Maritime

Great Eastern Shipping v Far East Chartering [2011] EWHC 1372 (Comm)

Thu, 13 Oct 2011 09:28:34 GMT

In this case the shipowner was held entitled to enforce a letter of indemnity given to the voyage charterer by the receiver of cargo where the cargo had been delivered to the receiver on the charterer's instructions in the absence of presentation of the original bills of lading.

The court held that the letter had been issued to the charterer, the cargo had been "delivered" as required by the letter and no issue of public policy was involved.

As to public policy, the delivery of cargo without production of the bill of lading is a deliberate wrongdoing and thus, as a matter of public policy, a party was not entitled to be indemnified against it. However the judge held that this case was not a public policy case because none of the relevant acts could be fairly described as "manifestly unlawful or known to be unlawful by the parties..."

Though it was not relevant given the judge's other findings, the judge doubted whether owners also had a good claim under an alleged "unilateral contract" with the receiver, as they were not aware of the offer of indemnity at the time they delivered the cargo.

GARNAT TRADING & SHIPPING (SINGAPORE) PTE LTD & ANOR v BAOMINH INSURANCE CORPORATION [2011] EWCA Civ 773

Thu, 04 Aug 2011 16:23:52 GMT

The appellant insurer appealed against a decision that it was liable on an insurance policy in respect of a floating dock which was lost in the course of a voyage from Vladivostock to Vung Tau in Vietnam.

The towage plan for the voyage permitted towage in conditions up to sea force 5 with a maximum wave height of 3.5m. Pontoons were affixed to the dock for the voyage.

On the voyage the dock was caught by a tropical storm with waves up to 10 meters which unexpectedly changed direction. One of the pontoons broke free and damaged various ballast tanks. This in turn caused an ingress of sea water and eventually the dock had to be abandoned.

The owners of the dock claimed on their insurance (with the appellant insurer). The insurer rejected the claim on the grounds of non disclosure and breach of the warranty of seaworthiness.

The judge at first instance held that the insurer was liable to pay the owners’ claim. The insurer appealed. The Court of Appeal dismissed the appeal and held (among other things) that:

(1) There had been a fair presentation of the risk and thus the insurer bore the risk of the dock meeting a typhoon or storm with a sea force greater than 5 and wave heights greater than 3.5m.

(2) The adventure insured was one where it was contemplated by the parties that there would be a maximum wave height of 3.5m. Therefore the dock had to be fit in all respects to encounter the ordinary perils of the seas for a voyage where the maximum wave height would be 3.5m (i.e. the contemplated voyage for insurance purposes).

(3) The insurer had failed to show that the dock was unseaworthy by reason of the pontoon securing arrangements or otherwise.

Novasen SA v Alimenta SA [2011] EWHC 49 (Comm) 19/01/2011

Fri, 25 Feb 2011 00:13:23 GMT

Novasen (N) entered into a contract for the sale of a cargo of oils with Sogescol (S), on FOSFA terms and including a FOSFA arbitration clause. N failed to deliver the oil. Alimenta (A) claimed to be the undisclosed principal of S and thus entitled to enforce the contract. A commenced arbitration proceedings against N. The arbitrators found that there was a contractual relationship between A and N.

N appealed asserting want of jurisdiction. N argued (amongst other things) that the arbitrators did not have jurisdiction to decide on the issue given that when contracting with N, S had acted outside of the scope its authority as agent for A because it had agreed to a change in the contract price.

HHJ Mackie QC, sitting as a judge of the Commercial Court, dismissed the appeal. The judge considered the effect of the doctrine of separability of arbitration clauses (s. 7 of the Arbitration Act 1996) where one party acted as agent to an undisclosed principal. The judge decided that there was an arbitration agreement in existence between A, as the undisclosed principal, and N even though A’s agent S was said to have acted outside of the scope of its authority when agreeing a change in the contract price. Therefore whether S had acted within the scope of its authority was a question for the arbitrators. In coming to this decision the judge applied Fiona Trust v Privalov [2008] 1 Lloyd’s Rep 254.

Ispat Indurstries Ltd v Western Bulk PTE.Ltd [2011] EWHC 93 (Comm) 31/01/2011

Fri, 25 Feb 2011 00:12:13 GMT

A vessel was chartered by owners (O) to charterers (C). Shortly before the start of a particular fixture C cancelled the relevant fixture note because the intended cargo was unavailable at the loading port due to political unrest. O accepted C's cancellation as a repudiatory breach and indicated that they would be searching for alternative employment for the vessel.

As it was unable to find an alternative fixture before the end of the trip, O claimed damages for the hire it would have earned on the trip. O also obtained security for substantial sums against C in New York by way of a Rule B attachment. The attachment was vacated on the application of C and the funds released. The funds were later attached again and on a further application by C the second order was vacated. The judge granting the second vacation declared herself “awestruck” by O’s conduct.

A majority of the arbitrators held that O's claim succeeded and dismissed C’s counterclaim. They found that although the unrest entitled C not to fulfil the terms of the charterparty, as the charterparty was a time charter, C had also been obliged to find an alternative cargo and it had made no attempt to do so. Furthermore, suitable cargo had been available at the port some days later. The dissenting arbitrator considered that the evidence of a particular witness had been unreliable.

C applied to challenge an award of arbitrators in favour of O under the Arbitration Act 1996 s.68, because (inter alia) there had been a serious irregularity in that the tribunal had failed to address the dissenting arbitrator’s concerns. C also appealed against the award under the Arbitration Act 1996 s.69 arguing (inter alia) that O's New York security had been unreasonably obtained and so had breached the London arbitration clause in the charterparty.

The court found (inter alia) that:

(1) The majority's failure to address the dissenting arbitrator's concerns did not amount to an irregularity under s.68.

(2) Ancillary security applications did not breach arbitration clauses so long as there was no attempt to have the merits of the dispute heard by someone other than the agreed tribunal (see e.g. The Rena K [1978]).

Oceaneering International AG and Oceaneering International Services Limited for an order under section 27 of the Civil Jurisdiction and Judgments Act 1982 [2010] CSOH 161

Tue, 07 Dec 2010 23:01:43 GMT

The petitioners were Swiss and English Companies. The respondents were a company registered under the laws of Cyprus, who owned an offshore intervention vessel known as “Sarah”. In an action pending before the High Court of Justice in England, the petitioners were seeking payment from the respondents of more than $2 million, which was said to be overdue on invoices relative to an Agreement between the parties regarding the provision of remotely operated vehicle (“ROV”) equipment, systems and personnel to the respondent. The location under which the contract was to be performed was the “Sarah”.

Under section 27 of the Civil Jurisdiction and Judgments Act 1982, the petitioners had arrested the “Sarah” on dependence of their English action. The Outer House had granted an order for arrestment on 19 November 2010, and the “Sarah” was then duly arrested in Montrose where she lay.

In this action, the respondents enrolled a motion for recall of the arrestment and its underlying warrant. The parties were agreed that a ship could only be arrested on dependence of Scottish proceedings if the claim fell within the scope of one or more of the subparagraphs of section 47(2) of the Administration of Justice Act 1956. According to the petitioners, their claims fell within the scope of both subparagraphs (k) and (l) of section 47(2). These subsections related to (k) the supply of goods or materials to a ship for her operation or maintenance and (l) the construction, repair or equipment of any ship. The respondents disputed that the case came within either of these categories.

The respondents submitted that the parties’ agreement concerned the provision of services and materials to them, rather than to the vessel itself. The services and materials provided could not be said to have been necessary for the operation of the "Sarah". The respondents submitted that they could (in theory at least) have deployed the vessel without ROVs, and in any event, irrespective of their source, any ROVs would fall to be operated from the "Sarah" rather than as part of her operation. It was submitted that at best, the vessel might be described as "accommodating" equipment which would then be operated on its own account. The petitioners submitted that this approach was too narrow; the ROV equipment and relative services had been supplied for the “Sarah” and not for any other vessel. The petitioners also pointed out that her picture alone had appeared on the front cover of the parties’ agreement. It was submitted that, so far as the petitioners were aware, the “Sarah” was the respondents’ only vessel, and perhaps their only significant asset.

The court concluded that the respondents’ claim for recall of the arrestment and underlying warrant was not well-founded. Noting that the "Sarah" was the only vessel remotely connected with the parties' agreement, the court observed that she was also the point of delivery of all of the equipment and services to which the contract related. The court concluded that the contract was vessel specific, and was not persuaded that it would be unreasonable to describe the relevant supplies as having been made “to” the “Sarah”, thereby bringing the claim within the scope of subsection s47(2)(k). Distinguishing The ‘River Rima’ 1988 2 Ll 193, the court noted this was not merely a form of cargo: rather, the installation, maintenance and operation of the ROV equipment and associated systems on board the “Sarah” could properly be viewed as enhancing her operational capabilities. Respondents’ motion refused; petitioners awarded expenses.

Glory Wealth Shipping Pte Ltd v North China Shipping Ltd & Anor, [2010] EWHC 1692 (Comm), 08/07/2010

Wed, 08 Sep 2010 21:23:36 GMT

Events occurring after early re-delivery of a vessel and the assessment of damages

Omak Maritime Ltd v Mamola Challenger Shipping Co & Ors, [2010] EWHC 2026 (Comm), 04/08/2010

Wed, 08 Sep 2010 21:03:00 GMT

Reliance damages were limited by reference to the position the claimant would have been in if the contract had been performed

SLYVIA SHIPPING CO LTD V PROGRESS BULK CARRIERS LTD (2010), [2010] EWHC 542 (Comm)

Thu, 06 May 2010 19:51:01 GMT

Damages for breach of a time charter for loss of a subsequent fixture were recoverable where they were not too remote (The Achilleas distinguished)

P time chartered a bulk carrier from S. The vessel was detained at Canada following inspection for repairs to the structure of her holds. P had previously entered into a sub-charter for a voyage from Canada which it lost as a result of its detention. P entered into a substitute fixture which was less profitable. It claimed its loss of profit from S on the basis that S had failed to exercise due diligence and had breached its maintenance obligations under the charter.

The matter proceeded to arbitration. The Tribunal found that S had failed to exercise due diligence and had breached the charter. As to the assessment of damages, they found S liable to pay P’s loss of profit on the lost charter, giving credit for the profit made on the substitute fixture.

S appealed to the High Court. It argued that damages for the loss of the sub-charter were too remote in law, relying, inter alia, on The Achilleas [2008] UKHL 48. The appeal was refused. The Court reaffirmed that the standard test for remoteness applied, that is whether the loss claimed was of a kind which would have been within the reasonable contemplation of the parties at the time that the contract was made as being a not unlikely consequence. The Achilleas was found to apply to unusual circumstances such as where there was a general understanding in the market. The Achilleas was therefore distinguished. The Court found that the Tribunal had not erred in law in holding that the loss was not too remote and dismissed the appeal.

DALWOOD MARINE CO V NORDANA LINE AS (2009), [2009] EWHC 3394 (Comm)

Thu, 04 Feb 2010 16:22:34 GMT

Reducing damages for wrongful premature termination of a time charter to take into account benefits enjoyed by the Owners after the notional date on which the Vessel would (but for the breach) have been re-delivered

N time chartered a vessel from D. N redelivered the Vessel prematurely. Faced with no available market, D ordered the Vessel to another location, dry-docked her then delivered her to another charterer. The Vessel earned a significantly higher rate under this subsequent charter. The Tribunal took into account the reality of the Vessel’s subsequent employment when assessing D’s loss. D appealed, arguing that the Tribunal had erred in taking into account earnings of the Vessel after the date on which she would have been notionally redelivered under the charter.

The High Court dismissed the appeal. The Court held that in principle D was entitled to the benefit of the contractual right he had lost. Prima facie this was the hire that would have been earned less the hire actually earned for the period between the date of premature termination by N and when contractual redelivery would have taken place. Notwithstanding this, where an owner enjoyed a benefit from a substitute voyage which they would not have achieved but for the wrongful repudiation of charter, this may be taken into account when assessing damages.

Soufflet Negoce v Bunge SA [2009] EWHC 2454 (Comm) (13 October 2009)

Mon, 02 Nov 2009 11:53:49 GMT

‘Readiness’ required under an FOB contract on GAFTA Form 49 was not equivalent to that required for a shipowner’s Notice of Readiness and a Seller was obliged to load despite concerns that the holds were unclean

Gold Shipping Navigation Co SA v Lulu Maritime Ltd [2009] EWHC 1365 (Admlty) (18 June 2009)

Wed, 19 Aug 2009 18:55:15 GMT

Collision action limitation periods & counterclaims

L’s ship collided with G’s in the Suez Canel, whereupon G’s sank. Both parties wished to make claims against each other. The limitation period for such a claim is provided as being 2 years by section 190(3) of the Merchant Shipping Act 1995. Following a mutually agreed extension of time, G issued proceedings. L in turn issued a counterclaim, but G took the point that L’s counterclaim was out of time.

The court found that the limitation period in s190(3) of the Merchant Shipping Act 1995 did apply to counterclaims. However, in the circumstances, the Court granted L’s application for an extension of time.

F G Hawkes (Western) Ltd v Beli Shipping Co Ltd [2009] EWHC 1740 (Comm) (17 July 2009)

Wed, 19 Aug 2009 18:53:53 GMT

Extension of time for service of a claim form

In the usual way H had 6 months to serve a claim form out of the jurisdiction on B. 1 week before the end of this period, H applied ex parte for an extension of time which was granted. H then duly served the claim form on B. B applied to set aside the order extending time, an application which would have significant ramifications for H given that limitation had expired.

B succeeded on its application. The core factor influencing the Court’s decision was H’s inactivity during the original 6 month period: for 5 months H took no substantial steps to carry out service. The Court found that it was incumbent upon H to take reasonable steps and that it had failed to do so. The Court therefore exercised its discretion to set aside the extension of time.

Lansat Shipping Co Ltd v Glencore Grain BV [2009] EWHC 551 (Comm) (25 March 2009)

Wed, 25 Mar 2009 13:55:00 GMT

Time charter damages

L let its Vessel to G on an NYPE time charter for “about minimum 3 months to about 5 months (about means +/- 15 days)”. G redelivered the Vessel 6.166 days late. G paid hire to L for the duration of the charter (at the charter rate), together with the market rate for the 6.166 days of overrun.

L claimed further hire pursuant to Clause 101 of the charter which provided:

“The Charterers hereby undertake the obligation/responsibility to make
thorough investigations and every arrangement in order to ensure that the
last voyage of this Charter will in no way exceed the maximum period under
this Charter Party. If, however, Charterers fail to comply with this
obligation and the last voyage will exceed the maximum period, should the
market rise above the Charter Party rate in the meantime, it is hereby agreed
that the charter hire will be adjusted to reflect the prevailing market level
from the 30th day prior to the maximum period [d]ate until actual redelivery
of the vessel to the Owners.”

L therefore claimed an additional US$471,603.32 in an LMAA arbitration. The Tribunal found as a preliminary issue that Clause 101 was a penalty clause as it was not a genuine pre-estimate of damages.

L appealed unsuccessfully to the High Court. The Court reaffirmed the understanding of illegitimate last orders as discussed by Rix LJ when The Achilleas was at the Court of Appeal stage ([2007] EWCA Civ 901). The Court found, inter alia, that if the Owner chose to accept the last order, its recoverable loss was the market rate for the Vessel for the period of overrun. L had not lost the chance of an earlier redelivery, rather it had chosen not to take that chance and Clause 101 could therefore not be a genuine pre-estimate of damages as it amounted to damages for a loss which L did not suffer.

West Tankers Incorporated v AS Riunione Adriatica di Sicurtà SpA (“The Front Comor”) (2007) UKHL 4; Allianz SpA (formerly AS Riunione Adriatica di Sicurtà SpA) v West Tankers Inc, ECJ C-185/07

Tue, 10 Feb 2009 00:00:00 GMT

Anti-suit injunctions

On 10 February 2009 the European Court of Justice answered a question posed by the House of Lords:
‘Is it consistent with Regulation No 44/2001 for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings in another Member State on the ground that such proceedings are in breach of an arbitration agreement?’

The ECJ, following the Advocate General’s advisory opinion, ruled that an anti-suit injunction, such as the one in the instant proceedings, was incompatible with Regulation No 44/2001.

Pratt v Aigaion Insurance Company SA [2008] EWCA Civ 1314 (27 November 2008)

Thu, 27 Nov 2008 00:00:00 GMT

Marine Insurance A trawler caught fire whilst in port. All the crew were ashore at the relevant time. The trawler owner (C) claimed on his insurance with the defendant (D). Under that policy, C warranted that there would be a “Warranted Owner and/or Owner’s experienced skipper on board and in charge at all times and one experienced crew member”. D argued that C could not recover under the policy by reason of breach of warranty as the required personnel were not onboard the trawler at the relevant time. The trial judge, considering the natural meaning of the words of the warranty, agreed. The Court of Appeal disagreed and allowed C’s appeal. In doing so, they interpreted the warranty looking at its underlying purpose: to protect the vessel in circumstances in which the crew (i.e. the skipper and one other) could be expected to be onboard, that is such as when the vessel is being navigated. The Court of Appeal therefore qualified the warranted “at all times” and found there was no breach of warranty.

Club Cruise Entertainment & Travelling Services Europe BV v Department for Transport [2008] EWHC 2794 (Comm)

Tue, 18 Nov 2008 00:00:00 GMT

Notices of Detention A cruise ship suffered from outbreaks of gastrointestinal virus. A surveyor acting ultimately on behalf of the defendant (D) issued notices prohibiting the ship from putting back to sea as being dangerously unsafe within the meaning of the Merchant Shipping Act 1995. The claimant (C) owner of the ship claimed damages, arguing inter alia that the detention was invalid and that it amounted to the tort of conversion. Certain preliminary issues fell to be determined by the Court. In particular, the Court decided that technical defects in a notice of detention did not render the exercise of the power to detain invalid if that exercise was otherwise valid. However, the Court found that the presence of the gastrointestinal virus was insufficient to render the ship “dangerously unsafe”. As for C’s claim for conversion, the Court held that D’s actions did not amount to the same given that C had remained in possession of the ship throughout and had merely been prevented from using the ship in a particular way for a short time.

Statoil ASA v Louis Dreyfus Energy Services LP [2008] EWHC 2257 (Comm) (29 September 2008)

Mon, 29 Sep 2008 00:00:00 GMT

Unilateral mistake: The Claimant/Seller (S) chartered a vessel to carry cargo from Norway to Mexico for delivery to the Defendant/Buyer (L). S received a demurrage claim from the vessel’s owners and in turn calculated a demurrage claim which it sent to L. S made a mistake in its calculations with the result that it claimed a lower amount from L than it intended to. L noticed the mistake but did not tell S. S and L reached an agreement on the demurrage claim based on these erroneous calculations. S later realised its error and sought to claim the balance of demurrage from L. The Court held that S could recover the balance of the demurrage on the particular facts of the case: there had been a second settlement agreement, superseding the first, under which L agreed to pay the demurrage claim in full. However, the point of principle arising from the case concerns the first settlement agreement. The Court considered whether it had equitable jurisdiction to grant rescission of a contract in circumstances where there was a unilateral mistake as to fact or state of affairs that was the basis upon which the terms of the contract were agreed, but where that assumption did not itself become a term of the contract. The Court decided that it did not have jurisdiction. Therefore, if it had not been for the second agreement, S would have been limited to the amount recovered under the first agreement with L, despite L entering into that agreement knowing that S had made a mistake in its calculations.

Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2008] EWHC 1875 (Comm) (01 August 2008) [2008] EWHC 1875 (Comm)

Fri, 01 Aug 2008 00:00:00 GMT

Implied duty to nominate a safe berth? Defendants (“Charterers”) chartered a vessel (“the Vessel”) from the Claimant (“Owners”) on a Gencon form voyage charterparty (“the Charterparty”). The Charterparty was a berth charter. Charterers nominated a berth in the specifically named loading port (Chekka) where the vessel suffered damage by contact with an underwater projection. The matter came before Aikens J by way of a section 69 Arbitration Act 1996 appeal from the decision of a distinguished tribunal. The issue, as formulated by Aikens J, was ‘if a specific load port is named in a voyage charterparty and there are several possible berths within that port to which a vessel could be directed to load by the charterers and there is no express warranty in the charterparty of the “safety” of either the port or the berth to which the vessel is to be directed by the charterers, is the charterparty subject to an implied term that the charterers must nominate a “safe” berth at that load port?’ [per Aikens J at para 8] The Court applied the standard test for implication of a duty, asking whether such a duty was necessary or was required to give the Charterparty business efficacy. Aikens J held that in the circumstances there was no implied warranty of the safety of the berth at Chekka as nominated by the Charterers. Rather the only obligation upon the Charterers was that they could not nominate an “impossible” berth, that is one at which a vessel of the Vessel’s salt water draft could not lie afloat at.

Transfield Shipping Inc (Appellants) v Mercator Shipping Inc (Respondents), [2008] UKHL 48

Wed, 09 Jul 2008 08:11:00 GMT

The Achilleas is a single-decker bulk carrier. By a time charter dated January 2003, the owners let her to the charterers for five to seven months at a daily hire rate of US$13,500 and then again in September 2003 for a further five to seven months at a daily rate of US$16,750. The latest date for redelivery was 2 May 2004.

By April 2004, market rates had more than doubled compared with the previous September. On 20 April 2004 the charterers gave notice of redelivery between 30 April and 2 May 2004. On the following day, the owners fixed the vessel for a new four to six month hire to another charterer, following on from the current charter, at a daily rate of US$39,500. The latest date for delivery to the new charterers, after which they were entitled to cancel, was 8 May 2004.

With less than a fortnight of the charter to run, the charterers fixed the vessel under a subcharter to carry coals from China to discharge at two ports in Japan. If this voyage could not reasonably have been expected to allow redelivery by 2 May 2004, the owners could probably have refused to perform it but they made no objection. The vessel was delayed and was not redelivered to the owners until 11 May.

By 5 May it had become clear to everyone that the vessel would not be available to the new charterers before the cancelling date of 8 May. By that time, rates had fallen again. In return for an extension of the cancellation date to 11 May, the owners agreed to reduce the rate of hire for the new fixture to $31,500 a day.

The owners claimed damages for the loss of the difference between the original rate and the reduced rate over the period of the fixture. The charterers said that the owners were not entitled to damages calculated by reference to their dealings with the new charterers and that they were entitled only to the difference between the market rate and the charter rate for the nine days during which they were deprived of the use of the ship. The difference between these two bases was approximately $1.2m.

The arbitrators, by a majority, found for the owners. They said that the loss on the new fixture fell within the first rule in Hadley v Baxendale (1854), as arising “naturally, ie according to the usual course of things, from such breach of contract itself". It fell within that rule because it was damage “of a kind which the [charterer], when he made the contract, ought to have realised was not unlikely to result from a breach of contract [by delay in redelivery]".

The dissenting arbitrator did not deny that a charterer would have known that the owners would very likely enter into a following fixture during the course of the charter and that late delivery might cause them to lose it. But he said that a reasonable man in the position of the charterers would not have understood that he was assuming liability for the risk of the type of loss in question. The general understanding in the shipping market was that liability was restricted to the difference between the market rate and the charter rate for the overrun period and “any departure from this rule [is] likely to give rise to a real risk of serious commercial uncertainty which the industry as a whole would regard as undesirable.”

The majority arbitrators, in their turn, did not deny that the general understanding in the industry was that liability was so limited. But the majority said that this was irrelevant. A broker “in a commercial situation” would have said that the “not unlikely” results arising from late delivery would include missing dates for a subsequent fixture, a dry docking or the sale of the vessel. Therefore, as a matter of law, damages for loss of these types was recoverable. The understanding of shipping lawyers was wrong.

The Court of Appeal upheld the majority decision.

The case therefore raises a fundamental point of principle in the law of contractual damages:

“is the rule that a party may recover losses which were foreseeable (“not unlikely”) an external rule of law, imposed upon the parties to every contract in default of express provision to the contrary, or is it a prima facie assumption about what the parties may be taken to have intended, no doubt applicable in the great majority of cases but capable of rebuttal in cases in which the context, surrounding circumstances or general understanding in the relevant market shows that a party would not reasonably have been regarded as assuming responsibility for such losses?”

The House of Lords held that the findings of the arbitrators and the commercial background to the agreement were sufficient to make it clear that the charterer could not reasonably be regarded as having assumed the risk of the owner’s loss of profit on the following charter. The majority arbitrators’ decision was based on an error of law and that the view of this case that was taken by the minority arbitrator was right. The appeal was allowed.

Transfield Shipping Inc v Mercator Shipping Inc [2008] UKHL 48 (9 July 2008) [2008] UKHL 48; [2008] 3 WLR 345

Wed, 09 Jul 2008 00:00:00 GMT

The charterer (T), having notified the owner (M) that the vessel would be re-delivered by the end of the charter period, re-delivered the vessel 9 days late. M, acting on the notification, had previously fixed the vessel for a subsequent charter at US$39,500 per day hire. As a result of T’s late re-delivery, M was unable to fulfil this obligation. In the interim, there was a sharp deterioration in the market and the proposed subsequent charterers only agreed to take the vessel with hire reduced to US$31,500 per day. The key issue between the parties was the measure of damages: whether T had to pay only for the use of the vessel for the 9 extra days at the prevailing market rate, or whether T had to pay the difference between what M in fact earned on the subsequent charter and what they would have done had the vessel been re-delivered in accordance with the terms of the charter. The arbitrators decided that damages ought to be calculated on the latter of these two bases, finding that the loss fell within the first limb of the Hadley v Baxendale rule. The Court of Appeal rejected T’s appeal ([2007] EWCA Civ 901). On appeal to the House of Lords, T succeeded. Their Lordships considered the proper measure of damages and the application of the foreseeability test, finding that the extraordinary loss flowing from a relatively short delay in re-delivery was not foreseeable. This decision, whilst not preventing the recovery of losses arising out of subsequent charters, perhaps heralds a more restrictive regime as to the measure of damages in this sphere.

Golden Fleece Maritime Inc & Anor v ST Shipping and Transport Inc [2008] EWCA Civ 584 (23 May 2008)

Fri, 23 May 2008 00:00:00 GMT

This was an appeal by Shipowners. At first instance the Shipowners were found to be in breach of charterparty in circumstances where a change in international regulations (MARPOL) resulted in the inability of the chartered vessels to trade certain cargos to certain ports because they were not fully double-sided as required by the new regulations ([2007] EWHC 1890 (Comm); [2008] 1 All ER (Comm) 4979). The Shipowners’ appeal was unsuccessful. The Court of Appeal held that there was no established principle of law that terms of a charter concerning cargoworthiness or seaworthiness only related to the physical condition of the vessel as opposed to its legal fitness. Rather the matter was to be determined by construction of the individual charter concerned. On a construction of the relevant charter, the Shipowners had warranted that the vessel was (and would remain) eligible to trade under applicable conventions, laws and regulations.

Antiparos ENE v SK Shipping Co Ltd & Ors [2008] EWHC 1139 (Comm) (23 May 2008) [2008] EWHC 1139 (Comm); (2008) 158 N.L.

Fri, 23 May 2008 00:00:00 GMT

The claimant Shipowner sought to recover increased bunkering costs caused by the defendant Charterers’ change of loading port. The relevant charter was on the Asbatankvoy form. The Court held that clause 4(c) of the Asbatankvoy form did not confer a right on Charterers to re-nominate load and discharge ports. Further clause 4(c) required Charterers to meet additional expenses caused by a change in nomination and this was not restricted to expenses arising by way of deviation. The proper assessment was to compare the expenses actually incurred with those that would have been incurred without the change of nomination. Accordingly the claimant Shipowner was entitled to recover its increased bunkering costs.

Tsavliris Salvage (International) Ltd v The Grain Board of Iraq [2008] EWHC 612 (Comm) (01 April 2008)

Tue, 01 Apr 2008 00:00:00 GMT

A vessel on its way to Iraq carrying a cargo of wheat ran aground. The vessel’s owners entered into a salvage agreement with Tsavliris Salvage (International) [T] which purported to also be on behalf of the cargo’s owners. The vessel was successfully salved and T sought to recover sums from the Grain Board of Iraq [GBI], which they understood was the owner of the cargo. At arbitration, the arbitrator found in favour of T, holding that GBI owned the cargo, was a party to the salvage agreement and was not entitled to state immunity. GBI appealed under s67 of the Arbitration Act 1996, arguing that that the cargo was owned by the government of Iraq and that GBI, as part of the Ministry of Trade of Iraq, was immune from proceedings by virtue of the State Immunity Act 1978. GBI further asserted that it was not a party to the salvage agreement. Gross J held that GBI was the owner of the cargo, was a party to the salvage agreement and was not immune from proceedings. The matter turned on a detailed exploration of the provisions of the State Immunity Act 1978 and their operation in the context of shipping. The case also examines the regime under the International Convention on Salvage 1989.