More food for thought from the English CA today on the White & Carter principle: see MSC v Cottonex Anstalt [2016] EWCA 789.

The basic facts were that shippers took advantage of an offer by sea-carriers of the provision of 30-odd containers to carry their goods (something one suspects they won't do again in a hurry). Under the contract the shippers had a certain time after arrival to ensure that the cargo was unloaded, the containers unstuffed and returned to the carriers. After that demurrage became payable at a daily rate per container.

The vessel arrived in Bangladesh: there was no-one to collect the goods and utter confusion as to whose they were anyway. The containers were unloaded and warehoused. Demurrage began to run ... and run ... and run. Four months later the shippers gave an indication that they might not be able to ensure the containers' return. Five months after that, in February 2012, when it was pretty clear there was a total impasse, the carriers suggested they should sell the containers to the shippers, but nothing came of this. Meanwhile the carriers were quite happy just to bill the (solvent) shippers $840 per day demurrage until the crack of doom.

Varying Leggatt J, the CA held that demurrage could be claimed until February 2012, but not thereafter: at that point, a capital payment for the containers from the shippers of their value would effect closure. Moore-Bick LJ said that after February 2012 the "no legitimate interest" criterion in White & Carter applied, since the containers could simply be replaced at the expense of the shipper. He also said that, despite Geys v Societe Generale [2013] 1 AC 523, there could be no right to keep a contract alive once its commercial purpose had been frustrated, even though the  frustrating event was one that the contract placed at the risk of the other party.

Two further points. Leggatt J had attempted to insinuate a general European-style good faith obligation as a possible support for a bar on claiming demurrage indefinitely. Moore-Bick LJ at [45] poured a good deal of cold water on that. And rightly so: not of course because of the events of 23 June, but because it would be a radical change, upset the balance of English contract law, assimilate rules which actually have nothing in common, and spawn uncertainty. Secondly, he also expressed some hesitation as to whether a provision for payment of demurrage, even if potentially unlimited in time, could be a penalty.

Happy summer reading

Andrew