Bill of lading: party named as “shipper” was not a party to contract of carriage

The mv “Nortrader” loaded a cargo of a waste product known as unprocessed incinerator bottom ash (UIBA) at Plymouth (UK) for carriage to the Netherlands for reprocessing. There was an explosion on board, causing damage to the ship and injury to the chief engineer. 

The shipowners (N) made a claim in London arbitration against M, the operator of the plant where the UIBA originated, on the basis that M was named as the shipper in the bill of lading, which incorporated a London arbitration clause.

Contractual background

M challenged the jurisdiction of the arbitration tribunal, and the issue came before the Commercial Court (MVV Environment Devonport Ltd v NTO Shipping GmbH). The judge reviewed the contractual background and noted that M had a contract with R, the Dutch processing company, for disposal of the UIBA, under which the UIBA became R’s property and responsibility from the time when it was collected from M’s plant.

The vessel had in fact been chartered by R and the shipping arrangements (including preparation of bills of lading) were handled by an agent in Plymouth appointed by R. However, N relied on the fact that there had been 33 previous shipments under this contract, all of which were shipped under bills of lading which named M as the shipper. M had received copies of those documents and had never objected to being named as shipper, so N argued that this amounted to an implied authorisation.

Failure to object is not enough to amount to agreement 

The judge rejected this argument, based on established principles of agency law. He pointed out that whilst a bill of lading is evidence of the contract of carriage, the contract itself generally comes into existence before the bill is issued.

The fact that M was named as shipper was only a starting point, and N still had to prove that M had agreed to become a party to the contract, and/or authorised the agents to make the contract on its behalf.

Mere silence, or failure to object, was not enough to amount to agreement. In any event, N had not been involved in any of the 33 prior shipments or even been aware of the earlier bills of lading. On the evidence, it was clear that M had been named as shipper erroneously, and the arbitration tribunal had no jurisdiction to deal with the claim.