Laemthong International Lines Co Ltd v Artis (The Laemthong Glory) (No. 2) [2005] EWCA Civ 519
Facts
Cargo was delivered without production of the bills of lading against letters of indemnity given within a chain involving the receivers, charterers and shipowners. A person claiming entitlement to the cargo subsequently asserted rights, exposing the owners to liability and proceedings against the vessel. The owners sought protection under the receivers' indemnity, although they were not its immediate contracting recipients. The relevant wording extended protection to the charterers and their agents. The dispute concerned whether that description included the owners and whether the Contracts (Rights of Third Parties) Act 1999 allowed them to enforce the promise.
Legal Issue
Could the shipowners enforce the receivers' indemnity as identified beneficiaries under the Contracts (Rights of Third Parties) Act 1999 despite not being its immediate contracting parties?
Held
The Court of Appeal upheld the shipowners' right to enforce the receivers' letter of indemnity under the Contracts (Rights of Third Parties) Act 1999. In context, the promised protection extended to delivery performed through the owners as the charterers' agents. That description was capable of identifying the owners as beneficiaries even though they were not named individually. The terms purported to confer a benefit on them, and the construction of the agreement did not displace the resulting statutory route to enforcement. The decision did not create third-party rights merely from commercial involvement in a chain of transactions. Identification, the relevant benefit and the parties' contractual intention each required analysis.
⭐ Legal Principle
Under the Contracts (Rights of Third Parties) Act 1999, a beneficiary may be identified by a contractual class or description rather than name. A term purporting to confer a benefit is enforceable subject to the statutory qualification concerning the parties' contrary intention on proper construction.
Significance
Laemthong Glory provides a concrete example of the 1999 Act working through shipping indemnities and contractual descriptions. It is useful with Dolphin Maritime, where a payment mechanism did not necessarily confer the asserted benefit on an intermediary. The comparison guards against assuming that anyone affected by performance can sue. In a problem, identify the precise promise, the person or class intended to benefit and any wording excluding enforcement, then address how that right operates within the contractual chain.
Common exam questions about this case
Why did the owners not need to be individually named?
The Act permits identification by a class or description. The contractual references to agents, understood in the delivery arrangement, included the owners performing delivery through the charterers' arrangements. That satisfied the identification question without requiring their company name in every relevant clause.
Was participation in the shipping transaction enough by itself?
No. The owners relied on the terms of the indemnity and the benefit those terms conferred on an identified class. Commercial involvement alone does not create a statutory right. The promise, description and proper construction of the agreement must support enforcement.
How can the parties exclude a third party's enforcement right?
The statutory benefit route is subject to the agreement's proper construction, including whether the parties intended that the third party should not enforce it. Clear exclusion wording may therefore matter. The inquiry remains contractual and statutory, rather than an automatic right whenever performance happens to help someone.