Edwinton Commercial Corporation v Tsavliriss Russ (Worldwide Salvage Towage) Ltd; The Sea Angel
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE GROSS,The Hon Mr Justice Gross |
| Judgment Date | 26 July 2006 |
| Neutral Citation | [2006] EWHC 1713 (Comm) |
| Docket Number | Case No: 2004/43 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 26 July 2006 |
[2006] EWHC 1713 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HON MR JUSTICE GROSS
Case No: 2004/43
Mrs E. Blackburn QC & Mr M. Jones (instructed by Hextalls) for the Claimants
Mr T Hill (instructed by Eversheds) for the Defendant
Hearing dates: 1 st– 3 rd March 2006 & 6 th– 9 th March 2006
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.
INTRODUCTION
On the 27 th July, 2003, the "TASMAN SPIRIT" ("the casualty"), laden with some 67,537 mt of light crude oil, grounded in or near the approaches to the port of Karachi. Subsequently, on or about the 13 th August, the casualty broke in two. I say nothing as to the precise place of grounding; that is the subject of a dispute as to the safety of the port and was not canvassed before me. On any view, the grounding comprised a major pollution incident; it gave rise to great local sensitivity on the part of the port authority, the Karachi Port Trust ("KPT") and others.
The Islamic Republic of Pakistan ("Pakistan") was not at the material time a signatory to the International Convention on Civil Liability for Oil Pollution Damage 1969 or the 1992 Protocol by which it was amended (collectively, "CLC"). It follows that the CLC regime of strict liability, compulsory liability insurance and limitation of liability was inapplicable. Accordingly, absent agreement, any prospect of satisfying claims for pollution damage rested on the security of those vessels or assets within the jurisdiction of Pakistan.
On the 30 th July, 2003, the Defendant ("Tsavliris") entered into a Lloyd's Standard Form of Salvage Agreement with the owners of the casualty, on the LOF 2000 form ("the LOF"), incorporating the SCOPIC clause – to which I shall return later. In the event, the SCOPIC clause was invoked by Tsavliris on the 13 th August. To fulfil its obligations under the LOF, Tsavliris engaged a number of sub-contracted craft ("the chartered in vessels"). It was necessary to lighten the casualty, off-loading part of its cargo with the use of shuttle tankers and transhipping that cargo to a larger tanker, the "ENDEAVOUR II". One such shuttle tanker was the "SEA ANGEL" ("the vessel"), owned by the First Claimant, time chartered on the 25 th August, 2003 to the Second Claimant and sub-time chartered on the same day to Tsavliris ("the head charterparty" and "the charterparty", respectively). The period/trading limits clause of the charterparty included this wording: "…up to 20..days…for transhipment(s) of up to full cargo of crude oil from forward and aft sections…" of the casualty. The vessel was delivered into service under the charterparty on the 26 th August.
On the 5 th/6 th September, the vessel completed loading her final parcel of cargo from the casualty and shifted to "ENDEAVOUR II", in order to tranship that parcel of cargo. On the 6 th September, the Defendant gave 5 days notice of redelivery under the charterparty. On the 9 th September, the vessel completed the discharge of cargo into the "ENDEAVOUR II". On the same day, Tsavliris gave 3 days notice of redelivery at Fujairah, assuming that the vessel departed from Karachi that day.
In the events which happened, the vessel did not leave Karachi until the 26 th December and was not redelivered until the 1 st January, 2004. In the intervening period, between the 10 th September and the 26 th December, the vessel had been unable to depart Karachi because the KPT had refused to issue a "No Demand Certificate" ("NDC"), a pre-requisite to port clearance and of which more in due course. On the 5 th December, in a reasoned judgment to which I would pay respectful tribute, Judge Alam, sitting in the High Court of Sindh at Karachi, held that the KPT's refusal was unjustified and directed it to issue a NDC.
It is against this background that the present dispute has arisen. The Claimants claim that hire is due and owing under the charterparty in the amount of US$1,373,320, for the period from 18 th September, 2003 (from when Tsavliris ceased paying hire) up until redelivery on the 1 st January, 2004. For its part, Tsavliris denies that any hire is due and owing and contends instead that the charterparty was frustrated. This issue was first raised on the 21 st October, 2003, when Tsavliris alleged that the charterparty was frustrated, by latest the 13 th October. On the 23 rd October, the alleged frustration date was advanced to, in effect, the 10 th September. By the time of the trial, the 10 th September dated was (realistically) not pressed. Instead the Tsavliris case was that the charterparty was frustrated somewhere between the 19 th September (its primary case) and the 13 th October. The Claimants have throughout denied that the charterparty was frustrated, at all or, by way of a fallback position, not before the 18 th October. There were in addition certain ancillary claims and counterclaims with which it is unnecessary to deal at this stage.
In a nutshell, the rival cases were these. Mr. Hill, for Tsavliris, submitted, first, that there had been a frustrating event: namely, the unlawful refusal by the KPT to issue a NDC, when all sums properly due had been paid. KPT had "detained" the vessel as security for its pollution claims against third parties —the owners of the casualty and its Protection and Indemnity Club ("the Club"). This detention had continued until a deal had been done between KPT and the Club. From the 19 th September and certainly by the 13 th October, the parties acting as reasonable commercial men would reasonably have forecast that the period of delay would be inordinate, in the context of a 20 day charterparty for very limited services. This view was confirmed in retrospect; a 20 day charter had lasted for some 120 days. Secondly, Mr. Hill contended that the risk of such detention was not dealt with by the charterparty. This risk had not been assumed by Tsavliris and was neither foreseen by the parties nor reasonably foreseeable. As Mr. Hill put it in the Tsavliris written closing submissions:
" …the risk of the vessel being detained by the port authorities for security of someone else's obligations to pay for pollution damage was not reasonably foreseeable."
This was not detention arising in the course of the vessel's usual operation. The Claimants' arguments that the charterparty excluded the doctrine of frustration whether through cl. 7 of the charterparty, or any safe port or safe places obligation, or any redelivery obligation, or by way of the rider clause, were ill-founded or misconceived.
For the Claimants, Mrs Blackburn QC denied that there had been any frustrating event. Delay was a normal incident of a maritime adventure. Detention of salvors' craft and equipment, whether owned or sub-contracted, was a known risk of the salvage business; what happened here was not extraordinary. Alternatively, if the delay would otherwise have given rise to frustration, the risk of such delay was either assumed by Tsavliris, whether under the various provisions of the charterparty to which reference has already been made or otherwise, or it was self induced so that Tsavliris could not rely upon it. Above all and however analysed, Tsavliris had failed to launch timely court proceedings in Pakistan which could have secured the release of the vessel. The proceedings in the event instituted by the Claimants had done just that; it was the threat of contempt proceedings, following the order made by Judge Alam, which had brought about the vessel's release. If Tsavliris chose to proceed by way of commercial negotiations rather than litigation, a case of frustration could not be made good; there was throughout the opportunity of securing the vessel's release by recourse to the effective local court system. As to the alleged frustration dates advanced by Tsavliris, as at the 19 th September, the position was far too speculative to permit a conclusion that the delay would continue for such a period as to give rise to frustration. Throughout the period contended for by Tsavliris, namely the 19 th September – 13 th October, the litigation route had not yet been explored. As foreshadowed, if wrong on all this and as a fallback position, the earliest frustration date was the 18 th October.
Any notion of self induced frustration was disputed root and branch by Tsavliris. There was no relevant obligation; it was not in breach of any obligation (if obligation there was); any breach had not caused the delay or its continuation. The decision to pursue a commercial route to secure the release of the vessel had been justified; in any event, no court order, without the overall commercial deal already referred to, would have been effective to ensure the vessel's release.
For completeness, I record that the Claimants had earlier pursued an application for summary judgment under CPR Part 24. This application was refused by Cooke J, on the 19 th February, 2004, for the reasons which appear from his judgment. Other than by way of a brief reference to the judgment of Cooke J, it is unnecessary to say more of that application and its fate.
CONTRACTUAL TERMS
(A) The LOF: Chronologically, I start with the LOF. Some words of introduction may be appropriate. Traditionally, as is well-known, services under LOF salvage agreements are rendered on the principle of "no cure no pay". Again traditionally, salvage rewards and awards have been fixed with a view to encouraging salvage operations and taking into account the...
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