ICA update: recent developments in the English Courts

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Background

The ICA, or to give it its full name The Inter-Club New York Produce Exchange Agreement, is an IG approved clause for the apportionment of cargo claims. It aims to provide a mechanism by which claims can be quickly apportioned between owners and charterers without the need for costly or extensive litigation. It also contains provisions for security and time bars for notification of claims.

The first version of the ICA was published in 1970 but there have been subsequent amendments in 1984, 1996 and 2011. Although it was designed for incorporation into NYPE and Asbatime charters, it can theoretically be incorporated into any charterparty. 

Given the aim of the ICA, cases rarely proceed to litigation but 2017 and 2018 has seen some decisions emerge from the English courts.

Recent developments

In the Yangzte Xing Hau, a bulk carrier transported soya beans from South America to Iran. When she arrived at the discharge port in Iran, charterers ordered the vessel to wait for four months. The inherent nature of the cargo (self-heating properties) meant it could not withstand the delay. Cargo claims followed and owners brought an indemnity claim under the ICA against charterers. The claim fell within 8(d),  the catch all provision of the ICA – where claims are apportioned 50/50 unless “…there is clear and irrefutable evidence that the claim arose out of the act or neglect of the one or the  other (including their servants or sub-contractors) in which case that party shall then bear 100% of the claim.”

Owners argued that charterers act of loading the soya beans together with their orders for the ship to wait for four months meant that charterers were 100% liable under the ICA. Charterers attempted to argue that “act” should mean “culpable act” and that reference to “act or neglect” meant “fault”. 

At first instance, Teare J. disagreed with charterers and upheld the LMAA decision. The subsequent Court of Appeal decision upheld the prior decisions and noted that the word “act” was to be given its natural meaning and did not mean “culpable act”.  

In Agile Holdings v Essar Shipping the vessel was on a trip time charter voyage from Tunisia to the West Coast of India, carrying a cargo of direct reduced iron (DRI). During loading a fire was observed on the conveyor belt but supercargo inspected the holds and advised that loading could continue. Whilst on route to the discharge port the cargo combusted and caused heat damage. 

The tribunal found that cl.8(b) of the ICA was the relevant clause, which states that any claim arising out of the loading, stowage, lashing, discharge, etc. of the cargo is 100% for charterers unless the word “and responsibility” are added to clause 8 of the NYPE or a similar amendment is incorporated Clause 8 of the NYPE remained unamended but a rider clause did provide that “the Stevedores although appointed and paid by Charterers/Shippers/Receivers and or their Agents, to remain under the direction of the Master who will be responsible for proper stowage and seaworthiness and safety of the vessel…” Charterers tried to argue that this was a similar amendment for the purposes of the ICA. The Tribunal agreed but the Court found that as there had only been a partial transfer of responsibility (stowage only not loading) this was not enough to shift the responsibility as required by cl. 8(b) ICA.

These decisions don’t radically deviate from previous ICA case law but do highlight that the Courts are more likely to give the wording of the ICA its natural meaning and underline the rationale of the ICA and it’s more mechanical and simple approach to apportionment.

Links

Inter-Club Agreement (as amended 1 September 2011)

Transgrain Shipping v Yangtze Navigation [2017] EWCA Civ 2107(“Yangzte Xing Hau”)

Agile Holdings v Essar Shipping [2018] EWHC 1055 (Comm)

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About the Author:

ICA update: recent developments in the English Courts

Claims Executive

Amanda joined Thomas Miller as a claims handler in January 2015 from HFW, where she worked in shipping litigation. Prior to this she worked in supply chain management for an international retailer. Amanda has recently joined LS2 from the Club’s People Claims Syndicate and now deals primarily with the German membership.  A  fluent German speaker, Amanda read Law at Sheffield University and Trier University. She is currently studying for the postgraduate diploma in Legal Practice (LPC) and is about to complete the International Group’s P&I Qualification. Amanda is actively involved with the London Shipping community and sits on the Young Maritime Professionals Committee for the London Shipping Law Centre.


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