Awilco A/S v Fulvia SpA di Navigazione, The Chikuma
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Lord Simon of Glaisdale,Lord Edmund-Davies,Lord Scarman,Lord Bridge |
| Judgment Date | 19 February 1981 |
| Judgment citation (vLex) | [1981] UKHL J0219-2 |
| Date | 19 February 1981 |
| Court | House of Lords |
[1981] UKHL J0219-2
Lord Diplock
Lord Simon of Glaisdale
Lord Edmund-Davies
Lord Scarman
Lord Bridge of Harwich
House of Lords
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Bridge of Harwich. For the reasons he has given I too would allow the appeal.
My Lords,
I have had the privilege of reading in draft the speech prepared by my noble and learned friend Lord Bridge of Harwich. For the reasons he has given I too would allow the appeal.
My Lords,
I am in respectful agreement with the reasons advanced in the speech prepared by my noble and learned friend. Lord Bridge of Harwich, for concluding that this appeal should be allowed.
My Lords,
I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend Lord Bridge of Harwich.
For the reasons he gives I would allow the appeal.
My Lords,
This appeal arises from a dispute under the terms of a time charterparty in the New York Produce Exchange form to which at the material time the appellants ("the Owners") were parties as owners of the vessel "Chikuma" and the respondents ("the Charterers") as charterers. By clause 5 of the charterparty payment of the hire was "to be made …. in cash in United States currency, monthly in advance …. otherwise failing the punctual and regular payment of the hire …. the Owners shall be at liberty to withdraw the vessel from the service of the Charterers … .". An addendum to the charterparty provided for all freights to be paid to the Owners' agents "care of Istituto Bancario San Paolo di Torino—Sede di Genova" ("the Owners' bank").
On January 24th 1976 the Owners withdrew the vessel from the service of the Charterers on the ground that they had failed to pay the monthly instalment of hire due on January 22nd. The Charterers disputed the alleged failure and in due course claimed damages for wrongful withdrawal of the ship. This claim was referred to arbitration by Mr. Donald Davies as sole arbitrator. On a preliminary issue he was requested by the parties and agreed to state an interim award in the form of a special case on the assumption that a monthly instalment of hire fell due on or before January 22nd 1976 in the sum of $68,863·84 (the amount of which was at one time, but may well now no longer be, in issue).
Having set out his findings of primary fact, the arbitrator held that the Charterers had paid the appropriate sum on the due date in accordance with the contract and that the Owners were accordingly not entitled to withdraw the vessel when they did. This conclusion was reversed by Robert Goff J. His decision is reported at (1979] 1 Lloyd's Law Reports 367. On appeal by the Charterers, the Court of Appeal (Lord Denning M.R., Waller and Dunn, L.JJ.) unanimously restored the decision of the arbitrator. The Owners now appeal to your Lordships' House.
Before January 1976, monthly payments of hire had always been made punctually by credit transfer to the Owners' bank. On January 21st 1976, the Charterers instructed their Norwegian bank to make the required payment by credit transfer. On Thursday, January 22nd, at 11.41 a.m., on instructions from the Norwegian bank, Credito Italiano, Genoa sent a telex to the Owners' bank to the following effect:—
"PAY WITHOUT EXPENSES FOR US
USA $68,863·84
[BY] ORDER CHRISTIANIA BANK O.G. KREDIETKASSE OSLO
FOR ACCOUNT A.S. AWILCO
IN FAVOUR S.A.S.D.A. S.P.A. ACCOUNT 16020 C/O
YOURGOODSELVES
RE: CHIKUMA STOP
[WE] TELECOVER YOU VALUE 26 THROUGH CHASE
MANHATTAN BANK NEW YORK ACCOUNT YOURS OF TURIN STOP".
This text is a translation from the original Italian of the telex but I have added in square brackets words which, it was agreed at the hearing of the appeal, produce a more accurate version than the English text used in the courts below, though I think nothing turns on this. I should add that this telex was not exhibited to the special case by the arbitrator, but it was agreed between the parties at the hearing before Robert Goff J. that it should be treated as an exhibit. This was eminently sensible, for without seeing the telex it would be difficult to understand the arbitrator's crucial findings of fact which are set out in the following two paragraphs:—
"4. By a telex message of 1141 on Thursday, January 22, there was a credit transfer to the Owners' bank of U.S. dollars 68,863,84 representing the 81st payment of hire. At about noon on the same day the said credit transfer became irrevocable under Italian banking law and practice and the funds representing the 81st payment of hire became available to the Owners' bank for payment to the Owners although interest on those funds would not begin to run in favour of the Owners' bank until Monday, January 26.
5. On January 22, 1976, the Owners' bank credited the Owners' account with U.S. dollars 68,863,84 (representing the 81st payment of hire) and, under Italian banking law and practice, the Owners had the immediate use of the said sum even though interest on the sum would not begin to run in favour of the Owners until Monday, January 26. If the Owners had withdrawn the said sum from their bank on January 22 (which was not the case although they had the right so to do) they would probably have incurred a liability to their bank to pay interest on the sum until January 26."
It is further found that on the Owners' instructions, the Owners' bank recredited the amount of the transfer to Credito Italiano on January 23rd.
At the conclusion of his findings of fact, the arbitrator posed the question of law for the decision of the court (on the assumption to which I have referred earlier) in the following terms:—
"Whether the Respondent Owners were entitled to withdraw the vessel on Saturday 24th January 1976 under Clause 5 of the charter-party dated 18th December 1968."
Under the heading "AWARD", the arbitrator wrote:—
"Subject to the decision of the Court, I HOLD that:—
1. There was a payment to the Owners, by the Charterers, of U.S. dollars 68,863·84, on Thursday, January 22, 1976.
2. On the assumption that hire in the above sum was due on January 22 the Owners were not entitled to withdraw the vessel on Saturday, January 24, 1976, under Clause 5 of the Charterparty."
I have set out these extracts from the special case at some length in order to point to the conclusion, which seems to me inevitable, that the arbitrator was treating the question he had to resolve, having found the relevant primary facts, as a pure question of law depending on the true construction of the contractual provision applicable. What he held in setting out his award did not purport to be other than a conclusion of law and, in particular, there is no indication in the case that, either on the basis of expert evidence or by applying his own knowledge as a very experienced commercial arbitrator, he was attaching to any of the contractual words any special technical meaning other than their ordinary meaning.
This is a convenient point at which to make two general observations about the facts. First, the effect of the telex from Credito Italiano to the Owners' bank seems, in the light of the arbitrator's findings in paragraphs 4 and 5, to produce a situation, in accordance with Italian banking law and practice, which in the eyes of an English banker or lawyer, has some strikingly unusual features. It is a situation hardly likely to trouble the English courts again unless as a result of a similar Italian inter-bank transaction. Secondly, if the Owners are right, this is yet another instance of a clause such as clause 5 of the New York Produce Exchange form operating to produce what appears to be a harsh result. The unexpired term of the time charter must have been a valuable asset. The Court of Appeal was told that the Charterers' claim for damages was 53,000,000. Yet their failure, if there was a failure, to comply with their obligation under clause 5 was obviously of a very minor character.
My Lords, this is not the first time that the clause 5 of the New York Produce Exchange form of charterparty has been before the courts. In giving his considered judgment in The Brimnes [1973] 1 W.L.R. 386, Brandon J. (as he...
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