Title to Sue: Sumanu Natural Resources Ltd & Another v Mediterranean Shipping Co SA[2016] EWCA Civ 34

Title to sue is one of the first issues which should be considered in every cargo claim. The recent Court of Appeal judgement, Sumanu Natural Resources Ltd & Another v Mediterranean Shipping Co SA, concerning an application for permission to appeal, reiterates the importance of considering this issue at an early stage and certainly before expiry of the 1 year time bar which commonly applies to such claims.

Summary of Case

The claimants in the case were Sumanu Natural Resources Limited ("Sumanu") and SJM Gems International Limited (SJM). SJM sold barrels of coltan ore to Sumanu, who then sold the consignment on to a third party, King Tan Tantalum Industry Ltd ("KTT").

SJM contracted with an intermediary CFM who arranged the carriage of the consignment. On discharge from the ship the barrels were found to contain not the valuable coltan ore purchased but sand and pebbles.

It was unclear at what stage the ore in the barrels had been replaced (or who the perpetrator of the fraud had been). The ore was inspected by the claimant while being packed into the barrels which were sealed prior to loading. Although the seals remained in tact on discharge the claimants alleged that the coltan ore could only have been exchanged between loading onto the vessel and discharge.

The bills of lading issued were straight bills naming CFM as the shipper and KTT as the consignee. The only reference to the claimants on the bill of lading was the reference to Sumanu as notify party.

Following discovery of the loss Sumanu issued proceedings against the carrier (the defendant in the proceedings) within the Hague-Visby 1 year time limit but SJM was only joined as a claimant in those proceedings after that time bar had expired.

The Defendant applied for summary judgement on the grounds that the claimants lacked title to sue and the claim by SJM was time barred.

The Judgement

The Court of Appeal agreed with the judgement of the High Court that the claim was bound to fail as the claimants did not have title to sue and accordingly permission to appeal was refused.

Neither claimant had title to sue in contract, being named as neither the shipper nor consignee on the bill. The bill in this instance was a non-negotiable straight bill of lading and Sumanu as notify party therefore derived no title to sue under the bill (as it might if it were a negotiable bill which had been transferred to it). Accordingly the claimants had to identify title to sue in tort.

The claimants argued that Sumanu could claim in bailment on the basis that KTT had bailed the goods to them and they then bailed them to the ship owner. This was rejected by the court on the basis that as an intermediate party in a chain of buyers and sellers Sumano never had actual possession of the cargo and had a right to possession at earliest when they paid for the goods. A claim by Sumanu could accordingly not succeed.

Although the court was open to the potential argument that CFM could have been the agents of SJM (therefore giving SJM a potential action in bailment, SJM having bailed the goods to the carrier) SJM’s claim was time barred, having been issued after the Hague-Visby 1 year time bar.

Accordingly neither party had title to sue. Even if the title to sue issue could have been overcome there were also contractual provisions which would in any event have relieved the carrier of liability, thus making the claimants’ claim entirely hopeless.

Implications of the Judgement

The judgement of the Court of Appeal in this case reiterates the fundamental principles on which the majority of cargo claims must be based and serves as an opportune reminder that there is no substitute for careful legal analysis of the title to sue issue at the outset of a claim.

The apparently simply but often complex legal question as to who owns the goods makes up a significant part of this "title to sue" analysis and its importance should not be underestimated. On a practical note documentary evidence is often key to successful analysis of the issues involved and of particular importance to determining these issues are the following documents:

• bills of lading (to identify the contracting parties);

• sales contracts and banking documents showing when the purchase price is paid by each party (to identify who is the owner of the goods or has a right to possession of the same);

• correspondence and booking documents between parties and freight operators / carriers (to identify on whose behalf any freight intermediaries acted when making the carriage contract).