Bulfracht (Cyprus) Ltd v Boneset Shipping Company Ltd

JurisdictionEngland & Wales
JudgeMr Justice Colman
Judgment Date07 November 2002
Neutral Citation[2002] EWHC 2292 (Comm)
Docket NumberCase No: 2002 Folio No. 689
CourtQueen's Bench Division (Commercial Court)
Date07 November 2002
Bulfracht (Cyprus) Ltd
Boneset Shipping Company Limited “mv Pamphilos”

[2002] EWHC 2292 (Comm)


The Honourable Mr Justice Colman

Case No: 2002 Folio No. 689


Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Simon Croall (instructed by Waterson Hicks) for the Claimant

Mr Arshad Ghaffer (instructed by Shaw Lloyd & Co) for the Defendant


Hearing dates : 18 October 2002


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.


Colman J

Mr Justice Colman

Mr Justice Colman:




By an arbitration award made on 12 June 2002 the claimant shipowners recovered US$52,924.23 on their claim for the balance of hire and interest on it due under a trip time charter of MV PAMPHILOS on the New York Produce Exchange form but failed in their claim that the charterers were in breach of their contractual duty to re-deliver the vessel in like good order and condition. The arbitrators, appointed under an ad hoc arbitration agreement, were divided in their views. In his dissenting award Mr Christopher Moss, who is one of the most experienced maritime arbitrators in London, described the conduct of the parties before the hearing as “a complete travesty of the process of commercial arbitration” and “an exercise in mindless antagonism”. He said that the way in which the case was conducted made it “impossible for the essentially straightforward issue to be determined fairly”.


The arbitration agreement expressly provided that the arbitrators should be “commercial/shipping men”.


The charterers now have two applications before the court:


1. for an order setting aside or remitting the award under section 68(2)(a) of the Arbitration Act 1996 on the grounds of serious irregularity affecting the proceedings or the award;


2. permission to appeal the Award under section 69(2)(b) of the 1996 Act on a question of law.


It has been agreed that if leave to appeal is given this court should go on to determine the substantive appeal at the same hearing.


The logical approach to multiple applications of this kind is almost invariably to determine the application to set aside or remit for serious irregularity first and to consider the question of permission to appeal once it has been decided whether the award can stand. Although applications for leave to appeal under section 69 are normally on paper without an oral hearing, the course adopted in the present case of hearing oral argument on the application for leave at the same hearing as for the section 68 application is a sensible and more cost efficient approach, particularly having regard to the fact that the underlying facts and legal submissions relevant to both applications are so closely related.


The underlying disputes may be summarised as follows.


Under the charterparty dated 28 January 2000 the charterers hired the vessel for one time charter trip with iron ore in bulk from Sepetiba in Brazil to Bourgas in Bulgaria.


It described the vessel as:—

“capable of steaming, fully laden, throughout the period of this Charter Party under good weather conditions about 13.0 knots on a consumption of about 36 mt IFO (180) cst plus 2.5 mts MDO see cl 54.”


The charterparty provided as follows:

“Clause 1: ‘That the Owners whilst on hire shall throughout the period of this Charter Party……keep the vessel in a thoroughly efficient state in hull, cargo spaces, machinery and equipment….. for and during the service.’

Clause 4: ‘that the Charterers shall pay for the use and hire of the Vessel at the rate of US$8,000…. daily, including overtime, or pro rata less commission …. Plus US$140,000 gross Ballast Bonus ….. hire to continue until the time of the day of her re-delivery in like good order and condition, ordinary wear and tear excepted, to the Owners …. On dropping last sea pilots Piraeus port after bunkering …’

Clause 15: ‘That in the event of the loss of time from….damages to hull….machinery or equipment….or by any other cause preventing the full of (sic) working of the vessel, the payment of hire shall cease for the time thereby lost and if upon the voyage the speed be reduced by defect in or breakdown of any part of her hull, machinery or equipment, the time so lost, and the cost of any extra fuel consumed in consequence thereof ….. shall be deducted from the hire.’

Clause 54: ‘… Speed and Consumption

BALLAST: About 13.0 Kn on about 32 mt IFO (180 CST) + 2.5 mt MDO

LADEN: About 13.0 Kn on about 36 mt IFO (180 cST) + 2.5 mt MDO

IN PORT: About 2.5 mt MDO…

Vessel burns MDO for main engines when manouvering navigating in/out ports and in narrow/shallow waters, rivers, canals.

Speed basis Beaufort Scale 4 Douglas Sea State 3 – no negative influence by swell and adverse current.'”


The vessel was delivered under the charterparty at Sepetiba, Brazil at 18.30 on 16 February 2000 and it anchored off that port on the same day. It was the owners' case in the arbitration that the vessel was at that time “tight, staunch, strong and in every way fitted for the service” in accordance with the terms of the charterparty. The vessel lay at anchor for about 21 days awaiting the charterers' berthing instructions. On 8 March 2000 the vessel berthed. She departed on completion of loading at 10.30 on 11 March and proceeded to Bourgas on the Black Sea where she completed her laden voyage on 7 April. She was eventually re-delivered to the owners at Piraeus on 13 April.


In the meantime, on 6 April 2000, the charterers had sent to the owners a calculation of a remittance of charter hire dated 5 April in which they claimed that the vessel had underperformed by reason of her slow speed and excessive fuel oil consumption. The charterers made deductions from the charter hire to reflect this breach of the speed and consumption warranty.


The owners referred to arbitration their claim for unpaid charter hire. They also claimed as damages the cost of cleaning the vessel's hull and the time lost in so doing on the basis that the charterers had failed in accordance with clause 4 to re-deliver the vessel in “like good order and condition” as when she was delivered to them.


The owners' case was essentially that while the vessel was at anchor off Sepetiba her hull had become heavily fouled with marine growth and this had the effect of reducing her speed and increasing her consumption of fuel. Thus the vessel's failure to comply with the speed and consumption warranty was caused solely by her compliance with the charterers' instructions to lie at anchor for 21 days and accordingly the charterers were not entitled to make any deduction from the hire. The further consequence of these orders was the charterers' failure to comply with their re-delivery obligations.


The Arbitration


There was no dispute that in the course of the voyage from Sepetiba the vessel had under-performed. The main issues were whether the under-performance was solely caused by the fouling of the hull and, if so whether that fouling had occurred solely during the period at anchor off Sepetiba. If the answer to the first question was yes and to the second question was No, the charterers could have a defence to the whole or part of the claim for unpaid charter hire. If the answer to the second question was Yes, the charterers would have no defence to the whole or part of the claim, for the vessel would have been in proper condition when delivery to them took place.


In their Reasons the majority of the arbitrators, Mr I D Leftakis and Mr John Tsatsas arrived at their conclusions by the following route:


1. The vessel was dry-docked in Greece in September 1999. Her hull was “suitably clean and prepared, as required” by the manufacturers of the anti-fouling paint, Akzo Nobel. Because this was an expensive procedure it would not have been in the owners' best commercial interests for the work to be skimped and accordingly the arbitrators were satisfied that at the end of September 1999 the vessel had a clean and painted hull free of any marine growth (Reasons para 6.5).


2. It was to be inferred from the attendance of the vessel's classification society at the dry-docking and their likely requirement for any indentation or damage to the bilge keel to be repaired and from photographs of the vessel in dry dock that there were no protrusions or significant indentations at the end of September 1999 that were likely to affect the vessel's speed (Reasons, para 6.6).


3. The anti-fouling paint supplied to the vessel and the scheme of application was designed for a service life of 12 months. The invoices from the shipyard suggested that the correct number of coats of paint, as evidenced by a letter from the manufacturers, had been applied and that the owners “had acted with due diligence and foresight when purchasing and applying the paint scheme” (Reasons, para 6.8). The scheme purchased had been “a perfectly adequate and customary plan for what are known in the industry as self-polishing coatings”. I interpose that, as indicated in the letter from the manufacturers, the efficacy of the anti-fouling paint depended on its biocide loading and polishing rate. The biocide loading depended in turn on whether the vessel was in an area of high fouling activity and warm water (such as Brazil) and the polishing rate depended on whether the vessel when in such conditions was static or moving through the water. If the vessel were static for more than 12 days, the risk of fouling pick-up would be high.


4. The vessel did not have a record of underperformance during the period of trading between dry-docking and her delivery at Sepetiba under the time charter as was to be inferred from inter alia the absence of claims by charterers to...

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