BOTTIGLIERI DI NAVIGAZIONE SpA Charterers and COSCO QINGDAO OCEAN SHIPPING COMPANY Owners
| Jurisdiction | England & Wales |
| Judge | MRS JUSTICE GLOSTER, DBE,Mrs Justice Gloster, DBE |
| Judgment Date | 04 February 2005 |
| Neutral Citation | [2005] EWHC 244 (Comm) |
| Docket Number | Case No: 2004 Folio 473 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 04 February 2005 |
[2005] EWHC 244 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mrs Justice Gloster, DBE
Case No: 2004 Folio 473
Edmund Broadbent Esq (instructed by Messrs Swinnerton Moore) for Charterers
Nevil Phillips Esq (instructed by Messrs Birketts) for the Owners
Hearing dates: 11 th November 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application under sections 68 and 69 of the Arbitration Act 1996 ("the 1996 Act") to challenge an award ("the Award") dated 10 th May 2004 made by Mr Alan Oakley and Mr William Packard as arbitrators in arbitration proceedings brought by Cosco Qingdao Ocean Shipping Company ("Owners") against Bottiglieri di Navigazione SpA ("Charterers"). The arbitration was on documents alone. The dispute arose under a time charter ("the Charterparty") concluded on 25 th November 2002 in the NYPE form with amendments.
The factual background to the dispute is as follows. The Bunga Saga Lima ("the Vessel") is a 73,144 tonne deadweight bulk carrier built in 1998 and constructed with seven cargo holds. By the Charterparty, Owners, who were disponent owners under a head charterparty, chartered the vessel to Charterers for a short time charter period comprising two or three laden legs. In the arbitration Owners claimed the sum of US$ 86,630.57 in respect of hire. Charterers' defence to that claim related to the time lost and expenses incurred in connection with cleaning of the holds at the second loadport, Rostock, Germany, following the first voyage under the charter. On 22 nd October 2002, Owners had taken delivery of the Vessel from her head owners in China under the head Charterparty. Her previous cargo had been soya beans. Owners then loaded a cargo of coking coal for Sepetiba, Brazil, in all seven holds. After discharge of this pre-delivery cargo of coal at Sepetiba, the Vessel was delivered to Charterers at Sepetiba anchorage on 8 th December 2002.
It was common ground that, when the Vessel was delivered on 8 th December, the holds were dirty with coal residues from the pre-delivery cargo which would have prevented grain having been loaded in the holds. This was clear from delivery surveys. However, the coal residues did not prevent Charterers from loading their first cargo, which was iron ore. That was loaded in holds 1, 3, 5 and 7 of the Vessel, and carried to Swinoujscie, Poland. However, the coal residues did have to be removed before the Vessel could load her second cargo, rapeseed in bulk, at Rostock, for carriage to Bin Qasim, Pakistan. After discharge of the iron ore in Poland, the Vessel ballasted the short distance to Rostock. The Vessel failed cargo hold cleanliness inspections at Rostock on both 6 th and 8 th January 2003. The Vessel was delayed at Rostock while her holds were cleaned to a standard suitable to load grain. Holds 3, 5 and 7 were passed on 9 th January 2003; holds 1, 4 and 2 were passed in the period 11 th to 14 th January. When she had eventually been satisfactorily cleaned, the rapeseed cargo was loaded in six of her seven holds, hold 6 being left empty. The Vessel was eventually redelivered to Owners on 16 th March 2003. Charterers alleged that Owners were in breach of the cleanliness warranties under the charter and that they (Charterers) were entitled to place the Vessel off-hire at Rostock until the holds were passed "grain clean". Owners argued that they were not responsible for the cleanliness of the holds once Charterers had loaded the iron ore cargo at Sepetiba. Charterers contended that, other than their responsibility for intermediate hold cleaning under clause 92 of the Charterparty, it was Owners' responsibility to clean the holds to a grain clean standard at Rostock.
There was evidence both from Charterers' surveyors and from Owners' surveyors that, when the Vessel delivered at Sepetiba, holds 2, 4 and 6 were not even sufficiently clean to receive the iron ore cargo because of the coal residues. The evidence also demonstrated that both Charterers and Owners knew at the time of delivery at Sepetiba that the holds were dirty and did not comply with the "grain clean" requirement. In response to Owners' claim for outstanding hire and expenses, Charterers contended that they were entitled to deduct US$ 82,779.19 as off-hire plus expenses at Rostock under clause 13 of the fixture note, or clause 15 of the Charterparty or, alternatively, that they were entitled to recover the same amount as damages in respect of Owners' breach of their delivery obligations, under line 21, clause 13 of the fixture note and clause 46, amendment 5.
The Tribunal rejected both claims of Charterers. In effect, the Tribunal decided that, because Charterers had not insisted on cleaning being done at the first loadport, Sepetiba, even though the iron ore could be loaded without it, Charterers had lost the right to claim for the loss of time and expense when cleaning to the relevant grain standard was done at the second loadport, Rostock. In those circumstances, Charterers now:
i) seek leave to appeal the Tribunal's conclusion on the off-hire claim (under section 69 of the 1996 Act); and
ii) challenge the Tribunal's conclusion on the damages claim for serious irregularity under section 68 of the 1996 Act, alternatively seek leave to appeal under section 69.
The relevant provisions of sections 69 and 68 are as follows:
" 69 Appeal on point of law
(1) Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings. An agreement to dispense with reasons for the tribunal's award shall be considered an agreement to exclude the court's jurisdiction under this section.
(2) An appeal shall not be brought under this section except—
(a) with the agreement of all the other parties to the proceedings, or
(b) with the leave of the court.
The right to appeal is also subject to the restrictions in section 70(2) and (3).
(3) Leave to appeal shall be given only if the court is satisfied—
(a) that the determination of the question will substantially affect the rights of one or more of the parties,
(b) that the question is one which the tribunal was asked to determine,
(c) that, on the basis of the findings of fact in the award—
(i) the decision of the tribunal on the question is obviously wrong, or
(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and
(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.
68 Challenging the award: serious irregularity
(1) A party to arbitral proceedings may (upon notice to the other parties and the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.
A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).
(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—
(a) failure by the tribunal to comply with section 33 (general duty of the tribunal);
(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67);
(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;
(d) failure by the tribunal to deal with all the issues that were put to it;
(e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;
(f) uncertainty or ambiguity as to the effect of the award;
(g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;
(h) failure to comply with the requirements as to the form of the award; or
(i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.
(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may—
(a) remit the award to the tribunal, in whole or in part, for reconsideration,
(b) set the award aside in whole or in part,
(c) declare the award to be of no effect, in whole or in part.
The court shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.
(4) The leave of the court is required for any appeal from a decision of the court under this section."
The relevant provisions in the Charterparty were as follows:
Line 21:
"Vessel on her delivery to be ready to receive cargo with clean swept holds and tight, staunch and in every way fitted for the cargo as per clause 29 having water ballast …"
Clause 15:
"that in the event of the loss of time from deficiency strikes and/or default of men or stores … machinery or equipment …or by any other cause preventing the full working of the Vessel, the payment of hire shall cease for the time thereby lost; … and the cost of any extra fuel...
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