Facts: on February 26, 2019, LLC “Tiger-Oil” (Principal) and LLC “Avers” (Agent) entered into an agency agreement, under which the Principal directs the Agent to perform maintenance work on the Principal’s vessels in certain seaports, including fresh water supply to the vessels (hereinafter – the Agency Agreement).

Under the terms of the Agency Agreement, the Agent acts in his own name and at the expense of the Principal. The Agent performs actions at the request of the Captain or the Principal, in each case stipulating the cost.

Pursuant to the specified agreement, on May 22, 2019, LLC “Avers” (Customer, Respondent) entered into a general contract with LLC “Fesco Service” (Executor, Claimant) for mooring, repair and maintenance of vessels, including fresh water bunkering of vessels (hereinafter – the General Contract).

Under the terms of the General Contract, the Executor performs works / renders services on the basis of the Customer’s requests. A specific list of works / services and dates of their performance / rendering shall be agreed by the parties in the requests. The Executor is obliged to consider each request and send the Customer a confirmation of its acceptance for work or refusal to perform works / render services.

Upon completion of work / provision of services under the General Contract, the parties shall sign an acceptance certificate.

The Customer duly fulfilled its obligations to pay for the works / services under the General Contract, but did not pay one of the invoices issued by the Executor for the fresh water bunkering services on the m/v “Tiger-1” in the volume of 175 m3 in the amount of RUB 41,225.10.

The Executor’s pre-trial claim for payment of the specified amount, which was received by the Customer, was not satisfied, and therefore the Executor applied to the arbitration court with a claim to recover from the Customer the debt for the services rendered in the amount of RUB 41,225.10.

In support of its claims, the Claimant submitted to the case materials an acceptance certificate № 0Ф00-001249 dated 09.09.2019, signed by a representative of the Claimant and the captain of the vessel m/v “Tiger-1”, sealed by the vessel, in which the Respondent was listed as the customer.

Objecting to the claims of the Claimant, the Respondent pointed out that he did not order or accept the disputed service. He did not apply for the relevant service under the General Contract, and the acceptance certificate submitted by the Claimant does not have his signature and seal.

Ruling of the courts: by the decision of the court of first instance, upheld by the appellate and cassation instance courts, the claim was denied.

Refusing to the Claimant to recover the cost of water bunkering services on the m/v “Tiger-1”, the Arbitration Court of Primorsky Territory proceeded from the fact that the Respondent is not obliged to pay for services that he did not apply for and did not accept.

The court pointed out that the Claimant has not provided evidence to confirm that the Respondent sent a request to the Claimant for the provision of relevant services and acceptance of the application for work by the Claimant, in violation of the General Contract rules.

The Claimant referred to the fact that the proper evidence is the acceptance certificate № 0Ф00-001249 dated 09.09.2019, because all acceptance certificates under the General Contract listed the Respondent as the customer, and the seal of the vessel served and the captain’s signature were affixed at the time of acceptance.

The court rejected the Claimant’s argument, pointing out that all of the certificates available in the case materials, except for the disputed one, were signed by the Respondent, and the seal of the vessel confirms the acceptance of services rendered by the captain of the vessel, but not by the Respondent.

The court also pointed out that under Article 71 of the Merchant Shipping Code of the Russian Federation the captain of the vessel acted within his power as a representative of the third party LLC “Tiger-Oil” (Principal), which owns the vessel on the right of ownership.

The General Contract was qualified by the court as a bilateral deal between LLC “Avers” (Customer) and LLC “Fesco Service” (Executor) with the agreed order of interaction between the parties in the process of execution of the contract.

In this regard, guided by paragraph 3 of Article 308 of the Civil Code of the Russian Federation, the court concluded that the actions of the Claimant on the bunkering of the m/v “Tiger-1” could not be qualified as committed under the General Contract, because the Claimant was not entitled to accept and fulfill requests from a third party that was not a party to the contract, since this procedure had not been agreed by the parties.

In conclusion, the court pointed out that the fact of provision of services to the vessel m/v “Tiger-1”, which is confirmed by the acceptance certificate No. 0F00-001249 dated 09.09.2019, can create an obligation for the person who received the service – LLC “Tiger-Oil” (Principal).

Also, the court rejected the Claimant’s argument about the possibility of the Respondent (Agent) to recover the disputed amount by way of recourse from the Principal, because the existence of an agency relationship between the Respondent and a third party does not change the execution of the General Contract and in itself does not in itself create the obligation for the Respondent to pay the disputed services.

Agreeing with the decision of the first instance court, the Fifth Arbitration Court of Appeal has even more clearly expressed the position that the disputed legal relationship developed between the Claimant and LLC “Tiger-Oil” (Principal), and the Respondent is not a party to these relations.

From the reasoning of the appeal decision it is clear that the request for bunkering the disputed volume of water was submitted by the captain of the m/v “Tiger-1” directly to the Executor (Claimant).

In this case, the court noted that the Respondent was not properly notified of the fact that the captain of the ship ordered additional service, and that there is no evidence of the coordination of the relevant request with the Respondent for the purposes of its execution under the General Contract.

The Court also rejected the Claimant’s reference to the Respondent’s request dated 12.07.2019 for bunkering of the vessel m/v “Tiger-1” with 150 m3 of water and acceptance of 200 m3 of water under this request, pointing out that the dispute arose regarding bunkering of 175 m3 under act No. 0F00-001249 dated 09.09.2019, and bunkering in a different volume under other requests is not a subject of the present dispute and cannot indicate the acceptance of water in the disputed volume by the Respondent.

Leaving the cassation appeal without satisfaction, the Arbitration Court of the Far Eastern District in the reasoning of the decision repeated the arguments of the lower courts.

Comment: the decision of the courts in this dispute appears to be correct.

The Respondent (Customer, Agent) did not enter into legal relations with the Claimant (Executor) regarding the disputed 175 m3 of water.

Based on the materials of the case, the General Contract, on the execution of which the Claimant refers in support of his claims, is of a framework nature. Under its terms, the Executor performs works / renders services on the basis of requests from the Customer, in which the parties agree on a specific list of works / services and the dates of their performance / rendering. These conditions appear to be essential.

Moreover, according to the General Contract, the Executor has the right to refuse to perform works / render services requested by the Customer. It does not follow from the provisions of the General Contract cited in the court decisions that this right of the Executor is tied to any conditions.

Consequently, there is a reason to believe that the General Contract is organizational and in itself does not involve property grants. The emergence of rights and obligations associated with property grants between the parties required the submission of a request by the Customer, containing the missing essential conditions (the offer – Article 435 of the Civil Code), and its acceptance by the Executor (the acceptance – Article 438 of the Civil Code), from which he could also refuse (the freedom of the contract – Article 421 of the Civil Code). That is, for each request the parties entered into a separate contract (Article 432 of the Civil Code).

As it follows from the court decisions, the Respondent (Customer, Agent) did not request for bunkering the disputed volume of water. Captain of the vessel m/v “Tiger-1”, who submitted the request, is by virtue of law the representative of the shipowner LLC “Tiger-Oil” (Principal) and not the Agent (Article 71 of the Merchant Shipping Code of the Russian Federation). The General Contract does not provide for the possibility of request by the third person, i.e. it also does not fix the powers of the Captain as the representative of the Customer.

Accordingly, the Respondent (Customer, Agent) did not enter into a contract with the Claimant (Executor) for the bunkering of a vessel with the disputed 175 m3 of water.

The related bunkering obligations could not be assigned to the Respondent as an agent by agreement between the Complainant and the Principal (or any other person).

Common to the obligation relations is the principle of relativity, by virtue of which an obligation binds only its parties. From this principle follows an important rule, to which the courts rightly referred: an obligation does not create duties for persons who are not participants in it as parties (for third parties), except in cases provided for by law (§ 3 of Article 308 of the Civil Code of the Russian Federation).

The agency agreement concluded between LLC “Tiger-Oil” (Principal) and LLC “Avers” (Agent) is a maritime agency contract (Article 232 of the Merchant Shipping Code of the Russian Federation).

Agent is not an exception to the general rule enshrined in § 3 of Article 308 of the Civil Code of the Russian Federation. That is, if in relation to the obligation the agent is a third party, the parties to the obligation cannot impose any obligations on it.

The separateness of figures of the agent and the principal follows also from the special law. In the reverse situation, when the agent performs a deal on his own behalf, the rights and obligations arise with the agent, not with the principal (subparagraph 2 of § 1 of Article 1005 of the Civil Code of the Russian Federation).

Confirmation is also found in jurisprudence. According to the position set out in the Ruling of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 04.03.2014 № 16719/13 in case № A56-34466/2012, agent- shipper, who is not a party to the contract of supply, is recognized as an improper respondent in a claim for recovery of debt for undelivered goods, even if by virtue of the agency agreement and binding for the agent and the supply contract parties local act agent is a person, who is responsible for the quality and quantity of goods supplied.

According to paragraph 10 of the review of practical application of the Merchant Shipping Code of the Russian Federation by arbitration courts (annex to the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 13.08.2004 № 81) agent may apply with a claim to the counterparts of the principal only if the principal assigns its right of a claim (cession).

Thus, the courts made the right decision, because the money under the contract, to which the respondent is not a party, cannot be recovered from him.

Herewith the Claimant’s argument that the power of the captain of the vessel m/v “Tiger-1” as a representative of the Respondent appeared from the circumstance is interesting (subparagraph 2 of § 1 of Article 182 of the Civil Code of the Russian Federation).

This argument was stated by the Claimant only in the cassation appeal, and was not considered by the court due to the limitations of the powers of the court of cassation under Chapter 35 of the Arbitration Procedural Code of the Russian Federation.

The Claimant argued that the captain’s power appeared from the circumstance, taking into account the the established order of acceptance of work performed under the General Contract. The similar argument of the Claimant in the court of first instance was rejected due to its inconsistency with the case materials.

Claimant’s reference to the captain’s power from the circumstance with its justification on the order of acceptance seems wrong in any case. The primary issue is the captain’s power to request (conclude a contract) for the bunkering of the disputed volume of water, not the acceptance of the services rendered. Settlement of the question on whose behalf the captain acted when submitted the request will allow to understand who entered into a legal relationship with the Executor and, accordingly, who is obliged to pay for the relevant service.

Under the terms of the General Contract, the parties agreed upon a special form for requests, even though they also provided for the possibility of filing it in a different form containing similar information. Claimant would have had more reason to argue that the captain’s power appeared from the circumstance if the captain of the vessel had filed the request strictly on the special form. But the judicial acts contain no information about the form of the request which was filed by the captain, and Claimant himself has not referred to it to substantiate his claims.

The proof of the captain’s power to act as agent’s representative is also complicated by his legal power as shipowner’s representative (Article 71 of the Merchant Shipping Code of the Russian Federation), and by the fact that the captain’s independent conclusion of a contract for servicing the vessel in the port is not an extraordinary occurrence.

Moreover, this argument is relevant to support the Agent’s selection as a proper respondent only if the court recognizes that the Agent, by its actions, contributed to the creation of circumstances from which the power of the captain was appeared. The facts of the case are not conducive to such a recognition. This seems ambiguous even if the captain filed the request according to the special form provided for by the General Contract.

Accordingly, Claimant’s argument is worthy of attention, but not effective from the point of view of protecting his interests in the present case.

We will also consider the clause of the courts about the failure to notify the Respondent about the disputed order and about the lack of coordination of the relevant order with him.

This clause appears to be inappropriate. These facts could only affect the internal relations between the Principal and the Agent (Respondent). But they would not entail a change of persons in the contract between the shipowner (Principal) and the Executor (Claimant).

Moreover, the mentioned facts could affect the internal relations of the Principal and the Agent only if the Agent was obliged to provide water bunkering in a certain monthly volume, for example. In such a situation, notification or approval by the Principal could have been the basis for reducing the volume of water ordered by the Agent. However, under the terms of the Agency Agreement, the Agent was obliged to act on individual requests from the captain or the Principal. That is, in case of independent conclusion of the contract, they could simply not send the relevant request to the Agent.

Thus, this clause is irrelevant for the resolution of the dispute in question. ■