Cobelfret Bulk Carriers NV v Swissmarine Services SA
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE BEATSON,Mr Justice Beatson |
| Judgment Date | 13 November 2009 |
| Neutral Citation | [2009] EWHC 2883 (Comm) |
| Docket Number | Case No: 2009 FOLIO 724 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 November 2009 |
[2009] EWHC 2883 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
IN THE MATTER OF AN ARBITRATION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Beatson
Case No: 2009 FOLIO 724
MR M. ASHCROFT (instructed by Ince & Co) for the Claimant
MR C. KIMMINS (instructed by Holman Fenwick Willan LLP) for the Respondent
Hearing dates: 6 November 2009
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 appeal from the award of a panel of three arbitrators dated 5 May 2009. Permission to appeal was given by Cooke J.
The dispute arises out of a charter-party of the MV "Lowlands Orchid" made between the applicant, Cobelfret Bulk Carriers NV, ("the owners"), and the respondent, Swissmarine Services SA ("the charterers,"). The charter was for a voyage with 165,000 MT 10% more or less in owners' option coal in bulk from Richard's Bay Coal Terminal to Rotterdam and Immingham. The arbitrators, by a majority, rejected a claim by the owners for demurrage in respect of the discharge of the cargo at Immingham and accepted the claim by the charterers for dispatch money.
The terms of the charter-party
The agreement was contained in an email from the brokers to both parties ("the fixture recap") dated 2 November 2007. This states:
"Scale load/25.000 MT SHINC"
and,
"O/WISE AS PER "EUROSAILOR-CP DTD 02/MARCH/2004" WITH CLS.42 LAST PARA DELETED LOGICALLY AMENDED TO REFLECT MAIN TERMS AGREED AS ABOVE…"
The charter-party for the MV "Eurosailor" referred to in the fixture recap was a contract between Fairweather Shipping Limited as owner and Swissmarine Services SA as charterer. The "Eurosailor" charter-party, (hereafter "the pro-forma charter-party") contained the following provisions:
"9. The cargo to be discharged by consignee at port of discharge, free of expense and risk to the vessel, at the average rate of (see clause 63) tons per weather working day of 24 consecutive hours, Sundays and holidays included, see also clauses 40 and 63 provided vessel can deliver it at this rate. If longer detained charterers to pay vessel demurrage at the rate of US$ 60,000 per running day (or pro rata for part thereof). If sooner dispatched, vessel to pay charterer US$ 30,000 per day (or pro rata for part thereof) dispatch money for all working time saved. … In case of strikes, lockouts, civil commotions or any other causes or accidents beyond the control of the charterers which prevent or delay the discharging, such time is not to count unless the vessel is already on demurrage.
63. Discharging Rate: 25,000 metric tons Sundays and Holidays included, excluding Super Holidays."
The Issues
The vessel loaded 168,444 MT bulk coal and discharged part of its cargo at Rotterdam between 19 and 22 December 2005. It discharged the remainder at Immingham between 23 and 28 December 2005. The central issue in the arbitration was whether laytime counted during the Super Holidays at Immingham during the period between 1800 hours on 24 December 2007 and 0600 hours on 27 December 2007. This involved considering whether, and if so to what extent, terms from the pro-forma charter-party were to be incorporated into the negotiated contract contained in the fixture recap. This in turn turned on whether the words "25,000 metric tons Sundays and Holidays included, excluding Super Holidays" in clause 63 of the pro-forma charter-party were inconsistent with the words "25,000 MT SHINC" in the fixture recap.
The Award
A majority of the arbitrators held that there was no inconsistency between the fixture recap and clause 63. Mr Crouch, the arbitrator appointed by the owners, dissented. He considered that "SHINC" in the fixture recap included all holidays and was completely at odds with clause 63 of the pro-forma charterparty. On the approach of the majority the charterers were entitled to US$ 106,500 dispatch money. On Mr Crouch's approach the owners were entitled to US$ 142,177.25 demurrage.
Paragraph 15 of the Reasons of the majority arbitrators states that the term "'Super Holidays' is one which is widely used in contracts for the shipment of large bulk cargos as an exception to the normal meaning of SHINC terms". Paragraph 16 states that "the term SHINC is essentially a shorthand term for 'Sundays and Holidays included'". The majority stated they considered SHINC "is not a term which has a specific and independent meaning but "rather a shorthand term that is capable of qualification and should not be seen, in the context of a fixture recap, as a definitive term which will override provisions in the pro-forma charterparty".
Paragraph 17 states:
"Considering the authorities to which we had been taken, in our view the most relevant to the present dispute was the decision in The Eternity [2009] 1 Lloyd's Rep 107, and we consider that the conflict between the use of the term SHINC (without qualification) in the fixture recap was not "clear and direct" to the extent that the words "excluding Super Holidays" in clause 63 should have been deleted".
The reasons of the majority arbitrators also refer to a letter dated 25 July and an email dated 26 November 2008 from Ifchfor, the brokers. The letter states that the words 'excluding super holidays' were removed from the working copy of the charter-party they had issued by a clerical mistake and an amended working copy was sent. The email states that the P & I Club considered the original working copy had been issued correctly but Ifchor's staff had misunderstood what the Club said and sent the amended working copy in error. The majority arbitrators found the email sent over a year after the fixture had been concluded unconvincing. In paragraph 22 of the Award they state that since the earlier letter "supported our view of the parties' agreement we therefore found that the correct construction of the agreement was that the words "excluding super holidays" should remain in clause 63 in the charter-party".
Mr Crouch, the arbitrator who dissented, stated that, at the recap stage, the parties could have explicitly listed out specific exceptions to SHINC but did not choose to do so. He states:
"'Sundays and holidays included' is plain English and means that Christmas Day, for example, is included. This is completely at odds with clause 63 of the pro forma Charterparty, which excludes, amongst others, Christmas Day. Using the language of The Eternity ([2009] 1 Lloyd's Rep 107): a 'clear and direct conflict' exists between the recap and the pro forma charter."
He stated that he did not find the brokers' letter of 25 July more persuasive than the subsequent email on 26 November.
"One was written 8 months and the other 12 months after the contract was concluded. The email contradicts the letter. They are both after the event, of little weight and serve only to evidence the confusion in the broker's mind about how he should have drawn up the charter. They do not, in my view, shed any light on the intentions of the parties."
He concluded that the "clear and direct conflict" between the recap and the pro forma charterparty must be objectively resolved by use of the parties' own formula for doing so which is, as per the recap, to "logically amend" the pro-forma charterparty. He stated that in this case this was to be done by deleting the words "excluding Super Holidays" from the pro-forma charterparty as had indeed been done by the broker in the first draft of the charter sent out to the parties.
Discussion
The owners appeal on the ground that the Arbitral Tribunal failed to give effect to the term agreed in the fixture recap that discharge was to occur at the specified rate "SHINC". Mr Ashcroft submitted on their behalf that because it had been agreed in the fixture recap, the express main terms of the charter, that discharge was to be "SHINC", the inconsistent wording in the pro-forma charterparty was not included in the contract or, if it was incorporated, its wording required amendment to give effect to the agreed term in the fixture recap. The Reasons of the majority are also criticised on two other grounds. The first is for inverting the question to be asked and asking (paragraph 4) whether the main terms of the fixture recap were to be incorporated into the pro-forma charterparty. The second is for relying on the brokers' statement as to what the contract was intended to mean.
On behalf of the charterers, Mr Kimmins submitted that clause 63 did no more than qualify the words in the fixture recap and were not inconsistent with them let alone clearly and directly inconsistent as is required by the cases. He submitted that such recaps set out the basics, "the main terms", but do not tell the whole story. That is to be found in standard terms or, as in this case, a pro-forma charterparty. In this case the term "SHINC" in the fixture recap could, he argued, sit happily alongside the provision in clause 63 that Super Holidays were excluded.
I can deal with the complaints about paragraph 4 of the Reasons and the reliance by the majority arbitrators on the brokers' letter of 25 July briefly. There is an error in paragraph 4 but the remainder of the reasons make it clear that the majority arbitrators understood that the question they had to answer was whether all of clause 63 should be incorporated into the fixture recap: see paragraphs 9, 12–13, 17 and 22. As to what was said about the brokers' letter, paragraph 22 of their reasons suggests that they thought it was relevant to the construction of...
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