo and its transportation were governed by Ext.P3 which was a Multimodal transport document as provided under the Multimodal Transportation of Goods Act, 1993 (herein after referred as the “Multimodal Act”). Clause 25 of the document specifically contemplated settlement of disputes by arbitration and conciliation and the jurisdiction of Civil Courts stood ousted in view of S.26 of Multimodal Act. The plaintiff, in the counter affidavit disputed the above and contended that, Ext.P3 was only a unilateral receipt and was not a Multimodal transport document and there was no consensus ad-idem between the parties to enter into an agreement for arbitration. The court below negatived the contention of the defendant, holding that the Contract of Carriage was not a Multimodal Transport document and that S.26 of the Multimodal Act and the Arbitration Act have no application to the facts of the case. The said Order of the Sub-Judge was challenged before the High Court.
It was contended by the Carrier based on Clause 25 of the Contract of Carriage that the arbitration clause therein operated as a bar in instituting a Civil Suit for enforcement of rights arising there from.
Clause 25 verbatim reads as follows:
“JURISDICTION/ARBITRATION: The contract evidenced by the Bill of Lading shall be governed by the Laws of India, and subject to the exclusive jurisdiction of Court in Chennai only. Dispute/Difference arising out of this contract and/or in connection with the interpretation of any of its clauses shall be settled by arbitration in India in accordance with the Arbitration & Conciliation Act, 1996. The No. Arbitrators shall be three, the Arbitrators shall be commercial persons. The venue for arbitration shall be Chennai.”
It was contended by the carrier that he was a Multimodal Transport Operator as defined under the Multimodal Act, having under taken a Multimodal transportation with the plaintiff evidenced by Ext.P3 Multimodal transport contract.
By virtue of Clause 25 extracted above, plaintiffs are bound by the arbitration clause in the light of S.26 of the Multimodal Act. The plaintiff contented that Ext.P3 was only a receipt evidencing a bill of lading, there was no consensus ad-idem in relation to terms of Ext.P3 and that it did not evidence a Multimodal contract.
It was contended by the Consignor  that a multimodal transport contract should involve undertaking of at least two different modes of transport, which was not involved in this case. The reply of the Carrier was that the factory of the plaintiff was at Alapuzha and empty container was delivered to the consignor, who stuffed it at Alapuzha, transported by road to Cochin Port and thereafter transported by sea, to Port Bandar Abbas by vessel OEL Dubai V029. Admittedly, an empty container was delivered to the consignor, which is also seen endorsed in Ext.P3, against the column of container no. According to Consignor, they themselves stuffed the container with goods. Thereafter, it was inspected by officials of State Live Stock, Marine and Agri products, and thereafter by Lloyds Agency, Kochi and both issued necessary certificates. It was thereafter handed over to Carrier with all records. In para 12 of the plaint, the cause of action is stated to have arisen, when the Consignor entrusted the container to the Carrier for shipment at a place within the jurisdiction of the Kochi court. Court noted that evidently, the Consignor had specifically pleaded that though the container was transported from Alapuzha, only the part of transportation by sea alone was undertaken by Ext.P3. This pleading it was noted was not denied by the Carrier.
As regards the nature of the document, ie., whether it is a Multimodal Transport Document or a Bill of lading, the High Court concluded as follows: “ Ext.P3 shows that the column of Place of Receipt is blank. However, Port of loading is shown as Cochin and place of delivery as Bandar Abbas, Iran.  The entries indicate that Cargo was shipped on board the vessel on 25th October 2008. There is absolutely no reference in Ext.P3 that either the container was entrusted at Alapuzha or that the freight charges included transportation from Alapuzha. Evidently, though the cargo moved both by road and by sea, the contract with defendant was for carriage of goods by sea alone.”
Based on the Multimodal Transportation of Goods Act,1993, the learned Judge reasoned as follows:
“Under S.2(l), to be a Multimodal transport contract, the Multimodal transport operator should undertake to perform or procure the performance of Multimodal transportation. Under S.2(k) Multimodal transportation means carriage of goods, by at least two different modes of transport under a multimodal transport contract from the place of acceptance of goods in India to a place of delivery outside India. A co-joint reading of S.2(k) and 2(l) undoubtedly shows shows that to be a Multimodal contract, the operator should undertake to transport by two modes. In other words, under the contract or by virtue of the contract, the transportation should involve two modes, from a place in India to a place of delivery outside India. The terms “two different modes of transport” found in S.2(k) does not qualify “carriage of goods” but refer to multimodal transport contract. In the instant case, though the goods were transported by two modes, only one part, that is the carriage by sea, alone was covered by Ext.P3. Consequently Ext.P3 cannot be considered as a Multimodal transport contract.”
“It is true that Ext.P3 is captioned as a Multimodal Transport document/Bill of lading. From the nature of the Caption, it could either be a Multimodal transport contract or a bill of lading. However, for the reasons stated above, it could not be treated as a Multimodal transport contract.”
The Court then proceeded to consider the crucial question regarding the binding nature of the Arbitration clause in the contract of carriage.
The Consignor had contended that Ext.P3 did not evidence a binding arbitration agreement. It was argued that it was not signed by the Consignor and that there was no consensus ad-idem to enter into an agreement of arbitration.
This was countered by the carrier contending that that it is not essential that the agreement should be signed by the parties, if the terms of the transaction discloses an intention to refer for arbitration and will be satisfied if the clause of arbitration on an invoice is brought to the notice of other party. It was argued by the learned counsel for the carrier that the entrustment  of the goods subject to the terms and conditions laid in Ext.P3, and by accepting a copy of the Ext.P3, by the Consignor, statutorily constituted the creation of a valid arbitration agreement. It was further contended that under S.7 of the Multimodal Act, a statutory liability is cast on the Multimodal operator to issue the Multimodal agreement to the consignor and by complying with that statutory liability, parties have voluntarily entered into the agreement.
The learned Judge concluded that the existence of an Arbitration clause in a Multimodal Transport Document/ Bill of lading by itself does not entitle the Carrier/ Multimodal Transport Operator to seek a dispute arising from the said contract of carriage to be referred to Arbitration by the following reasoning:  
“S.7 only enables a consignor who has entered into a contract for Multimodal transportation, to issue a multimodal document, at the option of the consignor. This presupposes entering into a contract for multimodal transportation. The term contract used in the definition of “Multimodal transport contract” and “Multimodal transport document” and in other parts of the Multimodal Act has not been specifically defined. Though by S.29 of the Multimodal Act, it shall have overriding effect over all other enactments, not with standing anything contained in any other law, the term contract shall by necessary implication can only have the meaning and content of the term contract as defined under the Indian Contract Act, 1872. Hence all the essentials required for entering in a valid contract will be required for entering into a Multimodal contract. In the case at hand, apart from entering into an agreement relating to the essential terms for transportation of goods by sea and for the payment of freight charges, it does not appear that there was consensus ad-idem for entering into an arbitration agreement. There is nothing to show that Clause 25 was ever brought to the notice of plaintiff. Hence the contention of the defendant does not appear to be sustainable.”
The High Court of Kerala thus held that there was no illegality or irregularity in the application of law, or exercise of jurisdiction by the court below warranting an interference under Article 227 of the Constitution of India and hence dismissed the original petition by the carrier.
 The finding of the Learned Judge based on facts that the document issued by the carrier which evidences only a single mode of transportation will not come within the purview of the Multimodal Transportation of Goods Act,1993 is precisely correct.
However the the reasoning given in the judgment for holding that the arbitration clause in the bill of lading does not bind the parties to the carriage, viz., the Consignor & the Carrier appears to be insufficient and requires closer examination.   
The reasoning given by the learned judge is that the term contract of carriage whether a Bill of lading or a Multimodal Transport Document can by necessary implication only have the meaning and content of the term contract as defined under the Indian Contract Act, 1872. Hence all the essentials required for entering in to a valid contract will be required for entering into a Multimodal contract.
We cannot have a quarrel up till the above part of the reasoning of the learned Judge.
However, subsequent part of the reasoned statement that “In the case at hand, apart from entering into an agreement relating to the essential terms for transportation of goods by sea and for the payment of freight charges, it does not appear that there was consensus ad-idem for entering into an arbitration agreement. There is nothing to show that Clause 25 was ever brought to the notice of plaintiff.” has been made totally overlooking the nature and validity of the clauses on the reverse of the bill of lading especially the Judgment of the Hon’ble Supreme Court in British India Steam Navigation Company v. Shanmughavilas Cashew.
The above judgment throws up very crucial legal questions concerning the binding nature and validity of numerous clauses in the bill of lading vis – a- vis the consensus ad idem requirement under contract law.
If the arbitration clause in the bill of lading lacks consensus ad idem and is not binding, what would be the status of the other clauses in the bill of lading including the Himalaya Clause, New Jason Clause etc.?
Would those terms on the reverse of the bill of lading which are the result of the accumulated experience of the marine carriers though centuries of operation and which have been tested in Hague, Hague-Visby, Hamburg and Rotterdam Rules and approved in statutes like Indian Carriage of Goods by Sea and the Bill of lading Act be negated by a single stroke of purported lack of consensus ad idem?
Does  consensus ad idem requirement have any relevance at all in the case of titular documents like the Bill of lading and Multimodal Transport Document which can be endorsed to third parties conferring on them titular rights over the cargo covered?
What impact would the judgment have when in maritime law we frequently are confronted with the phenomenon of incorporation into a bill of lading the arbitration clause in a charter party  
The above are a few of the questions of legal relevance that arise for consideration in the back drop of the judgment in  Caravel Shipping Services Pvt. Ltd. v. Premier Sea Foods Exim Pvt. Ltd. [2015 (4) KLT 1035].

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