Motor Oil (Hellas) Corinth Refineries S.A. v. Shipping Corp. of India, (1990) 108 N.R. 280 (HL)

• Case Date: February 15, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 108 N.R. 280 (HL)

Motor Oil Corinth  v. India Shipping (1990), 108 N.R. 280 (HL)

MLB headnote and full text

Motor Oil (Hellas) Corinth Refineries S.A. (original appellants and cross-respondents) v. Shipping Corp. of India (original respondents and cross-appellants)

Indexed As: Motor Oil (Hellas) Corinth Refineries S.A. v. Shipping Corp. of India

House of Lords

London, England

Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Griffiths and Lord Goff of Chieveley

February 15, 1990.

Summary:

The Shipping Corporation of India was the owner of a tanker which was chartered by Motor Oil (Hellas). The head charter contained a safe port clause. The charterers under a sub-sub-charter nominated Kharg Island as the loading port. Although Kharg Island was within a war zone, Shipping Corporation did not object. The ship went to Kharg Island and the captain stated that he was ready to take on cargo. However, before loading could commence, an air raid took place and the ship left the island. The captain refused to return and asked the charterers to nominate another port as provided by the war risk clause in the head charter. The charterers failed to nominate another port. Both sides then treated the other as having breached the contract. The issues of liability and damages then went to arbitration.

The arbitrators held the charterers liable on the ground that they breached the safe port clause in nominating Kharg Island. The charterers appealed.

The trial court, in a decision reported at [1987] 2 Lloyd's Rep. 509, allowed the appeal. The court found that the Shipping Corporation owners elected to waive the charterers' breach of the safe port clause by proceeding to a port it knew was dangerous. However, the court also found that the Shipping Corporation was exempted from liability because the war risks clause in the head charter allowed it to refuse to load cargo if the port became dangerous. The charterers appealed.

The Court of Appeal dismissed the appeal. The charterers appealed and the Shipping Corporation cross-appealed.

The House of Lords dismissed both the appeal and the cross-appeal.

Contracts - Topic 9901

Promissory estoppel - General principles - The House of Lords, in a case dealing with the breach of the charter-party, reviewed the principles of equitable or promissory estoppel and contrasted it to election and waiver - See paragraphs 19 to 21.

Shipping and Navigation - Topic 923

Charter of ships - The charter-party - Safe port clause - Liability of charterer - While a ship was waiting to load cargo, the port was bombed - The ship left because of the danger - The charterers claimed that the owner breached the contract - The owner submitted that the war risks clause allowed the ship to leave if there was danger - The House of Lords held that the owner was protected by the war risks clause - Two of their Lordships also opined that the charterers might have been liable to the owner for a claim for loss of freight on the ground they warranted the safety of the port - See paragraphs 29 and 30 and 32 to 34.

Shipping and Navigation - Topic 925

Charter of ships - The charter-party - Safe port clause - Waiver - Election - A charter contained a safe port clause - The charterers instructed the ship to load cargo in a war zone - The ship sailed to the port and was ready to load - An air raid took place and the ship left before loading - The captain refused to return - The charterers sued the owner - The owner submitted that the charterers breached the safe port clause - The charterers claimed the owner elected to waive the charterers' breach - The House of Lords held that the owner's conduct constituted a waiver of the charterers' breach - See paragraphs 1 to 24.

Shipping and Navigation - Topic 927

Charter of ships - The charter-party - Safe port clause - Exceptions - War conditions - The owner waived the safe port clause in the head charter and agreed to load cargo in a war zone - After the ship arrived, the port came under air attack - Because of the danger, the ship left without loading - The charterers sued for damages - The owner relied on the war risks clause in the head charter - The charterers submitted that the war risks clause was included in the waiver of the safe port clause - The House of Lords held that the owner was not liable because it could rely on the war risks clause - See paragraphs 26 to 28.

WAIVER - TOPIC 5

General principles - Nature of waiver - Election - The House of Lords considered the issues of waiver and election in regard to a breach of contract - The court reviewed the question of what would constitute an election by one party to waive the other party's breach and affirm the contract - See paragraphs 14 to 16.

Waiver - Topic 8

General principles - Waiver v. estoppel - [See Contracts - Topic 9901].

Waiver - Topic 1002

Contracts - Acts constituting waiver - [See Shipping and Navigation - Topic 925].

Cases Noticed:

Kodros Shipping Corporation of Monrovia v. Empresa Cubana de Fletes (The "Evia") (No. 2), [1983] A.C. 736, refd to. [para. 12].

Compania Naviera Maropan S/A v. Bowaters Lloyd Pulp and Paper Mills Ltd. (The "Stork"), [1955] 2 Q.B. 68, refd to. [para. 12].

Reardon Smith Line v. Australian Wheat Board (The "Houston City"), [1956] A.C. 266, refd to. [para. 12].

Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd., [1971] A.C. 850, refd to. [para. 14].

Scarf v. Jardine (1882), 7 App. Cas. 345, refd to. [para. 14].

China National Foreign Trade Transportation Corporation v. Evlogia Shipping Co. S.A. of Panama (The "Mihalios Xilas"), [1979] 1 W.L.R. 1018, refd to. [para. 14].

Borrowman Phillips & Co. v. Free & Hollis (1878), 4 Q.B.D. 500, refd to. [para. 18].

Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439, refd to. [para. 19].

Counsel:

Anthony Clarke, Q.C., and Charles Haddon-Cave, for the appellants;

Michael Collins, Q.C., and David Mildon, for the respondents.

This appeal was heard on November 6 to 9 and 13 to 16, 1989, by Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman, Lord Griffiths and Lord Goff of Chieveley.

The following speeches were delivered on February 15, 1990:

Lord Goff of Chieveley - see paragraphs 1 to 30;

Lord Brandon of Oakbrook - see paragraphs 31 to 33;

Lord Keith of Kinkel - see paragraph 34;

Lord Templeman - see paragraph 35;

Lord Griffiths - see paragraph 36.