Facts of the case: an agreement for the carriage of goods was concluded between LLC “Alliance-DV Kamchatka” (the Carrier) and LLC “Ventura” (the Consignor), under which the cargo shall be delivered to the destination point Palana and handed over to a person authorized by the Consignor. In addition, the contract contained a provision under which the discharge of cargo at the destination port shall be carried out by and at the expense of the Carrier.

In the course of the vessel’s passage, the Consignee – LLC “Mirastroy” – gave instructions to the Carrier to discharge the cargo in the port Petropavlovsk-Kamchatsky instead of the initially agreed discharge port under the contract of carriage of goods by sea.

Together with the instructions, the Consignee sent a letter to the Carrier, under which he guaranteed payment for loading and discharge operations in the port Petropavlovsk-Kamchatsky, as well as to compensate disbursements.

After the successful discharge of the cargo at the changed destination port, the Carrier asked the Consignee to compensate the disbursements and pay for the discharge of the cargo from the vessel.

The Consignee dismissed the complaint, which became the reason for the Carrier to file a claim with the commercial court.

Ruling of the courts: the Commercial Court of Khabarovsk Krai pronounced in favour of the Claimant and qualified the legal relationship between the Carrier and the Consignee as a services agreement.

The court held that the Consignee’s letter of guarantee containing instructions for the discharge of cargo in another port and a guarantee of payment for such discharge is an offer, and the actions of the Carrier – discharge – are its acceptance.

In this respect, the court noted that the Consignee is not a party to the contract for the carriage of goods by sea, and therefore the services for discharge of cargo in the changed port shall be paid by the Consignee, and cannot be imposed on the Carrier.

In the proceedings, the Consignee also objected that he had not received the cargo from the Carrier in the port emphasised in the letter of guarantee. However, the court dismissed this argument with reference to the same letter of guarantee in which the Consignee confirmed payment for the services of the new destination port.

It is interesting to notice that the Carrier submitted a contract for the carriage other than it was actually concluded between the Carrier and the Consignor. This fact was confirmed by the Consignor. It is likely that the copy of the contract submitted by the Carrier could contain a provision regarding discharge of the cargo at the expense of the Consignee to justify the Carrier’s claim. However, since the contract for the carriage was not the basis for the award of payment, the court did not delve into the questions of the wording of the two contracts.

At first glance, it may seem unfair that the agreed costs for discharge of cargo in another port were imposed on the Consignee, while, obviously, it was not accidental that the contract for the carriage contained a provision regarding the discharge of cargo at the sole expense of the Carrier.

However, it can be argued that the Carrier, when concluding a contract with the Consignor, might not have agreed to discharge the cargo in another port, for example, because of some technological characteristics of the port. The carrier also might at least have raised the freight. In other words, the Carrier agreed to discharge the cargo at a particular port and given particular terms. Thus, the Carrier should be entitled to change its remuneration when there is a change of the initially agreed discharge port. In the case under consideration, such a right was exercised by concluding a separate contract with the Consignee, even though the same consequences could be reached within the legal relations with the Consignor.

An interesting question is the lawfulness of the destination port’s change made by the Consignee. The consignee has a very limited number of rights and duties under the contract for the carriage of goods by sea. It seems that the Consignee is not entitled to change the terms of the contract for the carriage of goods in this case. That is why the court held that there were separate legal relations between the Consignee and the Carrier.

In the situation under consideration, the Carrier was most likely informed, at the time of LLC “Mirstroy” contacted it, regarding who the consignee was, and the Carrier was sure that there would be no claims brought by third parties for discharge of cargo at a port other than specified in the contract. This was probably the reason why the Carrier accepted the instructions of the Consignee despite the other destination port initially stipulated in the contract. In practice, such situations often lead to the fact that the Carrier requires the provision of a letter of indemnity to him, under the terms of which the carrier will be reimbursed for possible losses caused by for example, the release of cargo at a port other than the port of destination, to a party other than the one specified in the bill of lading etc. P&I Clubs do not approve of this practice, recognizing such actions of the carrier as a deviation, which could jeopardize insurance cover.

At the same time, it is possible to consider such actions of the Carrier as a violation of the contract for the carriage of goods by sea, if discharge of the cargo in a new port would lead to any losses, since the Carrier’s acceptance of instructions provided by the Consignee to change the discharge port is contrary to the Carrier’s obligations towards the Consignor. Of course, much depends on the terms of the contract for the carriage between the Consignor and the Carrier. In this aspect, the Carrier has assumed certain risks. In order to minimise them, the Carrier should have asked the Consignor regarding the possibility of changing the discharge port in accordance with the instructions of the Consignee.

On the other hand, the actions of the Consignee, who has the right and obligation to accept the cargo, bypassing the Consignor by nominating a new discharge port led to the fact that the costs of discharge, which were originally (under the terms of the contract) supposed to be borne by the Carrier, rested on the shoulders of the Consignee himself.

Finally, it should be noted that the situation described in the dispute and the result of its resolution are largely based on a long-standing theoretical dispute about the legal status of the consignee in the contract for the carriage of goods by sea. Let us briefly recall that, in general, there are positions according to which the consignee can act either as a party, an independent subject of relations, or as a third party in whose favor the contract is concluded or the performance under it, that is, a person who is not a party to the contract.

Russian law proceeds from the fact that the consignee is not a party to the contract of carriage by sea, which follows from the legal definition of the contract. In addition, Article 119 of the Commercial Shipping Code of the Russian Federation confirms and clarifies that the relationship between the carrier and the supplier of services for the carriage of goods by sea who is not the party to the contract shall be governed by the bill of lading.

It should be noted that if Russian law proceeded from the concept of a trilateral agreement for the carriage of goods by sea, then, most likely, the actions of the Consignee would have been qualified differently, and the terms of the agreement on the unloading of goods at the expense of the carrier in the event of a change in the port and the absence of objections to such a replacement, could be fully applied.

The Sixth Commercial Court of Appeal and the Commercial Court of the Far Eastern Circuit upheld the decision of the court of first Instance. The court noted that the cargo was discharged in another port at the request of the Consignee, and in that sense, the arguments that the Carrier is obliged to discharge the goods at its own expense under the contract concluded with a third person (the Consignor) were lawfully dismissed by the court of first instance.

It is worth mentioning that in support of the argument regarding failure to accept the cargo provided by the Carrier, the Consignee referred to the fact that neither it nor the Consignor were aware of the person who accepted the cargo. At the same time, the instructions of the Consignee in the letter of guarantee did not contain a particular person to whom the cargo was to be handed over. However, according to the court of first instance, these circumstances did not indicate that the cargo was not actually handed over (the question is only to whom, but within this dispute, this question did not matter). If the cargo was indeed handed over to an unknown person (and this is not a joint defence of the Consignor and the Consignee against the Carrier’s claim), then the logical continuation of the incident will be the claim of the Consignor/Consignee to the Carrier for damages in connection with the discharge of the cargo to an unauthorized person. However, given the text of the judgment, the cargo was handed over to the port employees, who, most likely, were instructed to accept and then deliver the cargo to the Consignee.

Conclusions

1. It is necessary to distinguish the change of the discharge port by the parties to the contract for the carriage in regard to the initially agreed discharge port, and the “new” (other) discharge port, which the carrier can accept as a result of the nomination by the consignee at its own risk not under the contract for the carriage of goods by sea.

2. Forwarding of any instructions by the consignee to the carrier, unless otherwise provided for in the contract for the carriage of goods by sea, and their performance by the carrier may indicate that there is a separate contract between the consignee and the carrier, which is different from their relations under the contract for the carriage of goods by sea. In connection with the performance of such instructions, the consignee has an obligation to pay for the services rendered by the carrier, regardless of the terms of the contract for the carriage of goods by sea, even if the latter stipulates that such services are to be rendered by and at the expense of the carrier.

3. If it is necessary to change the discharge port in the course of the vessel’s passage, the consignee should apply with according instructions to the consignor, who should give instructions to the carrier. In any case, the parties are recommended to accentuate as accurately as possible that the change of the discharge port is made in relation to the contract for the carriage of goods by sea.

4. If the Carrier accepts instructions regarding the change of the destination port provided by authorized third parties, including the consignee, the carrier is recommended to inform the consignor concerning that in order to reduce the risk of possible claims in connection with the discharge of the cargo at a port other than that stipulated in the contract for the carriage of goods by sea. ■