The background of the case is as follows: Ythan limited or 'Ythan' as called here are ship owners who claimed damages through this case against bills of holder Primetrade after the ship/vessel was lost. The loss of the vessel has been allegedly due to shipping of dangerous cargo that is a breach or violation of contract signed by the lading holders Primetrade against a dangerous cargo warranty. The vessel was chartered under contract of affreightment by Primetrade to charterers Phoenix Bulk Carriers Ltd referred as Phoenix and thus two sets of bills were issued via contractual incorporation.
The cargo was shipped by Orinoco Iron CA also known as Orinoco and they agreed to sell the cargo to Primetrade. Primetrade sold the cargo to Orient Prosperity or Orient in Jingtang China. The cargo was insured through insurance brokers Marsh and McLennan group (Marsh) and was financed through bankers UBS with a credit agreement governed by Swiss law. Orinoco then presented shipping documents to bank for payment and the bank forwarded the documents to UBS. The vessel however was lost at this point and Primetrade and Orient agreed to cancel the on-sale contract and letters of credit and Primetrade sought to make a claim on insurance policy for loss of cargo.
The loss of vessel occurred as on February 28, 2004 a disastrous explosion occurred on board the bulk carrier or vessel the Ythan which resulted in death of crew and the cargo of 33, 760 MT was also completely lost. It was shipped from Venezuela for discharge at Jingtang Port, China. The shippers were Orinoco and they were to sell to Primetrade, a Swiss company and they wanted to sell the same quantity of the commodity to Orient Prosperity to China, so the contract showed end user in China. There was a settlement that Primetrade would be paid with release of the bills despite discrepancies in the documents. Primetrade complied with duty of contracts, and secured rights against time limitations and placed shipowners on notice for losses and consequences of casualty. The dispute on payment of bills and claim for losses were referred before arbitrators in London judiciary. The arbitration held that Primetrade were holders of the bills for a short time until the insurance claim was paid. Primetrade made a claim due to threat of arrest and also appealed to the decision of arbitrators bringing forth new evidence and objections for appeals. The new objection and evidence as also the question whether Primetrade was the holder of bills were as important as Primetrade's claim under contract of carriage against carrier.
The explosion and loss of cargo on board made it possible for the owners to appeal under section 67 of