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Short delivery

In-transit loss clauses
Last updated: 21-Jun-2015

Per Smith J in Trafigura Beheer BV v Navigazione Montanari Spa [2014] EWHC 129 (Comm) at paras 14-15:

14. … In-transit loss clauses seek to … stipulate a cut-off point above which the owners may not explain or excuse differences in volumetric measures simply on the basis that they reflect such incidents of carriage (or transit) that are not attributable to fault on their part. It might be that contrariwise they also provide a cut-off point below which the charterers cannot present a claim for lost cargo simply on the basis of a difference between volumetric measures, but that question does not arise in this case and I say nothing about it in relation to the ITL clause in this case or more generally.

15. This being the commercial background to provisions of this kind, it seems to me that such expressions as "in-transit loss" connote loss that is incidental to the carriage of oil products, and does not extend to losses such as those that occurred in this case because of the action of the pirates.

Per Longmore LJ in Trafigura Beheer BV v Navigazione Montanari Spa [2015] EWCA Civ 91 at paras 18, 27:

18. The commercial reason for the clause has been held to be that it is notoriously difficult to determine oil shortage claims. In those circumstances it is sensible for the parties to agree that an unexplained difference between volumes measured on board the vessel after loading (or figures contained in the bill of lading as agreed in The Olympic Brilliance) and volumes measured on board the vessel before unloading of less that x% should not be recoverable by the charterer but that a difference of more than x% should be recoverable by the charterer from the owner. But the clause only applies to shortage claims arising from a normal voyage usually, no doubt, when the loss is otherwise unexplained. The fact that “in transit loss” is defined for the purposes of the clause as the difference between the volumes after loading and before unloading seems to me to support the conclusion that the clause is looking only to a short delivery loss of a kind encountered in a normal voyage. It can hardly be supposed for example that, if the vessel was ordered by the charterer to effect part discharge into lighters before arriving at a discharge port and arrangements could not be made to take measurements until arrival at the discharge port, the owner could be liable for the difference between measurements taken at the loading port after loading and measurements taken before unloading at the discharge port; …

27.… What this court held in The Olympic Brilliance was that the clause giving the right to deduct was a right to make a permanent deduction and that it was therefore irrelevant whether the charterer had a good claim for the loss of cargo or whether the owner had a good defence to the claim. The court made it clear that any claim for the loss of the cargo would be a different claim, subject to the Hague Rules which were incorporated into the Olympic Brilliance charter (just as the Hague-Visby rules are incorporated into the charter in the present case). Eveleigh LJ said (page 208 lhc) that if the clause dealt with loss (as opposed to deductions from freight) the conflict with the Hague Rules would be apparent. Kerr LJ (page 209 rhc) pointed out that in that case the ITL clause was in Part I of the charter which was to prevail over Part II of the charter (which incorporated the Hague Rules) in the event of a conflict, but said that there was no conflict because the Hague Rules provision "only deals with the carrier’s liabilities and not in any way with his entitlement to freight."

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