Starlink Navigation Ltd v The Ship "Seven Pioneer"

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY IN ADMIRALTY
AD.9181/98 

BETWEEN
STARLINK NAVIGATION LIMITED
Plaintiff

AND
THE SHIP "SEVEN PIONEER"
Defendant 

Hearing: 25 October 2000

Counsel: G Bogiatto for Plaintiff
AN Tetley and BJ Matheson for Defendant

Judgment: 12 February 2001 

JUDGMENT OF RODNEY HANSEN J

Solicitors: George Bogiatto, DX CP9060 for Plaintiff (Fax 307-2725)
Russell McVeagh, DX CX10085, Auckland for Defendant (Fax 377-1849) 

[1] The plaintiff sues the defendant for damage to a cargo of cement during a sea voyage from Indonesia to Western Samoa. The defendant maintains that the plaintiff has no claim against it and, on its initiative, the following question is to be determined pursuant to r 418: 

Does the plaintiff have sufficient interest to sue the defendant, whether in tort or contract? 

[2] The application was heard on the basis of an agreed statement of facts but with expert evidence heard as to aspects of Indonesian law. The application was argued and the evidence heard on 25 October 2000. It became clear that counsel for the plaintiff had not anticipated some of the key arguments put forward on behalf of the defendant. There was also insufficient time to address the implications of some aspects of expert evidence given on Indonesian law. I therefore gave leave to both parties to file supplementary written submissions. Those of the plaintiff raised matters which had not been addressed at the hearing and contributed to the time taken to deliver this judgment. 

Factual background

[3] On 16 June 1998 the plaintiff concluded an agreement with PT Indocement Tunggal Prakarsa Tbk ("Indocement") of Indonesia for the purchase of cement which it on-sold to various customers in Western Samoa, Tahiti and American Samoa. The contract was for purchase on FOB terms out of Jakarta. The cargo was to be shipped in June 1998. At all times, Indocement was both the supplier and the shipper of the cement. Shipping arrangements were, however, the responsibility of the plaintiff, as is implied by the FOB sale terms. 

[4] In June 1998, the plaintiff entered into a voyage charter party with Scottish Shipowners and Managers Pty Ltd ("Scottish Shipowners") for the shipment of the cement. Scottish Shipowners were charterers of the Seven Pioneer, under a head charter from a company related to the vessel's owners, Seven Mountain Shipping Co. Ltd. ("Seven Mountain").

[5] Between 12 June and 19 June 1998, the cement was loaded on board the Seven Pioneer at Tanjung Priok, Jakarta. When stowed, it was packed in large heavy-duty paper bags and loaded onto pallets. Four bills of lading were issued on 19 June 1998. They were in the standard form of Tasikmadu Shipping Co. Ltd ("Tasikmadu"), the local agent of the vessel's owner. The bills of lading were signed and stamped by Tasikmadu as agent of the Master of the Seven Pioneer. They name Indocement as the shipper of the cement, and the plaintiff as the consignee. They are expressed to be governed by Indonesian law.

[6] After loading, there was apparently some debate between the agent of the plaintiff and the Master of the vessel as to the way in which the cement had been stowed. There is dispute between the parties as to what was said and the outcome of the debate. It is not necessary to resolve this for the purpose of this application. The ship sailed as scheduled. During her voyage she encountered heavy weather. Upon arrival in Apia a large part of the cargo was found to be damaged. It is alleged that the damage was caused by the cement shifting during the voyage due to poor stowage.

[7] The plaintiff was able to obtain delivery of the cargo from the carrier against letters of indemnity from the plaintiff and Scottish Shipowners. Its agreement with Indocement provided for payment against receipt of the bills of lading from Indocement but the bills of lading were never sent and the plaintiff has never paid for the shipment. Nor has the plaintiff ever been an indorsee or holder of any of the bills of lading. 

[8] The plaintiff pleads in its amended statement of claim that there was a breach of its charter agreement with Scottish Shipowners which contained an implied term that the cement would be loaded in accordance with proper and good stevedoring practice. Alternatively, it claims in negligence based on a duty of care owed to plaintiff by the defendant by its agent. Although the pleading relies on a breach of the charter agreement, the evidence and argument at the hearing proceeded on the basis that the plaintiff's claim in contract rested on the contract of carriage. That is clearly correct. Under s 5 of the Admiralty Act 1973, an action in rem may only be brought where the person who would be liable in an action in personam is either the beneficial owner of all shares in the vessel or is a demise charterer of the vessel. It has not been suggested that Scottish Shipowners meets these requirements so the action may be sustained only on the basis of the plaintiff's rights against Seven Pioneer as the shipowner. In this case such rights can arise only under the bills of lading.

[9] The plaintiff claims the loss in value of the cargo, as well as various costs incurred as a result of the damage, including the cleaning of the vessel's holds, claims by the intended receivers of the cement and additional stevedoring costs.

[10] The defendant alleges that the plaintiff has no entitlement to damages in contract or tort as it was never a party to the contract of carriage and never acquired a sufficient proprietary or possessory interest in the cargo to found a claim in tort.

Proof of foreign law

[11] The question I am required to determine calls for a consideration of Indonesian law and both parties called Indonesian lawyers to give expert evidence. It will be helpful if I record at the outset the way in which I will approach that evidence.

[12] Foreign law must be proved as a fact by expert evidence: Dicey & Morris, The Conflict of Laws, (13th ed, 2000), para 9-001 et seq. The burden of proving a particular rule of foreign law rests on the party seeking to rely upon it. Where no foreign law is proved, the court will apply its own law.

[13] There is an important distinction to be drawn between the role of experts with respect to a question of the interpretation of a foreign statute, and a question of the construction of a foreign document. Dicey & Morris states, at paragraph 9-019:

"In the former case, the expert tells the court what the statute means, explaining his opinion, if necessary, by reference to foreign rules of construction. In the latter case, the expert merely proves the foreign rules of construction, and the court itself, in the light of these rules, determines the meaning of these documents."

See also Mount Cook (Northland) Limited v Swedish Motors Limited [1986] 1 NZLR 720 at 727. 

Claim in contract

[14] As already noted, a contract of carriage was entered into between the defendant and Indocement. The terms of the contract are contained in the four bills of lading issued on 19 June 1998. The bills of lading have identical terms. All show the plaintiff as the consignee of the goods. The parties are in agreement that the contract is governed by Indonesian law, cl 16 of the bills of lading providing as follows:

"16. LAW APPLICABLE TO THIS B/L. This B/L shall be governed by Indonesia law, observant of the stipulations laid down herein. The contents of this B/L must be considered as cancelled in so far as these contents are contrary to the stipulations of section 470 of the Commercial Code of Indonesia."

[15] Contracting parties have the right to choose the governing law of their contract: Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277 at 290 (PC). The status of Indonesian law as the proper law of the contract of carriage is therefore undeniable.

[16] In his supplementary written submissions filed after the hearing, Mr Bogiatto argued that if, as submitted on behalf of the defendant, the plaintiff is not a party to the bills of lading, Indonesian law would not apply to any aspect of the claim. He submitted the plaintiff's claim would fall to be determined under the New Zealand law including the Mercantile Law Act 1908. I cannot accept this submission. The terms of the contract of carriage are conclusive as to the governing law. The existence or nature of the plaintiff's rights under it are irrelevant to this question. If the plaintiff chooses to rely on the contract of carriage, it must accept its terms as to the law which governs it. In any event, the plaintiff has acknowledged in the agreed statement of facts that the contract of carriage, evidenced by the bills of lading, was between the defendant on the one part and Indocement and any endorsee or lawful holder of the bills on the other part. I reject the argument introduced by Mr Bogiatto in his supplementary submissions that the agreed position was affected by the fact that the bills of lading were issued by Tasikmadu as agents for the ship's master.

[17] I was informed that Indonesia, as a former Dutch colony, has a system of law derived from the European civil system. Both experts agreed that the contractual issues were governed by a combination of the Indonesian Civil Code and the Indonesian Commercial Code, as well as the terms of the relevant contracts themselves. There was also agreement that the Civil Code operates as a general body of law regulating, in this case, property transactions, while the Commercial Code contains, among others, specialised provisions relating to shipping law and the international sale of goods.

[18] Mr Tetley, for the defendant, submitted that only the holder of the bills of lading had the right to sue under the contract of carriage. He said that in this respect Indonesian law was in line with the law of most western jurisdictions. The Indonesian lawyer called by the defendant, Mr Umar, confirmed that this was indeed the position under Indonesian law. He said that the contract of carriage is made between the shipper, in this case Indocement, and the carrier, and that another party may acquire rights under the contract of carriage only by becoming a lawful holder of the bill of lading. He referred to Article 510 of the Indonesian Commercial Code:

510. The proper holder may demand delivery of the goods at the place of destination as described in the bill of lading, provided the way in which he has become the holder thereof is not unlawful.

Documents issued to third parties by the holder of a bill of lading with a view to their receiving parts of the goods mentioned in the bill of lading shall not confer upon the holders an independent right to delivery as against the Carrier. 

[19] The plaintiff's expert, Mr Simanjuntak, acknowledged that the plaintiff's claim in contract was properly brought under the contract of carriage. His position was, however, that where, as here, there had been a contract for sale and purchase on FOB terms, under Indonesian law ownership of the goods passed to the plaintiff on delivery to the ship and the issue of the bills of lading. He said that as a result of the passing of property, the plaintiff acquired rights under the contract of carriage at the time the bills of lading were issued.

[20] I will consider Mr Simanjuntak's evidence in relation to the passing of property in more detail later in this judgment. Assuming, for present purposes, that at Indonesian law property in the goods passed at this time, I am unable to understand and it was never explained why that should have the effect of conferring rights on the plaintiff under the contract of carriage. There was no rule of Indonesian law cited to me which supported the proposition and I am unable to see why that outcome should follow in the absence of a rule which prescribes it.

[21] The terms of the bills of lading confirm that rights under the contract of carriage, such as the right to delivery of the goods, are acquired by becoming a holder of the bill of lading. Clause 4, para 3 reads:

"In case the name of consignee is definitely stated in this B/L transfer by endorsement cannot be permitted and the Carrier has the right to deliver the goods to the consignee against their receipt, production of the B/L not being necessarily required. In no case, however, consignee shall have the right to claim delivery of the goods without producing of the B/L." [emphasis added]

[22] In my view, this clause and the terms of Article 510 establish that a third party can acquire rights under a contract of carriage (as evidenced by the bill of lading) under Indonesian law only by becoming a lawful holder of the bill of lading. The plaintiff is not, and never has been, a holder of the bills of lading. I therefore conclude that the plaintiff has no right to sue the defendant for breach of the contract of carriage.

[23] This result seems to me to accord with both principle and commercial common sense. As Mr Tetley pointed out, the consignee never saw the bills of lading and had no right to receive them until payment was made for the goods. If Indonesian law was as contended on behalf of the plaintiff, the whole object and purpose of a bill of lading would be defeated and the consignee made subject to obligations pursuant to the issue of a bill in which it played no part.

Tort

[a] Applicable law

[24] As a general proposition, a tort committed in a foreign jurisdiction will be actionable in a New Zealand Court only when it can be shown that the tort is actionable both at New Zealand law, being the lex fori, and according to the law of the place of the tort, the lex loci delicti: see Phillips v Eyre (1870) LR 6 QB 1 and Chaplin v Boys [1971] AC 356 (HL). Both these cases were discussed and accepted as applicable in New Zealand by Mahon J in Richards v McLean [1973] 1 NZLR 521.

[25] There is a recognised exception to this general rule of "double actionability": Red Sea Insurance Co. v Bouygues [1995] 1 AC 190 (PC) at 206. Exceptionally the circumstances of the case and the policies underlying the relevant causes of action in both jurisdictions may be such as to justify the application of the lex loci delicti alone. In Red Sea Insurance the Privy Council found in favour of applying only the lex loci delicti, in that case the law of Saudi Arabia, because there were "overwhelming" factors pointing to that law as the proper law of the tort, and none of any great weight in favour of the interest of the lex fori in the proceedings.

[26] I accept Mr Tetley's submission that this is not such a case. The owner of the defendant vessel is a company incorporated in Korea. The plaintiff is registered in Hong Kong and carries on business in New Zealand. The damage probably occurred in international waters during carriage from Indonesia to various ports in the Pacific. The plaintiff has chosen to bring the action in the New Zealand Courts notwithstanding that the bills of lading are governed by Indonesian law. There are no factors which could justify excluding the lex fori. The plaintiffs must therefore show actionability at both Indonesian and New Zealand law.

[b] Actionability under New Zealand law 

[27] Mr Tetley submitted that in order to sue in negligence at New Zealand law, the plaintiff must show either legal ownership of the cargo, or a possessory title to it. A mere contractual interest in damaged property was said to be insufficient to found an action for the negligent damage of that property. This submission was based on the leading judgement of the House of Lords in Leigh & Sillivan Ltd v Aliakmon Shipping Co. Ltd. ("The Aliakmon") [1986] 1 AC 785 which was acknowledged as stating the law in New Zealand in Brown v Heathcote County Council [1986] 1 NZLR 76 at 79-80 per Cooke P, and in the judgements of all members of the Court of Appeal in Williams v Attorney General [1990] 1 NZLR 646. See also the judgment of Cooke P in South Pacific Manufacturing Co Limited v New Zealand Security Consultants and Investigations Limited [1992] NZLR 282 at 298(CA). The Aliakmon has also been accepted as the law in other Commonwealth jurisdictions: see American Express Sdn Bhd v Dato Wong Kee Tat 1990-1 MLJ 91 (Malaysia); Melissa (HK) Limited v P&O Nedlloyd (HK) Limited 2000-1 HKC 484 (Hong Kong); British Columbia Hydro and Power Authority v ND Lea & Associates Limited 92 DLR 4th 403 (Canada); NACAP Limited v Moffat Plant Limited (1986) Inner House Case, 24/10.86 (Scotland).

[28] Mr Bogiatto referred to the recent decision of the Queen's Bench in The Starsin [2000] Lloyd's Rep. 85 as demonstrating that the defendant's analysis of the result in The Aliakmon was wrong. He relied on the following passage from the judgement of Colman J at 102, discussing the nature of the shipowner's duty of care with respect to the safekeeping of the cargo:

The foundation of any such duty therefore has to be upon the basis that the shipowners owed a duty of care in respect of the stowage of the cargo not merely to the bailors (the shippers), but to all those who might acquire title to the cargo while it remained stowed on board their vessel.

It must be observed at the outset that not only is there nothing in The Aliakmon which is inconsistent with the existence of such a duty, but it is implicit in that decision that such a duty would exist.

[29] Mr Bogiatto submitted that this passage established that the plaintiffs in this case could sue without legal title to the goods. I do not read it that way and I think that to do so would be inconsistent with The Aliakmon. What Colman J says is that a duty of care will be owed by the shipowners to all those who might acquire title to the goods during their time on board the vessel. He does not say that there is a concomitant right to sue for a breach of that duty. That, as held in The Aliakmon, will arise only if at the time of any breach the plaintiff had acquired legal ownership of or a possessory title to the goods. That is made clear in the following passage from the speech of Lord Brandon in The Aliakmon (supra) at p 809:

"My Lords, there is a long line of authority for a principle of law that, in order to enable a person to claim in negligence for loss caused to him by reason of loss or damage to property, he must have had either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred, and it is not enough for him to have only had contractual rights in relation to such property which have been adversely affected by the loss of or damage to it."

That Colman J did not misunderstand the position emerges clearly from a passage in his judgment immediately following that relied on by Mr Bogiatto:

"... What determines whether a cargo-owner, who has no contract with the shipowner can sue in negligence for cargo damage caused by negligent acts of the shipowner before title passed to the cargo-owner is solely and simply whether by the time when the cargo was lost or damaged the title in the cargo had passed to the claimant."

[30] It was not suggested in the present case that at the relevant time the plaintiff had a possessory title which, in this context, refers to actual possession or an immediate right to possession - see Benjamin's Sale of Goods (5th ed 1997) at para 18-109 and authorities cited at notes 91 and 92. The plaintiff founds its claim on the alternative basis that it had acquired legal ownership of the goods.

[31] A claim founded on legal ownership will be possible only if property has passed to the plaintiff. Benjamin op. cit. In New Zealand law the question of when property passes is largely governed by the Sale of Goods Act 1908 ("the Act"). By s 19 in a contract for the sale of specific or ascertained goods, property passes to the buyer at the time the parties intend it to pass. By s 19(2) intention is to be ascertained by having regard to the terms of the contract, the conduct of the parties and the circumstances of the case. Section 20 provides rules for ascertaining the intention of the parties unless a different intention appears. Rule 5 provides as follows:

"5(1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made. 

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer, or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract."

[32] The seller, Indocement, having delivered the goods to a carrier for the purpose of transmission to the buyer, by r 5(2) is deemed to have unconditionally appropriated goods to the contract unless it had reserved the right of disposal. By r 5(1) that would have resulted in property passing to the plaintiff.

[33] The issue therefore becomes whether in the circumstances Indocement retained a right of disposal over the goods. Unless it did, property passed on delivery to the carrier. The question of whether there has been a reservation of the right of disposal is in part governed by s 21 of the Act which provides as follows:

"21 RESERVATION OF RIGHT OF DISPOSAL 

(1) Where there is a contract for the sale of specific goods, or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled.

(2) In such case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. 

(3) Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal. 

(4) Where the seller of goods draws on the buyer for the price, and transmits the bill of exchange and bill of lading to the buyer together to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange, and if he wrongfully retains the bill of lading the property in the goods does not pass to him."

[34] In this case, the bills of lading were all made to the order of Starlink, as buyer and consignee. Pursuant to s 21(3) the seller is not therefore deemed to have reserved the right of disposal. In Mitsui & Co Limited v Flota Mercante Grancolombiana S.A. (The Cuidad de Pasto and the Cuidad de Neiva) [1988] 2 Lloyds Rep 208, 215 it was suggested that the statutory presumption may be displaced by naming the buyer as consignee but I agree with the learned authors of Benjamin's Sale of Goods at para 20-70 that where the buyer is named as consignee, the presumption simply does not arise and a seller should not be taken to have given up his right of disposal merely because the bill is made out to the buyer's order. As Benjamin goes on to point out, retention of the bill of lading gives the seller considerable control over the goods; the buyer is not normally entitled to demand delivery from the carrier without presenting the bill. In cases where the contract provides for payment against the bill of lading, the normal inference should be that the seller has reserved a right of disposal until payment in accordance with the contract has been made.

[35] There is nothing in the terms of the contract or the circumstances of this case to displace that inference. The bills of lading all showed the consignee as being "to order of Starlink Navigation". However, as previously noted, the bills of lading were never released to the plaintiff. The sale and purchase agreement between the plaintiff and Indocement provided for payment:

"... by T.T [telegraphic transfer] upon receipt documents (C.A.D.) directly to our Bankers ..."

The plaintiff, accordingly, acquired no right to the bills of lading until payment was tendered. Under the bills of lading themselves the plaintiff had no right to delivery of the goods unless it held the bills. In my view, these matters support the inference that Indocement retained a right of disposal over the goods and property in the goods did not pass to the plaintiff under New Zealand law. It follows that the plaintiff did not have a sufficient interest in the goods at the time they were damaged to found a claim in negligence.

[c] Actionability under Indonesian law 

[36] My finding that no right of action arises under New Zealand law makes it strictly unnecessary to consider the position under Indonesian law. I do so in deference to the careful evidence given by learned counsel from Indonesia. It will also assist should there be any suggestion that in determining actionability under New Zealand law, the question of whether property had passed should have been decided according to Indonesian law. Both parties proceeded on the basis that Indonesian law had no relevance to the question of actionability under New Zealand law.

[37] Mr Umar, the Indonesian lawyer called by the defendant, said that, as the plaintiff never held the bills of lading, it had no right to sue either in contract (as previously discussed) or on any other basis. He said that Indonesian law did not recognise a claim for breach of a duty of care arising independently of the contract of carriage. His evidence was also to the effect that The Aliakmon principle had no place in Indonesian law. Title to the goods is irrelevant. The right to sue is solely dependent on the claimant being a lawful holder of the bill of lading.

[38] For these propositions Mr Umar relied on articles 506, 507 and 510 of the Indonesian Commercial Code. They provide as follows:

"506 A bill of lading is a dated document wherein the Carrier states he has received certain goods for carriage to a named destination and for delivery there to a named person, and the conditions of delivery."

"507 The bill of lading shall be issued in duplicate, both copies to be negotiable. These negotiable copies, stating, the total number of copies issued shall all count as one and one shall count for all. Non-negotiable copies shall be marked accordingly.

The Carrier shall upon presentation of any copy not stating the number of copies issued and not marked as non-negotiable make delivery to a person who has taken it in good faith and for value." 

"510 The proper holder may demand delivery of the goods at the place of destination as described in the bill of lading, provided the way in which he has become the holder thereof is not unlawful. 

Documents issued to third parties by the holder of a bill of lading with a view to their receiving parts of the goods mentioned in the bill of lading shall not confer upon the holders an independent right to delivery as against the Carrier." 

[39] Mr Umar acknowledged that none of these articles provide express authority for the propositions he advanced. His evidence was to the effect that it was to be inferred from the articles that only a lawful holder of the bills of lading could maintain any action in relation to the goods.

[40] Mr Simanjuntak, for the plaintiff, agreed that the holder of a bill of lading had the right to sue under Indonesian law but said that a right to sue could also arise by the acquisition of ownership of or property in the goods. As mentioned earlier (para [19] above) in relation to the right to claim in contract, his evidence was that pursuant to the FOB contract between the plaintiff and Indocement, property passed to the plaintiff when the goods were loaded on board the ship. He relied on article 1459 of the Indonesian Civil Code which provides as follows:

"The right of ownership of the good being sold is not transferred to the buyer, as far as the delivery is not made yet according to Articles 612, 613, and 616."

Article 612 deals with the delivery of moveables. It provides:

"The delivery of movables, excepting intangibles, will be by transfer simply, carried out by the owner or on his behalf, or by handing over the keys of the building in which such goods are located. 

Such delivery is not required in case that obtainer is already possessing the object by virtue of another title." 

[41] Mr Simanjuntak's position was that the incorporation of FOB terms into the sale and purchase agreement meant that, pursuant to articles 1459 and 612, delivery would be complete upon the cargo being loaded on board the vessel. FOB contract terms oblige the seller to deliver the goods to the vessel nominated by the buyer. Carriage arrangements are the buyer's responsibility. The seller's obligations cease when the goods are loaded on the vessel.

[42] Mr Simanjuntak also relied on a text on the law on sale and purchase by an Indonesian author named HMN Purwosutjipto. The text was translated as stating in part that:

"... When a company sells or purchases under an FOB arrangement, the risk and the possession or ownership shifts or moves at the moment when the goods are loaded. Therefore the loading of goods upon a ship in a commercial exchange under FOB arrangements is for turning over of those goods according to the law." 

Another passage was translated as:

"Because this form of delivery has already become common in commercial transactions under FOB arrangements, therefore this sort delivery is legal delivery which results in ownership being transferred to the purchaser."

It will be apparent that the translation failed to fully capture what was said in the text but it is adequate I think to establish support for the opinion expressed by Mr Simanjuntak.

[43] Mr Umar did not accept that property had passed under Indonesian law. He relied on article 1513 of the Civil Code which provides:

"The main obligation of the buyer is the payment of the purchase price at the time and place determined by the agreement."

He argued that, as payment had not been tendered, property had not passed. He described the contract as "conditional" upon payment.

[44] A plaintiff who seeks to rely on foreign law for the purpose of establishing its claim must prove it as a fact - see para 12 above. I am required to consider whether, on the balance of probabilities, the plaintiff has made out a right to sue under Indonesian law independently of the contract of carriage.

[45] Neither party was able to point to provisions of the Indonesian Civil or Commercial Codes or other legal authority which unequivocally supported the conclusions they contended for. I was invited to rely on inferences to be drawn from the provisions of the Codes. The text relied on by Mr Simanjuntak supports his position on the passing of property but does not establish that, property having passed, a right to sue arises. Nor does it address the critical issue of whether, as Mr Umar contended, the stipulation that the bills of lading could be obtained only on payment of the purchase price prevented Starlink obtaining title. This seems to refer to something very close to a reservation of the right of disposal which I have found to have prevented property passing under New Zealand law.

[46] Both experts agreed that article 1338 of the Civil Code affirms the right of contracting parties to contract out of the general law. It follows that even if, as a general rule, delivery under an FOB contract takes place when the cargo is loaded on board the vessel nominated by the buyer, it does not necessarily follow that property passes at that point. That is not inconsistent with article 1459 of the Civil Code which establishes that ownership cannot be acquired without delivery in accordance with articles 612, 613 and 616 but does not dictate the converse.

[47] The opinions expressed by both experts are available on the legal principles each respectively relied on. Neither is incontrovertible. But it is the plaintiff which has the burden of establishing its case under Indonesian law. And when the opposing view is equally tenable, the onus clearly has not been discharged. The plaintiff has failed to establish to the standard required by law either that property in the goods passed to it on delivery to the ship or that, if it did, that was sufficient to confer on it a right to sue, notwithstanding that it was not the holder of the bills of lading.

[48] In cross-examination Mr Simanjuntak expressed the view, for the first time, that the plaintiff could rely on the letter of indemnity as conferring on it a right to sue. I am unable to accept that this is the case. The letters of indemnity were given for the purpose of protecting the ship's owner against liability for releasing the goods without production of the bills of lading. There is nothing in the terms of the indemnities which could give rise to a right of compensation for damage to the cargo. By their very nature, the letters of indemnity recognise that the plaintiff may have no right to delivery. I can see no basis on which they could confer a right of suit under the bills of lading or otherwise to sue for damage to cargo.

[49] The plaintiff has not discharged the onus of proving that it has a right of action independently of the contract of carriage under Indonesian law.

[d] Summary 

[50] The plaintiff has failed to establish a right to a claim in tort under either New Zealand or Indonesian law. 

Result 

[51] The answer to the question posed pursuant to r 418 is "No".

[52] I will consider memoranda filed within twenty-eight days as to costs and any further directions required.