Glencore International AG v MSC Mediterranean Shipping Company SA & Anor

Factual and Procedural Background

Plaintiff brought a claim against Defendant for damages arising from breach of contract, bailment, and conversion concerning a cargo of three containers of cobalt briquettes shipped from The City of Fremantle to The City of Antwerp under a bill of lading ("B/L") issued by Defendant. The B/L permitted transhipment and named Plaintiff as shipper and Company A as Plaintiff’s agents at Antwerp. The B/L was negotiable and subject to English law with exclusive jurisdiction of the English High Court.

Plaintiff alleged that only one container was delivered while two were misappropriated after being delivered to unauthorized persons. Defendant contended it complied with its obligations and raised estoppel as a defence. Other issues such as Plaintiff’s title to sue and damages were agreed, and Plaintiff did not pursue claims against a second defendant. The trial lasted two days, with Plaintiff calling two witnesses and Defendant relying on written evidence without cross-examination of key witnesses.

The cargo was handled under an electronic release system ("ERS") at the Antwerp port terminal, whereby carriers issue electronic pin codes instead of paper delivery orders to effect delivery. The B/L required surrender of an original bill or delivery order for delivery. Plaintiff argued this required physical surrender, while Defendant contended ERS use was consistent with the B/L or an agreed variation, alternatively relying on estoppel based on prior dealings with Plaintiff’s agent. The ERS was introduced by the Antwerp Port Authority with model covenants governing electronic release procedures, replacing other release methods.

Defendant’s local agent adopted ERS and informed Plaintiff’s agent of the change in 2011. Plaintiff’s agent had access to the pin codes via a generic email address. Plaintiff was not aware of ERS use by Defendant at the time of shipment. Following the loss, Defendant and Plaintiff’s agent improved security measures for container release.

Between 2011 and 2012, Plaintiff made 69 similar shipments handled under similar B/L terms, with Plaintiff’s agent presenting bills and using pin codes to collect goods from Defendant’s terminal. The shipment at issue followed the same pattern but resulted in loss of two containers after delivery to unauthorized parties.

Legal Issues Presented

1. Whether Defendant complied with its contractual obligation under the B/L to deliver the goods only upon surrender of the original bill of lading or a valid delivery order.
2. Whether the electronic release system (ERS) and provision of electronic pin codes constituted delivery or a valid delivery order under the B/L.
3. Whether an implied term or variation of contract permitted Defendant to use the ERS in lieu of a delivery order.
4. Whether Plaintiff is estopped from denying Defendant’s compliance due to prior dealings and acceptance of ERS procedures.
5. The extent of Defendant’s liability for the misappropriation of the two containers.

Arguments of the Parties

Plaintiff's Arguments

• The B/L expressly required delivery only upon surrender of the original bill or a delivery order, which Defendant did not provide.
• Electronic pin codes under the ERS do not amount to a delivery order as defined by law and practice.
• Plaintiff was unaware of ERS use by Defendant at the relevant time and did not consent to variation of contractual terms.
• Delivery requires actual transfer of possession with relinquishment of control by Defendant, which did not occur upon issuance of pin codes.

Defendant's Arguments

• Defendant complied with its obligations by providing electronic pin codes under the ERS, which constituted a delivery order or valid delivery mechanism.
• Alternatively, an implied term or variation of contract arose from a course of dealings and communications with Plaintiff’s agent allowing ERS use.
• Estoppel prevents Plaintiff from denying Defendant’s compliance given prior acceptance of ERS on similar shipments.
• Defendant denied liability for loss, contending it fulfilled contractual obligations and that Plaintiff is estopped from asserting otherwise.
• Defendant abandoned reliance on any custom or established practice at Antwerp supporting ERS as delivery.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the express terms of the B/L, which required surrender of the original bill or a delivery order for delivery of goods. It held that the electronic pin codes issued under the ERS did not constitute a delivery order as defined by statute and case law, since a delivery order must contain a carrier’s undertaking to deliver goods to a named person, which the pin codes lacked.

The court rejected Defendant’s argument that the ERS pin codes fulfilled the delivery obligation, noting that mere discharge of the goods or provision of codes did not amount to delivery because Defendant retained control until physical possession was taken by the consignee or its agent. The court emphasized that delivery is a bilateral act involving actual transfer of possession and relinquishment of control by the carrier.

The court considered the pattern of prior dealings and found that Plaintiff was unaware of ERS use and did not consent to variation of the B/L terms. It rejected the argument that prior dealings or course of conduct implied a term or varied the contract to permit ERS delivery, citing the principle that implied terms must be consistent with express terms and that background knowledge of private dealings cannot alter the meaning of negotiable documents of title.

The court also found no evidence that Plaintiff’s agent had authority to agree to any variation of the B/L contract to permit delivery by ERS pin codes. Consequently, the alleged variation was ineffective.

Defendant’s estoppel argument was dismissed on the basis that Plaintiff did not represent or conduct itself so as to indicate acceptance of delivery to any person presenting the pin codes, and Plaintiff’s limited knowledge of ERS use further undermined any estoppel claim.

The court rejected Defendant’s causation argument that loss would have occurred under the old system, holding that the claim was not that ERS use was a breach, but that Defendant failed to deliver goods or a delivery order as required by contract.

Accordingly, the court concluded that Defendant breached its contractual and bailment obligations by failing to deliver the goods properly under the B/L.

Holding and Implications

Judgment was entered in favour of Plaintiff on the claims for breach of contract and bailment.

The court held that Defendant did not comply with its obligations under the bill of lading contract because the electronic release system and pin codes did not constitute a valid delivery order or delivery of the goods. No implied term or variation was found to permit the use of ERS in place of the express contractual requirements. The estoppel defence was also rejected.

The direct effect of this decision is that Defendant is liable for the loss of the two containers. The court did not find it necessary to decide separately on the conversion claim, indicating it added nothing further. No new legal precedent was established beyond the application of established principles concerning delivery under bills of lading and contract interpretation.