Falkonera Shipping Company (Appellant/Claimant) v Arcadia Energy Pte Ltd and Another (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Christopher Clarke,Sir Stanley Burnton,Lord Justice Floyd |
| Judgment Date | 05 June 2014 |
| Neutral Citation | [2014] EWCA Civ 713 |
| Date | 05 June 2014 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2013/0477 |
[2014] EWCA Civ 713
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEENS BENCH DIVISION COMMERCIAL COURT
MR JUSTICE EDER
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Floyd
Lord Justice Christopher Clarke
and
Sir Stanley Burnton
Case No: A3/2013/0477
Mr C Hancock QC and Miss S Tresman (instructed by Ince & Co) for the Appellant
Mr David Allen QC and Mr N G Casey (instructed by Clyde & Co) for the Respondent
Hearing dates: 27 th & 28 th January 2014
Falkonera Shipping Company ("Owners"), the appellants, are the owners of a Very Large Crude Carrier ("VLCC") – the Falkonera. On or about 18 November 2010 they chartered her to Arcadia Energy Pte Ltd ("Charterers") to carry crude oil from the Yemen to " 1–2 ports far east". The charter was on BPVOY4 terms with amendments/additions.
Clause 8 of those terms provides:
" 8.1 Charterers shall have the option of transferring the whole or part of the cargo…to or from any other vessel including, but not limited to, an ocean-going vessel, barge and/or lighter (the " Transfer Vessel")…
All transfers of cargo to or from Transfer Vessels shall be carried out in accordance with the recommendations set out in the latest edition of the "ICS/OCIMF Ship to Ship Transfer Guide (Petroleum)".
Owners undertake that the Vessel and her crew shall comply with such recommendations, and similarly Charterers undertake that the Transfer Vessel and her crew shall comply with such recommendations. Charterers shall provide and pay for all necessary equipment including suitable fenders and cargo hoses. Charterers shall have the right, at their expense, to appoint supervisory personnel to attend on board the Vessel, including a mooring master, to assist in such transfers of cargo."
There was a further clause ("the STS lightering clause") which provided (without the numbering which has been added for ease of reference) that:
" (i) if charterers require a ship-to-ship transfer operation or lightening by lightering barges to be performed then all tankers and/or lightering barges to be used in the transhipment/lightening shall be subject to prior approval of owners, which not to be unreasonably withheld, and all relevant certificates must be valid.
(ii) all ship-to-ship transfer operations shall be conducted in accordance with the recommendations set out in the latest edition of the ics/ocimf ship-to-ship transfer guide (petroleum).
(iii) all such lightering ships must have a fully working inert gas system (igs), unless the cargo flash point exceeds 60f and only with express approval of the owners/master."
The question in this appeal is whether the judge was right to hold that Owners had unreasonably withheld their approval of another VLCC for use in a ship-to-ship (STS) transfer of cargo.
The course of the voyage
On 24 November 2010 the Charterers gave orders for the vessel to load oil in the Yemen and to proceed to Singapore for orders. On 2 December loading was complete. The vessel proceeded to Singapore for orders. On 5 December Charterers asked Owners to approve two vessels for an STS transfer – the Thaioil 2 and the Kythira. Owners approved the latter but asked for further detail in respect of the former. Charterers then decided that they wished to discharge the Falkonera cargo into three vessels — the Kythira, the Front Queen and the Front Ace– that they had chartered for use as floating storage vessels. The Thaioil 2 and the Kythira were both smaller than the Falkonera. The Front Queen was exactly the same length as the Falkonera– 330 metres.
STS transfers, like all marine operations, involve a degree of risk. The vessels may collide; oil may spill; property may be injured; people may be hurt. Claims may follow. An STS transfer from a VLCC to a smaller vessel is a very standard operation, habitually carried out. For such transfers the two vessels are usually secured by lines which include head lines and stern lines. As their names imply, a head line leads forward from the bow of the vessel; a stern line leads aft from the stern. If one vessel is smaller than the other there is room for the lines to go fore and aft from the smaller to the larger vessel at an angle which is less than 90 degrees and usually of about 45 degrees. These are designed to resist longitudinal and transverse forces, although primarily the former. There will also be spring lines (see below).
The transfer of oil from one VLCC to another is in a different category. VLCCs are usually of the same or very similar length. That means that there is no possibility of using head lines and stern lines in the same way. A line from the bow of one vessel to the bow of another will be at a right angle. The two vessels can however be secured to each other by:
a) breast lines which go from side to side, perpendicular to the longitudinal axis of the two vessels and resist transverse forces;
b) spring lines, which go in a broadly longitudinal direction between the two vessels and resist longitudinal forces; and
c) what were described by Captain Battye as "effective" head and stern lines 1. These are lines connecting the sterns and bows of the two vessels.
Captain Gilchrist was the founder of a company called SafeSTS Ltd ("SafeSTS"), a company specialising in assisting in the safe execution of STS transfers. He suggested a mooring arrangement for the Falkonera and the Front Queen (see [27] below) which is set out in the following diagram and uses breast lines (lines a and f); spring lines (lines d and e) and " effective head and stern lines" (lines b, c, h and g). The single lines on the diagram represent a set of 2 lines in each case (making 16 in all).
The ICS/OCIMF Ship to Ship Transfer Guide (Petroleum) – hereafter "the Guide" – referred to in clause 8 of the BPVOY 4 terms and in the STS lightering clause is a standard reference publication which, in 2010, was in its 4 th Edition (2005). The Guide, which is a substantial document, is what its name implies. It is not a set of rules.
Chapter 3, headed " Safety" includes the following:
" 3.1. General Safety
For all STS transfer operations each Master remains at all times responsible for the safety of his own ship, its crew, cargo and equipment and should not permit safety to be prejudiced by the actions of others. Each Master should ensure that the procedures recommended by this guide are followed and, in addition, that internationally accepted safety standards are maintained.
3.1.1 Risk Management
Before committing to an STS Transfer operation, the parties involved should carry out a risk assessment that should include sufficient information to ensure a good understanding of the operation."
There are then details of what the risk assessment should include as a minimum.
" The level of complexity required will depend on the type of operation. For a particular transfer area utilising standard approved STS equipment and ships that are fully operational, a generic risk assessment might be appropriate. For STS operations being undertaken in a new area, or in the event of deviation from routine STS transfer, a risk assessment should be carried out for each "non standard" activity…"
The Guide in its then form contained no section specifically dealing with STS transfers between ships of the same size. As the judge found [25–6] it did not, however, preclude such transfers, which were not uncommon, although less common than transfers from a larger to a smaller vessel. Nor does the absence of such a section mean that VLCC – VLCC transfers cannot be conducted in accordance with its recommendations. So far as SafeSTS and the Charterers were concerned, in 2010 SafeSTS had conducted 200 STS operations at Pasir Gudang, of which only two were VLCC – VLCC; in the same year the Charterers had conducted 58 STS transfers of which 2 were at Pasir Gudang.
December 2010
On 13 December the Charterers obtained the approval by the owners of the Front Queen as a receiving vessel for an STS transfer from the Falkonera. They also sought the approval by the Owners of the Falkonera and of the Front Queen for such a transfer. Attached to the email making the request was a copy of the Front Queen's Q88 form. This is a standard form tanker chartering questionnaire which, when completed, sets out detailed information about the vessel. The form recorded that the vessel complied with the recommendations of the Guide, had been subject to a SIRE inspection on 19 July 2010, and had been vetted and approved by a number of oil majors.
Owners' first response
The email seeking approval was forwarded to Captain Papapostolou, the Operations Manager at Andros Maritime Agencies Ltd ("Andros Maritime"), Owners' London agents. Half an hour later he responded as follows:
" With regards to Charterers request for Owners acceptance to discharge into another VLCC Front Queen, we would like to discuss some subjects in relation to this STS operation between two (2) VLCCs.
We having reviewed the ICS/OCIMF Ship to Ship Transfer Guide (Petroleum) do not, at this juncture, consider that discharge of the vessel by ship-to-ship transfer into another VLCC is permitted.
The ICS/OCIMF Ship to Ship Transfer Guide (Petroleum) does not contain any recommendations for Ship-to-Ship transfer between two VLCC's and, additionally, when reviewing these guidelines it is apparent that the requested operation may fall outside the...
To continue reading
Request your trial
-
Owners Found To Have Unreasonably Withheld Approval Of Charterers Proposed Discharge Vessels
...charter clauses are set out in that previous post. Owners' appeal of this decision has recently been dismissed by the Court of Appeal ([2014] EWCA Civ 713). Charterers had the right under the charter to transfer cargo to any vessel, including a VLCC. VLCC-VLCC transfers were permitted under......