Michael Ashcroft QC acted for the successful respondent owners (instructed by Ince & Co LLP) in this appeal to the Court of Appeal concerning the proper meaning and effect of an "in transit loss" clause in a charterparty. The case is of particular interest to those involved in the energy, commodities, shipping and transportation markets.
The dispute arose out of the hijacking of a fully laden oil/chemical tanker off the west coast of Africa by armed pirates. The pirates forced the crew of the vessel at gunpoint to discharge nearly $5m worth of the fuel oil cargo on board to an unidentified lightering vessel, which then absconded without trace. The charterers of the vessel, Trafigura, accepted that the owners were not at fault in any way for the cargo loss, but contended that the "in transit loss" clause rendered the owners strictly liable for the loss. The Court of Appeal (upholding Andrew Smith J) rejected that contention. Very clear words would be required to impose such an extraordinary no-fault liability on a contractual counterparty. The "in transit loss" clause should be interpreted as applying only to a loss occurring during the course of a routine/ordinary voyage. In any event, even if that was wrong, the "in transit loss" clause should be read as qualified by the exceptions from liability in the contract, which clearly excused the owners from liability; there was no irreconcilable consistency between these provisions and they could be harmonised in a sensible way.