Case No: 2013 FOLIO 424
Neutral Citation Number: [2015] EWHC 1989 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 10/07/2015

Before:

MR JUSTICE ANDREW SMITH
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Between:

	Glencore International AG	Claimant	
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	(1)	MSC Mediterranean Shipping Company SA
(2)	MSC Home Terminal NV	Defendants

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John Passmore QC (instructed by Gateley plc) for the Claimant
Yash Kulkarni (instructed by Duval Vassiliades) for the First Defendant

Hearing dates: 6 & 7 July 2015
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Judgment
Mr Justice Andrew Smith: 
1.	Glencore International AG (“Glencore”) claims against MSC Mediterranean Shipping Company SA (“MSC”) damages for breach of contract, bailment and conversion in relation to a cargo of three containers of cobalt briquettes. The cargo had been been shipped from Fremantle to Antwerp on the “MSC Eugenia” under a bill of lading (the “B/L”) issued by MSC and dated 21 May 2012.   The B/L permitted transhipment, and the goods were transferred to the “MSC Katrina” before they arrived.    It named Glencore as the shipper, and C Steinweg NV (“Steinweg”), Glencore’s agents at Antwerp, as “Notify Parties”.   It was a negotiable bill, the consignee box being completed “to order”.    There is an express choice of English law as applicable to the B/L, and the parties agreed upon exclusive jurisdiction of the English High Court.
2.	Glencore complains that only one of the containers was delivered and the other two were misappropriated.    The evidence does not show quite what happened to the missing containers, but it is common ground (and recorded as such in the list of issues) that they were “delivered to unauthorised persons”.   MSC contends that it complied with its obligations and is not responsible for the loss, or that Glencore is estopped from alleging otherwise.    It raises no other defence.   Other issues on the pleadings have been agreed: there is no longer any dispute about Glencore’s title to sue, and damages have been agreed, subject to liability, at $1,109,364.78.   Glencore has not pursued a claim against the second defendant, MSC Home Terminal NV (“MSC Home”).  Both parties proceeded on the basis that the issues are all to be decided by reference to English law.
3.	The trial took place over two days.  I am grateful to the parties’ advisers: the papers were in excellent order, and counsels’ submissions were clear, precise and succinct.  Glencore was represented by Mr John Passmore QC, and MSC by Mr Yash Kulkarni.     Glencore called two witnesses: Ms Corin Gautschi, whom it employs as a “Contract Administrator” and who has overall responsibility for the logistics and operation of Glencore’s cobalt contracts, but was not directly involved with this shipment; and Mr Charles Reynolds-Payne, a Commercial Manager at Steinweg with overall responsibility for its warehousing operations at Antwerp.  MSC called no oral evidence.   It put in evidence under the Civil Evidence Act, 1995 statements of Ms Evy Soen, who at the relevant time worked as a Commercial Assistant in the Import Operations Department with Mediterranean Shipping Company Belgium NV (“MSC Belgium”), the local agent for MSC; Mr Wouter Bassier, an Import Manager of MSC Belgium; and Mr Geert Dreessen, MSC Belgium’s Chief Information Officer.   MSC did not make Ms Soen or Mr Bassier available for cross-examination, and Glencore did not wish to cross-examine Mr Dreesen. 
4.	When the cargo arrived at Antwerp, it was handled under an electronic release system (“ERS”) used for containerised cargo at the port terminal.   In essence, under the ERS carriers do not issue paper delivery orders or release notes against bills of lading, but instead provide computer generated electronic numbers (or “import pin codes”), which holders of bills present to the terminal and so take delivery of their goods.        The B/L contained this express term: “If this is a negotiable (To order/of) Bill of Lading, one original Bill of Lading, duly endorsed must be surrendered by the Merchant to the Carrier … in exchange for the Goods or a Delivery Order”.     Glencore argues that therefore, as a matter of construction of the B/L or by implication, MSC should have delivered the cargo only on presentation of it or a delivery order given in exchange for it.     MSC contends that it handled the cargo in accordance with the express terms of the B/L properly interpreted or an implied term that permitted use of the ERS or in accordance with an agreement varying the B/L’s original terms.    Alternatively, it contends that Glencore is estopped from disputing that MSC was entitled to act as it did because of its pattern of previous dealings with Steinweg.   The issues about previous trading and variation include questions about Steinweg’s authority in this regard.
5.	The ERS was introduced with effect from the start of 2011.    Under it, when a consignee or its local agents presented a bill of lading and paid freight and other charges, the carrier sent to it at a designated email address a release note, which provided the addressee with a pin code.   Each code was automatically generated by the system and corresponded with a code stored (under encryption) in the Port Authority’s data base.   As I understand the evidence and find, the shipping company and its agent had no access to it.     The ERS was introduced as an alternative procedure to the existing practice at Antwerp whereby, when bills of lading were presented, carriers exchanged them for documents that were presented to the terminal to take possession of goods.    According to Mr Dreesen, it was thought carriers would see commercial advantage in adopting the more efficient ERS, but it is not mandatory and still has been adopted by only some of the carriers who operate to the Port of Antwerp.   
6.	At around the end of August 2010, the Antwerp Port Authority (or Alphaport) circulated a notice about the proposed ERS.   By a resolution of 3 September 2010, the Port Authority approved two sets of “model terms”: a “model covenant between the terminal operator and the shipping company or its ship’s agent for the electronic release of containers in the Port of Antwerp” (the “operator’s covenant”), and a “model covenant between the shipping company or its ship’s agent and the forwarder for the electronic release of containers in the Port of Antwerp” (the “forwarder’s covenant”).   Articles 1 and 2 of the operator’s covenant included the following: 
“Article. 1: Obligatory use of the electronic release procedure 
For the purpose of delivering full import containers, the parties hereby agree only to use an electronic release procedure in which:
1) the container is released by the shipping company or its ship’s agent, to the consignee or the latter’s representative, by communicating an electronic release code generated individually for each container, which is also communicated to the terminal operator;
2) delivery of the container by the freight handler to the consignee or the latter’s representative can only be made once the latter has entered the container number together with the corresponding release code mentioned under (1) above in the terminal operator’s ICT system.  
The release procedure mentioned in the first paragraph is governed by this covenant.   …
Article 2: Exclusion of other procedures and codes
The release procedure mentioned in art. 1 replaces all other release procedures previously used by the parties.  
No right of delivery may be conferred by any codes or references other than the release code mentioned in art. 1, such as the booking number”.  

Articles 2 and 3 of the forwarder’s covenant were materially identical.     
7.	The operator’s covenant also provided that:
i)	“These conditions apply without prejudice to the applicable legal and contractual provisions governing liability for loss and damage to cargo” (article 1);
ii)	“The shipping company or ship’s agent can at any time announce that the release has expired or has been withdrawn.
The parties can agree that the release shall expire de jure if the container is not collected within the free period.  
In particular, the release can be cancelled on the orders of the competent authority.
If the release expires or is cancelled, then the terminal operator shall not deliver the container ...” (article 4).
There were also provisions about the “release” being withdrawn in an appendix to the forwarder’s covenant, which dealt with “Conditions for the electronic release of containers in the Port of Antwerp”: 
iii)	 “If the container is not collected within free period as specified either in the release notice or in other applicable rules or regulations, then the release of the container may be withdrawn without notice and demurrage shall be owed …” (article 3);
iv)	The release may be withdrawn during the free period if additional costs are incurred, or in other special cases.  This withdrawal of release shall be notified to the consignee or the latter’s representative.  A new release and/or de facto delivery may be made conditional on prior payment of the costs still outstanding” (article 4).  
8.	Thus the scheme of the ERS is that, once a code is issued, the forwarder is able, and as against the shipping company (including in this term here and elsewhere its agent) entitled, to use it to obtain the goods and the shipping company is entitled to withdraw it and prevent the forwarder obtaining the goods only in the circumstances specified in articles 3 and 4.    However, the operator is to stop the code being used to release the goods if instructed by the shipping company to do so, whether or not the instruction involves a breach of its agreement with the forwarder.  The forwarder is left to its contractual remedies against the shipping company.
9.	MSC Belgium decided to adopt the ERS, and on 17 December 2010 it contacted forwarders such as Steinweg to inform them of this.    On 7 January 2011 it sent an email to Steinweg stating that as from January 2011 it would start to use the ERS in Antwerp at its home terminal and “no longer work with Delivery order (Laatvolgen)”.    It explained how ERS would use codes sent by email and asked Steinweg for an email address to which they should be sent.     Steinweg provided one.     On 17 January 2012 Steinweg asked MSC Belgium to send all arrival notices to “our generic address so that everyone has access to the same”, and gave the same address as on 7 January 2012.   MSC Belgium asked whether pin codes might also be sent to that address, and Steinweg replied that they might be.     All Steinweg’s forwarding operators, some 15 to 20 employees, had access to the generic address and so to any codes sent to it.    
10.	There is no evidence that MSC entered into an agreement with the Port Authority in the terms of the operator’s covenant, or that it entered into an agreement with Steinweg (or anyone else) in the terms of the forwarder’s covenant.   Indeed, Mr Reynolds-Payne said that Steinweg had not seen the model covenants, and I accept that evidence.   I infer that it operated the ERS broadly as the covenants contemplated, but not that it entered into agreements in those or comparable terms.     
11.	Steinweg is a long established business providing warehousing and related logistic services at the Port of Antwerp.   It has acted for Glencore for some 25 years.    At the relevant time, it was Glencore’s exclusive agent at Antwerp for handling cobalt shipments.   It did not enter into a formal contractual document with Glencore: towards the end of each year it sends Glencore its proposed tariffs for the next year and the parties conduct their business on the basis of those rates.   They include a charge (€10 in 2011 and 2012) for a “delivery order”.    On 29 December 2009 Steinweg sent Glencore notice that its transactions were subject to the “Belgian Freight Forwarders – Standard Trading Conditions” (the “BFF conditions”) and “General Conditions for the Handling of Goods and related activities in the port of Antwerp”.   A copy of the General Conditions was enclosed, and Steinweg advised where the BFF conditions were to be found.   The letter said, “Without response from your side we consider that you accept our conditions as a whole and without any remarks”.   There was no evidence of a response from Glencore, and I infer that there was none.  Article 9 of the BFF Conditions provided that, “In the absence of precise instructions to the contrary or special arrangements, the Freight Forwarder shall be at liberty in his choice of means to be used to organise and perform the services to the best of his abilities according to normal business practice, including the groupage of goods”.     Mr Reynolds-Payne accepted, and I find, that no relevant “precise instructions to the contrary or special arrangements” were given to Steinweg.    I consider that Glencore and Steinweg agreed that these terms, including article 9 of the BFF conditions, should apply to their dealings, but this is not important to my decision.    Mr Reynolds-Payne and Ms Soen accepted, and I would in any event find, that Steinweg’s task was to arrange that goods consigned to Glencore were duly delivered at Antwerp and it was entitled, and authorised by Glencore, to adopt any proper procedures to do so.   
12.	Between January 2011 and June 2012, Glencore made 69 shipments of cobalt (approaching an average of one per week) that were carried by MSC to Antwerp under bills of lading with terms materially similar to those of the B/L in this case.   On each occasion, Steinweg acted as Glencore’s agent to present the original bill of lading to MSC or MSC Belgium, and on each occasion Steinweg used a pin code to take delivery of the goods from the “MSC Terminal”, which Mr Reynolds-Payne described as a “dedicated area … operated for MSC by [MSC Home] Terminal NV”.   In the normal course, the bills of lading were stamped and signed by Glencore or Steinweg or both.    Shortly before a vessel arrived at Antwerp, MSC would send Steinweg an “Arrival Notice”, which gave her estimated time of arrival (“ETA”), and it included a note that, “Please note containers will only be released against pincode”.    After the bill was presented and freight and charges were paid, MSC would send Steinweg an electronic document headed “Release Note”, which gave a pin code (or codes) for release of the goods and stated the period, usually of about a month from discharge, during which the code was “valid”.    The Release Notes included the following provisions (the second of which was commonly, if not invariably, underlined) under the heading “Clauses and conditions governing subject receipt note”:    
•	“All terms and conditions contained in the MSC bill of lading concerned are applicable to subject release note.  The addressee of subject release note expressly confirms to have knowledge to these terms and conditions and to accept them unconditionally.
•	“This release note is subject to the terms and conditions contained in the Resolution by Alfaport Antwerp dated 3rd of September 2010 concerning electronic release of containers in the port of Antwerp.  The text of this Resolution is available on our website ….  The addressee of this release note expressly confirms to have knowledge of these terms and conditions and to accept them unconditionally.
•	“Discharge of the cargo will constitute due delivery of the cargo.  After discharge the cargo will remain on the quay at risk and at the expense of the cargo, without any responsibility of the shipping agent or the shipping company/carrier”.  
	 
13.	The shipment that gives rise to this claim was materially similar to the previous 69 shipments.     The B/L was in similar terms.   On 24 May 2012 Glencore sent Steinweg two copies of it and other documentation.   On 20 June 2014 MSC sent Steinweg an arrival notice, giving an ETA for the MSC “Katrina” of 24 June 2012,    Steinweg lodged with MSC Belgium one of the bills of lading, signed and stamped by itself and Glencore, and paid the handling charges.   On 22 June 2012 MSC emailed to Steinweg a release note for the three containers, giving for each of them a code that was valid from “discharge” to 25 July 2012.   Steinweg instructed its hauliers, Carjo Trans BVBA (“Carjo Trans”) about collecting the containers from MSC Belgium and bringing them to Steinweg’s warehouse, but it did not then pass on the codes.   The vessel arrived on about 26 June 2012 and the containers were discharged from the vessel, and, as I infer, placed in the MSC Terminal.  On 26 June 2012 Steinweg communicated the codes to Carjo Trans.  When Carjo Trans went to collect the containers on 27 June 2012, it reported to Steinweg that two had already been collected and the Port Authority confirmed this to Steinweg.  Apparently this was the first time that MSC had had a problem of this kind when using the ERS.     
14.	Before I consider MSC’s obligations under the bill of lading contract, I shall say something about Glencore’s knowledge of the ERS: Mr Kulkarni submitted that Glencore knew by the relevant time that at Antwerp containers carried by MSC were released by the terminal only against the provision of electronic pin codes, and he relied on that in support of his arguments (i) about the proper interpretation of the bill of lading contract, (ii) an implied term,, (iii) Steinweg’s authority to agree to vary the bill of lading contract, and (iv) estoppel.  Ms Gautschi was aware by June 2012 that at least one of the shipping lines used an electronic code for handling arrived cargo, but she did not know, and I accept that Glencore itself did not know, that MSC used this system at Antwerp.   There is no evidence that Steinweg had informed it of the ERS when it was introduced, or that it was sent copies of the arrival notices or release notes that referred to MSC using it.   Steinweg routinely levied €10 charges when it used the ERS and Glencore paid them, but there is no evidence that it would have reason to know that they were for electronic release notes: the charges were described as being for “delivery orders”.    
15.	After the loss MSC and Steinweg adjusted the arrangements for releasing containers, to provide extra security and avoid another such loss.   By an email dated 3 July 2012 MSC recorded arrangements, which were to be reviewed in December 2012, to release containers only to a driver who was from a specific transport company, who provided identification and who was using a vehicle with a specified registration number.   Mr Reynolds-Payne sent an email to Mr Rolf Seiler at Glencore advising him that “Drivers will ... have to announce themselves at the problem desk of MSC Home Terminal to identify themselves and give the correct pincode”.     It was suggested by Mr Kulkarni that the terminology indicates that Mr Reynolds-Payne understood that Glencore knew that ERS used pin codes.   Mr Reynolds-Payne did not accept that, and to my mind the email only suggests that, unremarkably, he assumed that Mr Seiler would understand in general terms what a pin code is.   In any case, the email shows that Mr Reynolds-Payne had already spoken with Mr Seiler, and it seems probable that he would have referredto the use of pin codes.  The email indicates nothing about what Glencore knew before the loss.   
16.	A bill of lading that states that goods are to be delivered “to order” is a document of title relating to the goods, and, as is stated in Carver on Bills of Lading (3rd Ed, 2012) at para 6-008, “… normally the carrier must deliver the goods only to the person in possession of the bill, whether as original shipper or as indorsee of the bill or as consignee.  The carrier is not bound to deliver the goods except on production of the bill, and is liable to the holder of the bill if he wrongfully delivers the goods to anyone else.  Delivery to such other persons is wrongful even if made against a forged bill of lading in circumstances in which the fact that the bill was not genuine was not known or reasonably apparent to the carrier.  … The general rule may, however, not apply where delivery without the bill is required or authorised by law at the port of discharge or by a custom prevailing there”.    MSC pleaded that a term was to be implied into the B/L that allowed it to provide a pin code when it was surrendered, but the argument was not pursued: Mr Kulkarni said that MSC does not rely on any alleged custom or established practice at Antwerp.
17.	Steinweg, on behalf of Glencore, produced a copy of the B/L to MSC Belgium.   MSC’s argument is that it was then obliged to exchange it for either the goods or a “Delivery Order”, and that it exchanged the B/L for a “Delivery Order” for the containers.   It does not contend that it met its obligation under the B/L by delivering to Glencore the goods in exchange for it.   Nevertheless, I shall say something about what would constitute delivery of goods in order to set the scene for the parties’ submissions on what is in issue.     In the context of the sale of goods, Sale of Goods Act, 1979 s.61(1) provides a general definition of “delivery” as “voluntary transfer of possession from one person to another”.   In Barclays v Customs & Excise, [1962] 1 Lloyd’s Rep 81,89, Diplock J observed that a bill of lading contract is “not discharged by performance until the shipowner has actually surrendered possession (that is, has divested himself of all powers to control any physical dealing in the goods) to the person entitled under the terms of the contract to obtain possession of them”.     Thus, as it is put in Cooke on Voyage Charters (4th Ed, 2014) at para 10.4, delivery is “a bilateral act, involving the receipt of the goods by the consignee or his agent as well as the relinquishing of possession by the carrier, and so it cannot be effected merely by discharging the goods over the ship’s side at the port of delivery.   Equally delivery cannot, in the absence of special terms, be effected merely by putting the goods into the custody of a person who is not the agent of the consignee”.    
18.	Mere discharge of cargo therefore does not constitute delivery as a general rule.  Although MSC Belgium’s release note of 22 June 2012, like its previous release notes, stated that discharge of the cargo would constitute due delivery, MSC did not argue that it delivered the goods merely by discharging them from the “MSC Katrina”.    Nor did it argue that it delivered them by putting them into storage to await collection by Carjo Trans.    In some circumstances, delivery might be effected by putting goods into a port authority’s custody, but it is accepted that this did not happen here.    First, the goods were not deposited into the custody simply of the Port Authority: they were put into the MSC Terminal.   The evidence does not make clear quite what role the Port Authority had in managing goods that were stored there, but the MSC Terminal was operated by MSC Home and operated for MSC.     Secondly, although by emailing the pin codes MSC Belgium provided Steinweg with the means to take possession of the goods as long as they were valid, as I have explained, under the ERS in so far as its procedures reflected the model covenants, MSC Belgium had at all times the power, albeit not the contractual right as against Glencore or Steinweg, to invalidate them.   To that extent, MSC did not, in Diplock J’s words, divest itself of all powers to control any physical dealing in the goods.   
19.	Thus, MSC’s argument that it complied with the express terms of the B/L is that the electronic pin codes that it provided to Steinweg constituted a “Delivery Order” within the meaning of the bill of lading.    I reject that argument.   As is explained in Benjamin’s Sale of Goods (9th ed, 2014) at para 18-212, the expression “delivery order” is used to describe documents of different kinds: it must be interpreted in its context in the B/L.    To my mind, the parties must be taken to be referring to what is commonly called a “ship’s delivery order”, an expression used and defined in Carriage of Goods by Sea Act, 1992 s. 1(4).   It is an essential feature of such a delivery order that it contains an undertaking given by the carrier who is party to it (or possibly assumed by the carrier through attornment: see Benjamin, loc cit, at para 18-216) to a person identified in it to deliver the goods to which it relates to that person.    This is required by the statutory definition, and is in accordance with usage before the 1992 Act: see Krohn & Co v Thegra NV, [1975] 1 Lloyd’s Rep 146, 154-155.   The usual purposes of agreeing that a delivery order, rather than the goods, may be delivered in exchange for a bill of lading is to expedite the performance of contracts and particularly to allow bulk cargoes to be split into parcels, without resorting to the practice (a practice “fraught with danger”, per Longmore J in Noble Resources Ltd v Cavalier Shipping Corp (The “Atlas”), [1996] 1 Lloyd’s Rep 642,644) of issuing substitute bills.   It is readily understandable that a shipper should agree for practical reasons to this much flexibility in performance.    It strikes me as improbable that it would agree to a term whereby the holder of the bill of lading might surrender its rights under it against the carrier without receiving in return either the goods themselves or the benefit of a substitute undertaking from the carrier.    There is no need to interpret the B/L so as to have this improbable effect.   
20.	Mr Kulkarni argued that the expression “Delivery Order” should be understood more widely because it was so understood by the parties: in support of this, he pointed out that Steinweg levied and Glencore paid the €10 charge for a “delivery order”  when Steinweg received a release note with electronic codes.    I am not impressed by that argument: as I have found, Glencore did not know that the charges related to release notes with codes, and in any case there is no evidence about who in Steinweg decided to levy and so describe the charges.    I cannot accept that this informs what the parties intended when they entered into the B/L.  In any case the parties did not use consistent terminology, as is reflected in MSC Belgium’s email of 7 January 2011. 
21.	Mr Kulkarni also sought to rely on the pattern of previous dealings using the ERS to support his argument that the expression “Delivery Order” should be given a more generous interpretation.    It was suggested, as I understand it, that, when they contracted against the background of how the previous shipments were handled, the parties must have contemplated that the goods might be released under the ERS and intended that the term “Delivery Order” should include an email containing codes sent under the ERS.    To my mind, this argument faces three difficulties.
22.	First, although in principle the factual background can sometimes inform the interpretation of a negotiable document of title, there is an obvious difficulty about a document having “different meanings for different people according to the knowledge of the background” (to use the words of Lord Hoffmann in Mannai Ltd v Eagle Star Assurance Co Ltd, [1997] 749, 779C/D).    The proper approach to using the background knowledge to inform the interpretation of bills of lading was explained by Lord Hoffmann in Homburg Houtimport BV v Agrosin Private Ltd (The “Starsin”), [2003] UKHL 12 at paras 73ff: it is to be recognised that negotiable bills of lading, being documents of title, are “addressed” to and might need to be understood by various persons other that the original parties, and therefore the original parties are taken to have intended that they should be given the meaning conveyed by their wording in light of knowledge available to the range of  persons to whom  they are addressed.   Thus, 
“As it is common knowledge that a bill of lading is addressed to merchants and bankers as well as lawyers, the meaning which it would be given by such persons will usually also determine the meaning it would be given by any other reasonable person, including the court.   The reasonable reader would not think that the bill of lading could have been intended to means one thing to the merchant or banker and something different to the lawyer or judge” (at para 76).    
The parties making the contract in the B/L would not have expected the range of addressees described by Lord Hoffmann to know of their own previous dealings, and are not to be taken to have intended that it should inform the interpretation of the B/L.
23.	Secondly, I have found that Glencore did not know until the loss that gives rise to this claim, and so did not know when it entered into the B/L, that MSC was using the ERS for cargo discharged at Antwerp.  Mr Kulkarni submitted that Steinweg’s knowledge is to be imputed to Glencore because it was Glencore’s agent at Antwerp, and that, since Steinweg knew that containers carried by MSC were released by the Antwerp terminal only against the provision of electronic pin codes and without paper delivery orders, Glencore is to be taken to have known this (unless, which is not suggested, MSC knew that Steinweg had not informed Glencore of this).     He cited Bowstead & Reynolds on Agency (20th Ed, 2014) at paras 8-204 and 207 in support of his submission, which I accept, that notices received by an agent with the scope of his actual or apparent authority are effective even if not transmitted to a principal unless the third party knew that they would not be, and that generally the law may impute to a principal knowledge about the subject matter of the agency acquired by an agent while so acting.      However, Steinweg was not Glencore’s agent for the purpose of entering into bills of lading or making contracts for the carriage of goods, and I am not persuaded that its knowledge is relevant to determining the contractual intention evinced by Glencore when it made the B/L contract.
24.	Thirdly, it is not enough for MSC to establish that, in view of the previous pattern of dealings, the B/L allowed it to use the ERS, and so not to deliver the goods or a delivery order immediately the B/L was surrendered but only deliver the goods when the codes were presented to the Port Authority.    It needs to show that, when MSC Belgium provided pin codes for previous shipments, it was taken thereby to have fulfilled MSC’s responsibilities with regard to the cargo and its delivery, and so MSC was taken to have no further liability therefor.    The previous dealings provide no support for this proposition.   MSC, or at least MSC Belgium, wanted to adopt the ERS, but, even if it be supposed that Glencore was content for it to be used, it does not follow that it would have agreed that delivery was considered to be made when it, or Steinweg, was sent the pin codes rather than when goods were later received.   Indeed the operator’s covenant contemplated that delivery took place only when the code was used to take the goods from the Port Authority: it refers to containers being delivered only once that consignee or its representative has entered the container number and corresponding code into the operator’s system, and expressly states that the conditions were “without prejudice to the applicable legal and contractual provisions covering liability for loss or damage to cargo”.   It goes on to provide that “No right of delivery may be conferred by any codes or references other than the [specified] release code …”: thus, it contemplates that receipt of a code confers a “right of delivery”, not that it constitutes delivery.   
25.	MSC does not, of course, submit that, by providing the release note containing the pin codes, it undertook to Glencore or Steinweg that it would deliver the cargo to them: had it done so, it would clearly have been in breach of its undertaking.   Mr Kulkarni’s primary submission is that it thereby gave no undertaking at all with regard to delivery: his alternative submission is that, if MSC gave any undertaking, it was only that the goods would be delivered to whoever presented the right codes, and it did not undertake to deliver them to Steinweg or Glencore.   Thus, it accepts that it did not give in exchange for the B/L a Delivery Order of the kind that I have described and that, in my judgment, was required by the B/L.    I therefore conclude that MSC did not comply with its obligations under the B/L, unless it can rely on an implied term or show that it was varied by agreement.   
26.	MSC pleads that it was an implied term of the B/L that, “upon surrender of the bill of lading by the lawful holder, a carrier or its agent may provide an import pin code … (so that thereafter the recipient of the import pin code can present the import pin code to take delivery of containerised cargo, provided always that the import pin code matches the corresponding [electronic data interchange] pin code)”, and that the term is to be implied “by virtue of custom/procedure in the port of Antwerp … and/or so as to give business efficacy [to the B/L] and/or by obvious inference”.    However, as I have said, Mr Kulkarni abandoned any argument based on a custom, practice or procedure, and pursued the argument for an implied term only on the basis of the previous course of dealing (an argument that is not strictly pleaded, but no point was taken by Glencore on that).   
27.	The first problem with this argument is that the implied term sits awkwardly with (if it does not contradict) the express provision in the B/L that the goods or a Delivery Order are to be provided in exchange for it.   In Johnson v Unisys Ltd, [2001] UKHL 13 Lord Hoffmann said (at para 35) that, “… any terms which the courts imply into a contract must be consistent with the express terms. Implied terms may supplement the express terms of the contract but cannot contradict them”.    This requirement of consistency does not only preclude an implied term that is starkly inconsistent with what is expressly agreed, but, as the speech of Lord Hoffmann reflects, the law implies terms that work harmoniously with the scheme of the agreed arrangements, and the less readily harmonious a term would be, the less readily it is implied.   Here the parties specifically relaxed the prime facie obligation on the carrier to deliver the goods only against surrender of the B/L in that they agreed that it might surrender them against a delivery order, but the very fact that they agreed such a limited relaxation makes it difficult to suppose that they intended to go further.  
28.	But the argument for an implied term faces other difficulties, which largely reflect the reasons for which I rejected Mr Kulkarni’s arguments about the interpretation of the B/L (which would not surprise any subscribers to the proposition of Lord Hoffmann in Attorney General of Belize v Belise Telecom Ltd., [2009] UKPC 10 at para 19 that “the implication of a term is an exercise in the construction of the instrument as a whole”).   First, carriers were not obliged to use the ERS, and it was not used by all: this in itself shows that business requirements never dictated that its use.  Further, to my mind the argument that a term is to be implied into a document of title from a course of dealings between its original parties faces the same objections as those explained by Lord Hoffmann in The “Starsin” about background known only to the original parties informing its interpretation.    
29.	However the argument for an implied term is put, it faces this further difficulty: in order to provide MSC with a defence to the claim, it must be implied not only that MSC or its agent might use the ERS and provide a pin code (or pin codes), but that by providing it MSC fulfilled its obligations with regard to delivering the cargo and discharged its liabilities (in contract and bailment).   As I see it, there is no proper reason to introduce such a term by implication.
30.	MSC pleads that in its exchanges in January 2011 with Steinweg it was agreed that the term in the B/L that it should be surrendered in exchange for the goods or a delivery order was varied.    Although the pleading does not spell out the varied term, I take it to be that the B/L might be exchanged for pin codes that were valid under the ERS.    The obvious difficulty with the pleaded case is that the B/L was issued (and the B/L contract made) after January 2011.   To meet this, Mr Kulkarni argued (again, without Glencore taking any pleading point against him) that, in view of the exchange in January 2011 and the pattern of dealings thereafter, when MSC sent and Steinweg received pin codes in respect of the shipment under the B/L, MSC offered to vary the B/L contract and Steinweg, on behalf of Glencore, accepted the offer.   This formulation of the argument, necessary to overcome the timing problem, runs instead into difficulty in identifying conduct on the part of Steinweg whereby it evinced an intention to accept an offer of this kind.    It had already paid freight and charges and surrendered the B/L.    There is no evidence that Steinweg responded to the email sending the pin codes: indeed the address from which MSC sent it was noreply@mscbelgium.com.    Steinweg passed the codes on the Carjo Trans, and in some circumstances an offer can be accepted without the acceptance being communicated to the offeror, but I cannot interpret the communication with Carjo Trans as evincing any contractual intention on Steinweg’s part, and Mr Kulkarni did not argue that it did so.   
31.	There is another answer to the variation argument presented by Mr Kulkarni: I do not accept that Steinweg had authority to agree to vary the B/L contract by accepting the terms of the release note sent by MSC Belgium.   Steinweg was Glencore’s local agent for handling cargo discharged at Antwerp: the evidence of Mr Gautschi, which I accept, was that Glencore left it to Steinweg to liaise with the carrier’s agent to secure the release of goods after discharge, arranging for their collection from terminals, unloading them and checking them at their warehouse and storing them pending instructions from Glencore: Glencore was not directly involved with or concerned about how Steinweg did this.   I do not need to explore whether this means that it might reach a contractual agreement binding on Glencore about how delivery might be effected in accordance with the B/L.    I can accept that Steinweg was impliedly authorised to use the ERS, but it does not follow that it was entitled to agree that, if it did so, MSC was to be regarded as having completed delivery of the cargo otherwise than in accordance with the B/L.   The terms of the release note stated that discharge of the cargo should constitute its delivery: that is to say, it stated that MSC was not required to effect delivery of the cargo in the usual sense of the term, but that it fulfilled its delivery obligation by the unilateral act of discharging it.   There was no evidence that expressly or impliedly Glencore gave Steinweg actual authority to make such an agreement of its behalf or that it would be usual for an agent such as Steinweg to have authority to agree this for its principal or that by appointing Steinweg as its agents or that otherwise Glencore held Steinweg out as having such authority and so conferred apparent authority on Steinweg.   Indeed, no such suggestion was put to either Ms Soen or indeed to Mr Reynolds-Payne when they were cross-examined.    If it was outside Steinweg’s authority to agree to this term of the release note, it answers Mr Kulkarni’s variation argument: it could not be argued, and was not argued, that it accepted only the other terms of the release note that it had authority to accept.   An offer of the kind suggested could only be accepted in its entirety or not at all.  
32.	Mr Kulkarni submitted that there was no difference of any importance between the previous paper-based system used by MSC at Antwerp and the ERS: if Steinweg had authority to operate the old system, it must have had authority to agree to operate the ERS.   I am not impressed with that argument: I do not need to explore whether Steinweg had authority to operate the old system.   The simple answer is that the release notes under the old system, as it appears from those in evidence to which Mr Kulkarni referred, did not include a term that discharge of the cargo should constitute delivery.    
33.	This leaves MSC’s estoppel argument: to my mind it faces many of the same difficulties as MSC’s other submissions, and I propose to deal with it briefly.   MSC pleads an estoppel, which Mr Kulkarni submitted might be characterised as an estoppel by representation or an equitable estoppel, “from asserting that the delivery of the cargo upon presentation of a pin code was a breach of contract and/or duty by MSC”.     It argued that, since Glencore gave the appearance that it was content for the ERS to be used for the 69 previous comparable shipments, it is not open to it to complain that it was used for the three containers under the B/L.    But the pleaded estoppel does not assist MSC: Glencore does not complain that MSC acted in breach of contract by delivering the cargo on presentation of pin codes.   Its complaint is simply that it did not have the cargo delivered to it or its representative.   I can see no basis on which it could be said that Glencore represented, or so conducted itself as to let it be understood, that it was or would be content for the goods to be delivered to anyone who presented the correct pin code: still less did it make a sufficiently clear representation along these lines, or sufficiently indicate that it would be so content, as to give rise to an estoppel.    The estoppel arguments are also answered by my findings about the limited knowledge that Glencore had about the use of the ERS.      
34.	Finally, Mr Kulkarni made a submission about causation: that there is no evidence that the two containers would not have been misappropriated under the old paper based system, and so no evidence that the loss was caused by the use of the ERS.   I reject that argument: it seems to me most likely that the loss occurred after someone had learned of the codes and used them to steal the containers.   But Glencore’s case is not that it was a breach to use the ERS.   It is that, when presented with the B/L, MSC neither delivered the goods nor provided a Delivery Order.  The causation argument supposes that MSC could properly have provided in exchange for the B/L a release note that did not include an undertaking to deliver the goods to the person to whom it was addressed and so did not amount to a ship delivery order.   I have rejected that submission. 
35.	I therefore conclude that Glencore has established its claim in breach of contract and bailment, and is entitled to judgment accordingly.   I heard no separate argument no the conversion claim, and, in view of my other conclusions, I do not see that it adds anything.   But the parties may address me further about it if they so wish.