Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2004] 1 Lloyd’s Rep 38

Key point

  • s. 1(1)(b) Contract (Rights of Third Parties) Act 1999 if applicable, creates a rebuttable presumption of enforceability by third parties; s1(2) applies only if the contract provides that the parties did not intend third party enforcement.

Facts

  • Cleaves (C), a chartering broker acted for shipowners, Nisshin (D)
  • In each of the charterparties C negotiated, D agreed with the charterers that D will pay C commission
  • There was also an arbitration clause by which all parties agree to refer all disputes arising out of the contract to arbitration
  • C sued D for payment of its commission under s1(1)(b) Contract (Rights of Third Parties) Act 1999
  • D argued that C could not show that the parties intended to confer the benefit under s1(2) Contract (Rights of Third Parties) Act 1999 as none of the contracts expressly provide that C could enforce clauses against the owners

Held (High Court)

  • C’s claim succeeded

Colman J

Presumption of intention under s1(1)(b)

  • S1(2) provides that subsection S1(1)(b) is disapplied if, on a proper construction, it appears that the parties did not intend third party enforcement.
  • In other words, if the contract is neutral on this question, s1(2) does not disapply s1(b): [23]

Current case

  • In the present case the charter parties are indeed neutral in that they do not express any intention contrary to the entitlement of the brokers to enforce the term