Great Eastern Shipping v Far East Chartering

Great Eastern Shipping Co Ltd v Far East Chartering Ltd (The Jag Ravi) [2012] EWCA Civ 180

Contract – Shipping – Bills of lading – Agency – Letter of indemnity

Facts:

Far East Chartering (FEC) were contracted by Great Eastern Shipping (GES) to charter one of their ships from Indonesia to India. The ship carried coal. The coal had been bought by a company associated to FEC (FEC Assoc.) from an Indonesian company (Pth) and sold to the receiver Binani (an Indian coal importer). The original bills of lading were not realised to FEC Assoc. Binani executed a LOI at FEC’s request, as no bill of lading was available. The LOI was addressed to ‘The Owners/Disponent Owners/Charterers’. FEC issued a letter of indemnity in similar terms addressed to the owners. Pth brought separate proceedings asserting rights as the original holder of the bill of lading and the goods being received by Binani without the bills. GES sought to enforce Binani’s LOI.

Issues:

Whether FEC were entitled to rely on the LOI addressed to the charters.

Held:

The appeal by GES was dismissed. The wording of the letter’s addressee(s) was not clear in that there was supposed to be only one offeree. The natural and proper meaning of the LOI was that it was addressed to both the owners of the ship and the charterers (FEC). The cargo was delivered, GES did comply with the request to deliver cargo and delivery did not have to require the physical handover of the cargo to Binani. GES complied with the request to deliver the goods without the bill of lading and drafted the LOI in good faith, without any knowledge of the proceedings commenced by Pth against the receiver of the goods, Binani. The LOI offered an indemnity in respect of the delivery as had been effected.