The Delfini

The facts of The Delfini 1 are complex and a simplified account of them must suffice for the purpose of this note. On 2 July 1985, Sonatrach had sold 100,000 tonnes of oil (Algerian concentrate) to Vanol, who in turn sold 20,000 to 25,000 tonnes of the same commodity to Enichem c.i.f. Gela. Payment was to be made by Enichem within four days of completion of discharge, against documents or seller’s letter of indemnity in respect of missing documents. The buyer, for his part, was to open a bank guarantee not later than on nomination of the vessel; this guarantee was given before shipment. Vanol chartered the Delfini and bills of lading were issued by her master evidencing the shipment of 24,540 metric tonnes of oil for shipment to Gela; these bills named Sonatrach as shipper and were later endorsed by Sonatrach to Vanol in blank, thus becoming bearer documents. As between Vanol and the owners of the Delfini, the bills were mere receipts: the contractual relations of these parties were governed by the charterparty. That contract provided for the release of the goods against a letter of indemnity from the charterers, if the bills of lading failed to arrive at the destination in time for discharge of the goods. This turned out to be the position and Vanol issued two letters of indemnity: one to the shipowners (whom Vanol asked to deliver the goods even though bills of lading were not presented) and one to Enichem to protect them against claims by third parties who might have acquired the bills. The Delfini completed discharge by 9 August; payment was made on 12 August; on or about 20 August the bills of lading were sent by Vanol’s bank to Enichem. Under the contract between Sonatrach and Vanol, property had passed at the time of shipment, even though Vanol did not pay under this contract till 2 September. There was short delivery of some 275 tonnes less than the bill of lading quantity and the question was whether Enichem were entitled to claim damages for breach of contract from the shipowners in respect of this quantity. No attempt was made to rely on an implied (or Brandt v. Liverpool 2) contract, so that the question was whether Enichem could sue under s. 1 of the Bills of Lading Act 1855. This in turn raised two issues: when had property in the oil passed from Vanol to Enichem? And had it passed “upon or by reason of” the endorsement and transfer of the bill of lading? The Court of Appeal held that property had passed before the transfer