Buyuk Camlica Shipping Trading & Industry Company Ltd v Progress Bulk Carriers Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 04 March 2010 |
| Neutral Citation | [2010] EWHC 442 (Comm) |
| Docket Number | Case No: 2009 Folio 713 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 04 March 2010 |
[2010] EWHC 442 (Comm)
Before: GAVIN KEALEY Q.C. sitting as a Deputy High Court Judge
Case No: 2009 Folio 713
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr. Peter MacDonald Eggers (instructed by Elborne Mitchell) for the Claimant
Mr. Mark Jones (instructed by Marine Law) for the Defendant
Hearing dates: 8 th & 9 th February 2010
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.
Mr Gavin Kealey Q.C. sitting as a Deputy High Court Judge:
Introduction
This is the hearing of a number of applications by the Claimant under the Arbitration Act 1996 including applications in two arbitration references under Sections 68 and 69 and, as those applications were made out of time, for an extension of time in order to make them pursuant to CPR 62.9. Since the issues that are raised by these applications are of some complexity, it is necessary to set out the background in a little detail.
The Claimant (to whom I shall refer as the Owners) chartered their vessel “Hilal I”, a bulk carrier built in Japan in 1977, flying the Turkish flag, to the Defendant (to whom I shall refer as the Charterers) under two separate time charterparties for two consecutive charter periods. The first charterparty (“the 2004 charterparty”) was dated 8th September 2004 and lasted from 1st October 2004 until 30th March 2005. The second charterparty (“the 2005 charterparty”) was dated 15th February 2005 and, in direct continuation from the 2004 charterparty, lasted from 30th March 2005 until 24th August 2005. Each of the charterparties was on an amended NYPE (1946) form and the terms of each were substantially the same although the hire rates were different.
The arbitrations
A number of disputes arose between the Owners and the Charterers out of the performance of the two charterparties. Those disputes were referred to arbitration in two separate arbitration references, one in respect of each charterparty. Both arbitration references were conducted pursuant to the LMAA Terms 2002. The Arbitral Tribunal was the same in both references and comprised Mr Michael Baker-Harber, Mr Charles Measter and Mr Brian Williamson. The Arbitral Tribunal issued two Awards each dated 26th March 2009, one under each arbitral reference, and one set of Reasons common to both Awards.
The two major disputes between the parties in the arbitrations related to the refusal by the Owners under the 2004 charterparty to carry a cargo of HBI (hot moulded briquettes of direct reduced iron) from Misurata in Libya; and the refusal by the Owners under the 2005 charterparty to carry a cargo of DRI (direct reduced iron) from Point Lisas, Trinidad to New Orleans, USA. The Charterers claimed, and the Arbitral Tribunal found, that there were orally agreed variations of both charterparties that entitled the Charterers to carry cargoes of HBI and DRI notwithstanding the terms of Rider Clause 38 of each of the charterparties which had specifically excluded from the categories of permitted cargoes to be loaded any cargoes of Direct Reduced Iron in any form. The Owners do not challenge the Arbitral Tribunal's findings that oral variations were made to the two charterparties but, in a variety of ways, now seek to challenge the Arbitral Tribunal's conclusions that the Owners' refusals to implement the orally agreed variations constituted breaches of contract by the Owners entitling the Charterers to damages under each of the charterparties.
The Arbitral Tribunal dealt with all of the legal submissions on the basis of written arguments but heard oral evidence concerning the orally agreed variations of the charterparties and the HBI and DRI disputes over three days between 9th and 11th July 2008. On 23 rd September 2008, the Arbitral Tribunal received detailed written Closing Submissions from both parties, which covered not only the oral evidence but also the parties' legal arguments. The written Closing Submissions submitted on behalf of the Owners extended to some 305 paragraphs and occupied 81 pages of print. As for the Charterers, they produced 481 paragraphs of written submissions over 115 pages of print. The Owners then served a short set of Reply Submissions on 24th October 2008.
It appears that the arguments raised by the parties were not, at least initially, found by the Arbitral Tribunal to be easy to resolve. By an email dated 4th March 2009, Mr Baker-Harber informed the parties that the delay in producing an award was attributable to the Arbitral Tribunal's “inability to agree a really rather fundamental point on the two largest claims relating to the HBI / DRI cargoes.” Having said that, by another email dated 10th March 2009, Mr Baker-Harber informed the parties that the Arbitral Tribunal was now “ad idem on the point that was troubling us and we are proceeding at full ahead.”
Shortly thereafter, on 26th March 2009, the Arbitral Tribunal produced its Final Award in each of the arbitration references and a common set of Reasons for both. In the 2004 charterparty Award, the Arbitral Tribunal concluded at paragraph B (c) that “[t]here was a legally binding agreement between Owners and Charterers that an HBI cargo would be carried and Owner's subsequent refusal to undertake a voyage carrying such a cargo was a breach of that agreement, entitling Charterers to damages”. At paragraph B (b) of the 2005 charterparty Award the Arbitral Tribunal concluded that “[t]here was a legally binding agreement between Owners and Charterers that a DRI cargo would be carried to the USA and the Owners' subsequent refusal to undertake a voyage carrying such a cargo was a breach of that agreement, entitling Charterers to damages”. In both Awards, the Arbitral Tribunal expressly reserved to itself jurisdiction to deal with all outstanding matters in the references including “quantum issues”.
The one set of Reasons supporting both Awards has to be read and understood against the background of the terms of the two charterparties in issue, the adduced oral evidence, and the detailed written submissions served by the parties.
So far as is relevant to the Owners' applications, each of the charterparties provided: that the vessel's moulded depth was 14.05 metres (Rider Clause 53—Description Clause); that the employment of the vessel was to be in the carriage of lawful merchandise in lawful trades between safe port and/or ports and always via safe berths, safe anchorages and always safely afloat (lines 24 – 32); and that the permitted cargo or cargoes should be laden and/or discharged in any dock, wharf or place in port or elsewhere where the Charterers may direct, provided that the vessel can safely lie always afloat at any time of tide (Clause 6).
It was common ground between the parties, at latest by the time when they came to serve their written Closing Submissions, that the vessel's actual moulded depth, described in Rider Clause 53 of the charterparties as 14.05 metres, was in fact 16.10 metres. The relevance of this misdescription is that a vessel's air draft (i.e. the distance between the waterline and the vessel's hatch coamings) is a product of her moulded depth: the latter is one of the principal factors used to calculate the former, which is done by subtracting the vessel's actual draft from the sum of the vessel's moulded depth, hatch coaming height and the rise in the deck.
The air draft restrictions for vessels loading at Misurata in Libya (to which the Charterers ordered the vessel to load a cargo of HBI under the 2004 charterparty as varied) and at Point Lisas in Trinidad (to which the Charterers ordered the vessel to load a cargo of DRI under the 2005 charterparty as varied) were respectively 10.5 and 11.0 metres. If the vessel's actual moulded depth had complied with her described moulded depth as set out in Rider Clause 53 of each of the charterparties, her air draft would have come within the applicable restrictions at both of those ports. As it was, however, the vessel's actual moulded depth meant that the vessel's actual air draft inevitably exceeded the air draft restrictions at Misurata and Point Lisas by some margin.
The most substantial parts of the parties' written Closing submissions were devoted to the issue whether the parties had orally agreed variations under each of the charterparties permitting the Charterers to load what would otherwise have been forbidden cargoes: HDI and DRI. It is apparent from paragraphs 249, 254, 365, 370, 387 and 447 of the Charterers' written Closing Submissions, that the Charterers were claiming that the two orally agreed variations were: in respect of the 2004 charterparty that the vessel should load a cargo of HBI at Misurata in Libya; and in respect of the 2005 charterparty that the vessel should load a cargo of DRI at Point Lisas in Trinidad. The Charterers alleged that they relied on those orally agreed variations of the two charterparties by entering into two sub-charterparties of the vessel for the loading and carriage of HBI and DRI out of Misurata and Point Lisas respectively; so that, when the Owners refused to go to those ports to load those cargoes, they suffered substantial loss and damage.
The Owners' primary defence in relation to the Charterers' allegations concerning HBI and DRI was that no oral variations to the two charterparties were ever agreed or, if they were agreed, that they were unsupported by consideration and/or were too uncertain to be enforceable. The Owners' secondary defence was that, even if the two charterparties were subject to binding oral variations...
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