This is an appeal from an arbitration award. The issue of law concerns the true construction of cl 8(d) of the Inter-Club Agreement 1996 (ICA). Specifically, the issue is whether the term 'act' in the phrase 'act or neglect' means a culpable act in the sense of fault; or whether it means any act, whether culpable or not, which is what the arbitration tribunal found.

The charterers appealed, arguing that the phrase 'act or neglect' must be read as a whole, that 'neglect' means a culpable failure to do that which ought to have been done and that the coupling of 'act' with 'neglect' shows that the two words have an equivalent or complementary meaning, so that 'act' means fault by commission and 'neglect' means fault by omission.

Held: Appeal dismissed.

The Judge found that, just as there can be contexts where in the phrase 'act or neglect' the meaning of 'act' will take its colour from 'neglect', there can equally be contexts where the meaning of 'act' will not take its meaning from 'neglect' but can mean any act whether or not culpable. Thus in The Fiona [1993] 1 Lloyd's Rep 257, 268-9 the Court had to construe the phrase 'act, fault or neglect' in art 4.3 of the Hague Rules. HHJ Diamond QC said that 'the shipment of dangerous goods is clearly an act of the shipper whether or not it is due to any fault of neglect on his part ... I do not consider that the word "act" in art IV r.3 can properly be disregarded or be treated as synonymous with fault or neglect'. This approach was followed by the Court of Appeal in The Giannis NK [1996] 1 Lloyd's Rep 579, 582 where Hirst LJ adopted 'Judge Diamond's construction of the word "act" ... thus giving the word its natural and ordinary meaning, which would include the very act of shipment itself'. (The case went to the House of Lords but it was there held that this question did not arise for decision, see [1998] 1 Lloyd's Rep 337, 343, and Lord Lloyd preferred not to express a view on the question.)

The meaning of 'act or neglect' in cl 8(d) of the ICA 1996 must depend upon its context and it must be construed having regard to the language of the ICA as a whole. The context is that cl 8(d) is part of the ICA 1996 which seeks to apportion claims between owners and charterers in a broadly mechanical manner having regard to the cause of a cargo claim and without having regard to the terms which would otherwise govern the relationship between the owners and charterers. Given that context, the word 'act' would reasonably be understood to bear its ordinary and natural meaning of any act without regard to questions of fault.