Edwinton Commercial Corporation v Tsavliriss Russ (Worldwide Salvage Towage) Ltd; The Sea Angel

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Wall,Lord Justice Rix
Judgment Date12 June 2007
Neutral Citation[2007] EWCA Civ 547
Date12 June 2007
Docket NumberCase No: A3/2006/1831 & A3/2006/1831 (A)

[2007] EWCA Civ 547

[2006] EWHC 1713 (Comm)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM the Queen's Bench Division, Commercial Court

The Honourable Mr Justice Gross

Before

Lord Justice Rix

Lord Justice Wall and

Lord Justice Hooper

Case No: A3/2006/1831 & A3/2006/1831 (A)

Between
(1) Edwinton Commercial Corporation
(2) Global Tradeways Limited
Claimants/Respondents
and
Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The “Sea Angel”)
Defendents/Appellants

Mr Nicholas Hamblen QC & Mr Timothy Hill (instructed by Messrs Eversheds LLP) for the Appellants

Ms Elizabeth Blackburn QC & Mr Mark Jones (instructed by Messrs Duval Vassiliades) for the Respondents

Hearing dates : 6, 7 & 8 March 2007

Lord Justice Rix
1

Frustration of a charterparty is the subject matter of this litigation. In particular, the issue is whether a delay of some three or so months towards the end of a short (20 day) time charter, caused by reason of the unlawful detention of the vessel by port authorities, in a salvage context, has frustrated that charter.

2

Ultimately, the detention of the vessel was ended as a result of successful legal proceedings against the port authority, coupled with the threat of contempt of court proceedings and a commercial deal.

3

The judge, Mr Justice Gross, after a seven day trial found that the charter had not been frustrated. The charterers appeal on the ground, in essence, that there was no good reason why the judge should not have recognised the frustrating effect of an indefinite delay which, by a critical stage in the negotiations for the vessel's release, promised to last some three months as a minimum. When a comparison was made between the contractually agreed length of the charter, which was 20 days, and the actual and prospective delay, which amounted to many times that period, principle and authority mandated a conclusion that the charter had been frustrated. The judge himself accepted that there was a realistic argument to that effect, a fortiori because at the time when the detention began the charter had been all but performed and what remained was merely a short redelivery voyage of a few days. His reasons for rejecting that argument, which centred on the risks inherent in the salvage context, the sphere of responsibility under the charter, and the availability of recourse to legal action, are said by the charterers to be flawed. The owners of the vessel, on the contrary, say that the judge's decision was correct, not only for the reasons which he gave, but for many other reasons besides.

The basic facts

4

I am indebted to the judge's full and careful findings of fact for the following material, very little if any of which is in dispute, even if the analysis which proceeds from them is.

5

The vessel concerned was the Sea Angel, a small vessel of 3,789 grt (the “vessel”), owned by Edwinton Commercial Corporation (“Edwinton”) and in the disponent ownership of Edwinton's in some sense linked company Global Tradeways Limited (“Global”). Edwinton and Global were claimants at trial and in this court are the respondents.

6

Her charterers were Tsavliris Russ (Worldwide Salvage & Towage) Limited, who were defendants at trial and are here the appellants (“Tsavliris”). Tsavliris needed the Sea Angel to assist in the salvage operations concerning the Tasman Spirit, a tanker laden with 67,537 tonnes of light crude oil which on 27 July 2003 grounded in or near the approaches to the port of Karachi (also, the “casualty”). On 13 August the Tasman Spirit broke in two. The casualty amounted to a major pollution incident, and gave rise to great local sensitivity on the part of the local port authority, Karachi Port Trust (“KPT”), and other authorities within the Islamic Republic of Pakistan (“Pakistan”).

7

Tsavliris are one of a small number of internationally known salvors. On 30 July 2003 Tsavliris entered into a Lloyd's Standard Form of salvage agreement with the owners of the Tasman Spirit on the LOF 2000 form (“LOF”) to salve the casualty. To fulfil their obligations under the LOF, Tsavliris engaged a number of sub-contracted craft, among them the Sea Angel whose task was to act as a shuttle tanker, lightening the Tasman Spirit and carrying crude oil from her to a larger, storage tanker, the Endeavour II, which was a sister-ship in the same ownership as the casualty, but also sub-contracted by Tsavliris for the salvage operation. Tsavliris also hired two tugs, and the Fair Jolly, which had been used as a shuttle tanker before the arrival of the Sea Angel. I shall refer as necessary to the Sea Angel and the other sub-contracted vessels as the “Tsavliris vessels”.

8

Tsavliris chartered in the Sea Angel on 25 August 2003 from Global, on the same day as Global chartered her from her owners, Edwinton. The Edwinton head-charter was at the rate of $5,000 a day, and the Global sub-charter was at the rate of $13,000 a day. In other respects the two charters (the “head-charter” and the “charter” respectively) were essentially back to back. They were for “up to 20 days” for transhipment of crude oil from the forward and aft sections of the broken casualty. The Sea Angel was delivered into service on 26 August 2003, and therefore her due redelivery date was 15 September 2003.

9

On 9 September, after discharge to Endeavour II of Sea Angel's final transhipment cargo, Tsavliris gave a three day definite notice of redelivery at Fujairah, the contractual redelivery port which was three days steaming away. In other words, Tsavliris expected that the vessel would leave Karachi that day. In the event, the vessel was unable to leave Karachi until 26 December and was not redelivered until 1 January 2004. In the intervening period the vessel had been unable to depart because KPT had refused to issue the necessary “No Demand Certificate” (“NDC”), a certificate that no outstanding port dues were required and a prerequisite to port clearance. In the event, therefore, the vessel was detained at Karachi for some 108 days, at a time when the anticipated outstanding period of the charter was 3 days, and the permitted outstanding period before redelivery was 6 days: so that in all the 20 day charter period was exceeded by about 108 days.

10

During the period of detention, the main events were as follows. On 9 September 2003, MM Marine Services (Pvt) Ltd (“MMM”), Tsavliris's Karachi general agents whose executive director was Rear Admiral (Retd) Khalid, applied for Sea Angel's NDC. There were a number of meetings in which Admiral Khalid sought to identify the port dues chargeable to Sea Angel and to the two tugs. On 17 September there was a demand by KPT, based however in the main on charges claimed as due against Tasman Spirit, in the sum of Rs 650 million, the rough equivalent of $11 million. This could only reflect some kind of payment, or guarantee for payment, of pollution and clean-up expenses or damages.

11

This led to a series of meetings and communications between not only KPT and Tsavliris but also the casualty representative of the owners of the Tasman Spirit (Mr Gregory) as well as representatives of their P&I Club, the American Club (the “Club”). Legal representatives were also involved, Messrs Clyde & Co (Mr Hall) on behalf of Tsavliris and Messrs Eversheds (Mr Moloney) on behalf of the Club. On 18 September, the Tsavliris salvage master and Mr Gregory agreed that the Tsavliris share of KPT's Rs 650 million claim was only about Rs 21 million (some $354,000) and that only Rs 923,184.36 (or $15,916.97) related to the Sea Angel herself.

12

On the same day, the Pakistani Ministry of Foreign Affairs wrote to the Embassy of Greece in Pakistan suggesting that there might be difficulties in the repatriation of the Master and crew of the Tasman Spirit in the absence of undertakings including a Club guarantee “to meet all losses including consequential losses”.

13

On 19 September MMM reported to Tsavliris that the “general impression here is that unless the total amount of Rs 650,000,000 is either paid, by you or guaranteed by some one, no movement is likely to take place”: and that, therefore, no remittance in respect of port dues solely relating to Tsavliris vessels could be relied on as a final settlement.

14

Tsavliris paid no hire for the Sea Angel beyond 18 September. At trial, the primary case of frustration run by Tsavliris was that in the light of this last communication from MMM there had been a frustration of the charter by 19 September. However, that case was not accepted by the judge, and has not been resurrected on this appeal. I need say nothing further about the counter-submissions of the parties relating to that earlier date.

15

On 24 September Mr Hall of Clydes gave instructions to a Karachi law firm, Messrs Orr Dignam, to prepare, but not issue, an urgent application to the Karachi court seeking an order that Mr Pappas, the Tsavliris salvage master, be allowed to depart along with the Tsavliris vessels. Orr Dignam had been retained somewhat earlier in relation to other matters (viz the Endeavour II and the withdrawal of the passports of the salvage personnel). Consideration was also given to whether a claim in damages should be brought against KPT for the detention of Mr Pappas and the vessels. Orr Dignam's advice that day was to proceed in the first instance by issuing a legal notice as a precursor to the commencement of any proceedings.

16

Up to now, the strong preference was to find a commercial solution rather than take the route of litigation, on the basis that the former was the speedier, safer and more...

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2 books & journal articles
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    • Singapore Academy of Law Annual Review Nbr. 2014, December 2014
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