Case Summaries
London Arbitration 26/19
“Charterers made a deduction from hire on the grounds of an underperformance claim under a cp on a NYPE 1993 form. The Tribunal found that the deduction was unlawful as it constituted a breach of clause 46 of the cp, pursuant to which "Charterers are entitled to deduct from last sufficient hire payments only value of bunkers on redelivery...". Charterers' argument that the clause dealt only with bunkers adjustments but did not preclude equitable set-off of performance claims was rejected. In fact, it was held that the purpose of the clause was to protect Owners from possible iniquitous ad hoc deductions disguised as equitable set off and if Charterers had a performance claim, they should have claimed damages independently.”
Navalmar UK Ltd v Ergo Versicherung AG & Anor (BSLE SUNRISE) [2019]
“The Commercial Court held that the "actionable fault" defence under Rule D of the York Antwerp Rules is available to the issuer of a General Average guarantee in the standard wording approved by the Association of Average Adjusters and the Institute of London Underwriters. Under this form, the guarantor has the obligation to "... pay any contributions to General Average ... which may hereafter be ascertained to be properly due ...". The Court found that the word "due" means the same as legally owing or payable; but GA does not become owing or payable unless and until a court rules on the merits of a Rule D defence ("properly"). This conclusion was meant to be in accordance with the settled practice and understanding of the shipping industry such that only very clear wording could justify departing from it.”
Priyanka Shipping Ltd v Glory Bulk Carriers PTE Limited [2019]
“Following the sale of a Capesize bulk carrier for demolition only and despite their undertaking not to trade her further, buyers continued to trade the vessel sought the lifting of the covenant. Sellers rejected that request (as the purpose of the sale was to reduce oversupply in the market) and sued for compensation, including 'negotiating damages' being a sum of money as might reasonably have been demanded by them in exchange for permitting the continuation of the breach of the covenant. The Commercial Court rejected the claim, holding that the undertaking not to trade was akin to a non-compete obligation which did not fall within the category of cases where 'negotiating damages' were available as a measure of a sellers' loss.”
London Arbitration 22/19
“A charterparty for the carriage of logs contained a clause, 66, which made the tendering of NOR at loadport conditional on Owners' promise that "...the Vessel's holds will be clean, dry and free of cargo residues...". Upon arrival at loadport the vessel's holds were found to be infested and the authorities ordered fumigation. Although Owners contended that infestation was not contemplated by clause 66, the Tribunal held the NOR invalid as the presence of insects was in any event a breach of the duty under common law regarding the condition of the holds and the vessel was not ready until fumigation had been completed.”
Suez Fortune Investments Ltd & Anor v Talbot Underwriting Ltd & Ors (BRILLANTE VIRTUOSO) [2019]
“Owners and their co-insured Bank claimed on the war risk insurance following the boarding and setting on fire of the Vessel in the Gulf of Aden in 2011. The Court had struck out Owners' claim, for disobedience to a disclosure order. The Bank nonetheless continued, arguing that (even in the event of Owners' wilful default — as contended by insurers) it could rely on the insured perils. The Court found that the Vessel had indeed been scuttled and, as a result, "piracy" was unavailable, as objectively, the event was motivated by attempted fraud on insurers rather than fortuitous theft of the Vessel; "persons acting maliciously" did so in furtherance of the fraudulent plan rather than by spite or ill-will; the same applied to "malicious mischief'; senseless rather than orchestrated damage was required for "vandalism" and an intention to frustrate intended use of property for "sabotage". The Bank's claim therefore failed.”
Bilgent Shipping PTE Ltd & Anor v ADM International Sarl & Oldendorff Carriers GmbH & Co KG [2019]
“An amended Baltimore Form C Berth Grain CP provided in CI.14 that NOR to load "must be delivered ... between 0800 hours and 1700 hours ..Monday to Friday, between 0800 ... and 1100 ... on Saturday, ....Laytime is to commence 0800 hours the next working day...." and in CI.16 for a right to cancel should NOR "not be delivered as per Clause 14 by...noon on... [10th May]." NOR was tendered at 0704 on Sunday 10 May. On appeal from an arbitration, the Court upheld Charterers' cancellation, holding that NOR could not be served on a Sunday: terms identifying what is a valid NOR have a commercial purpose and to hold that an NOR could be valid for one purpose (laytime) but not another (cancelling) would create uncertainty in the face of the parties' attempt to create certainty.”