The Respondent in Pace Shipping Co Ltd of Malta v Churchgate Nigeria Ltd of Nigeria [2010] EWHC 2828 (Comm) had brought a cargo claim in arbitration against the Appellant under s.2(1) Carriage of Goods by Sea Act 1992 (“CoGSA”). The Appellant had requested a declaration of nonliability from the tribunal, on the basis that the Respondent had no title to sue, as it had no title to the cargo.

After a lengthy arbitration history (summarised in the judgment of Burton J, available on LexisNexis), the case came before the High Court by way of an appeal under s.69 Arbitration Act 1996. The central dispute before the court was whether CoGSA gives rise to different causes of action according to whether or not the holder of the bill of lading has suffered loss, and whether in this case it was necessary for the Respondent to plead a separate cause of action in relation to s.2(4) CoGSA (i.e. one which arises specifically for parties with an interest in the goods who were not holders of the bill of lading).

The fundamental question for the court to consider was whether s.2(4) creates a separate cause of action “in the sense that the claimant, under the bill of lading, who has suffered no loss in the circumstances when s.2(4) is triggered because of not having been, or no longer being, the owner of the goods, is entitled, pursuant to s.2(4), to exercise those rights [being the rights under s.2(1)] for the benefit of the person who sustained the loss or damage to the same extent as they could have been exercised if they had been vested in the person for whose benefit they are exercised”.

Burton J dismissed the appeal, holding that on a proper construction of s.2(4), the Defendant was pursuing its own cause of action. In the event that it lost on the issue of original ownership of the goods (which it did in this case), it was entitled, albeit having suffered no loss, to recover, pursuant to its own cause of action, the loss suffered by the owner of the cargo and, in due course, to account for it. The judge also noted that a case brought under s.2(4) of CoGSA had to be properly particularised in order for the opposing party to be able to raise the relevant defences.