Fastfreight PTE Ltd v Bulk Trident Shipping Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 24 January 2023 |
| Neutral Citation | [2023] EWHC 105 (Comm) |
| Docket Number | Case No: CL-2022-000017 |
| Court | Queen's Bench Division (Commercial Court) |
[2023] EWHC 105 (Comm)
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2022-000017
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND IN THE MATTER OF AN ARBITRATION CLAIM
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Patrick Dunn-Walsh (instructed by MFB Solicitors LLP) for the Claimants
Henry Byam-Cook KC (instructed by Holman Fenwick Willan LLP) for the Defendants
Hearing dates: 29 and 30 November 2022
Draft Judgment circulated to the parties: 3 January 2023
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.
| (A) INTRODUCTION | 2 |
| (B) BASIC FACTS AND KEY CHARTERPARTY TERMS | 2 |
| (C) THE AWARD | 5 |
| (D) GENERAL PRINCIPLES TO BE APPLIED | 8 |
| (E) APPLICATION TO PRESENT CASE | 10 |
| (F) CONCLUSION | 17 |
(A) INTRODUCTION
This is an appeal on a question of law under section 69 of the Arbitration Act 1996, relating to a Partial Final Award dated 20 December 2021 (“ the Award”) under which two maritime arbitrators awarded the Owners US$2,147,717.79 (together with interest and costs) in respect of unpaid hire under a time charter.
The question of law on which permission to appeal was granted by Andrew Baker J is:
“Where a charterparty clause provides that no deductions from hire (including for off-hire or alleged off-hire) may be made without the shipowner's consent: Is non-payment of hire a ‘deduction’ if the Vessel is off hire at the instalment date?
Having considered the Award and counsel's written and oral submissions, I have concluded that, at least on the charterparty terms and facts in the present case, the answer is ‘yes’; that the arbitrators were correct to make their award in favour of the Owners; and that the appeal must be dismissed.
(B) BASIC FACTS AND KEY CHARTERPARTY TERMS
The Owners chartered their vessel, the “ Anna Dorothea”, to the Charterers by a trip time charter for the carriage of a bulk cargo from East Coast, India to China. The contractual documents comprised a fixture recap email dated 13 April 2021, which set out the main terms of the contract and incorporated a heavily amended New York Produce Exchange (NYPE) 1993 form wording, with certain additional clauses attached.
The Charterers agreed to pay hire for the use of the vessel at the rate of US$20,000 per day, with instalments of hire to be paid every five days in advance (§ 11 of the recap). Further details concerning hire were set out in clauses 10 and 11 of the incorporated NYPE form.
Clause 10 was headed “ Rate of Hire/Redelivery Areas and Notices”. So far as relevant, it provided that:
“The Charterers shall pay for the use and hire of the said Vessel at the rate of [US$20,000] per day pro rata… Charterers to pay first 20 days hire without value of bunker within 3 banking days of vessel's delivery and thereafter every 5 days in advance or up to redelivery which ever is earlier. U.S. currency, commencing on and from the day of her delivery…until the hour of the day of her redelivery…”.
Clause 11 was headed “ Hire Payment” and provided:
“(a) Payment
Payment of Hire shall be made so as to be received by the Owners or their designated payee in cash in to Owners' bank account in Germany…
Notwithstanding of the terms and provisions hereof no deductions from hire may be made for any reason under Clause 17 or otherwise (whether/ or alleged off-hire underperformance, overconsumption or any other cause whatsoever) without the express written agreement of Owners at Owners' discretion. Charterers are entitled to deduct value of estimated Bunker on redelivery. Deduction from the hire are never allowed except for estimated bunker on redelivery…
in United States Currency, in funds available to the Owners on the due date [5 days in advance] … Failing the punctual and regular payment of hire…the Owners shall be at liberty to withdraw the Vessel from the service of the Charterers without prejudice to any claims they (the Owners) may otherwise have on the Charterers.
At any time while the hire or any amount is outstanding … the Owners shall, without prejudice to the liberty to withdraw, be entitled to withhold the performance of any and all of their obligations hereunder … and hire shall continue to accrue …
…
(b) Grace Period
Where there is failure to make punctual and regular payment of hire due to oversight, negligence, errors or omissions on the part of the Charterers or their bankers, the Charterers shall be given by the Owners 3 banking days written notice to rectify the failure, and when so rectified within those 3 banking days following the Owners' notice, the payment shall stand as regular and punctual. …”
(my emphasis)
The paragraph underlined above was printed at line 146 of the amended NYPE terms and is referred to as “ line 146” in the Award and the parties' submissions.
Clause 17, headed “ Off Hire” stated:
“In the event of loss of time from deficiency and/or default … of officers or crew … or by any other similar cause preventing the full working of the Vessel, the payment of hire and overtime, if any, shall cease for the time thereby lost. Should the Vessel deviate .. during a voyage, contrary to the orders or directions of the Charterers, … the hire is to be suspended from the time of her deviating .. until she is again in the same or equidistant position from the destination and the voyage resumed therefrom. …
If upon the voyage the speed be reduced by defect in, or breakdown of, any part of her hull, machinery or equipment, the time so lost, and the cost of any extra bunkers consumed in consequence thereof, and all extra provide directly related and actually paid expenses (always limited to one shift maximum) expenses [sic] … may be deducted from the hire only after having reached an agreement with the Owners on the figures (costs, times, bunkers).”
Clause 23 was headed “ Liens” and dealt, among other things, with overpaid hire:
“The Owners shall have a lien upon all cargoes and all sub-freights and/or sub-hire and/or all demurrage and/or all dead freight and/or all damages detention and/or all other amounts due to Charterers for any amounts due under this Charter Party, including general average contributions, and the Charterers shall have a lien on the Vessel for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once. …”
The charterparty also incorporated a set of Additional Clauses, including this one:
“ Clause 67. BIMCO terms
Notwithstanding anything within this charter party, the riders, the recap, and/or the “BIMCO infections or contagious disease clause for time charter parties” and/or its equivalent, in the event any member of the crew or persons (except those on charterers' behalf) on board the vessel is found to be infected with a highly infectious or contagious disease and the vessel has to (i) deviate, (ii) be quarantined, or (iii) barred from entering any port, all time lost, delays and expenses whatsoever shall be on owners' account and the vessel shall be off-hire.
…
Owners are fully aware that vessel is fixed for one trip via East Coast India to China.”
The vessel loaded a cargo of iron ore pellets at Visakhapatnam, India for carriage to China, and was ordered by the Charterers to sail to Lanqiao for discharge. It arrived off that port on 4 May 2021 but was not able to obtain a berth. In the event, the cargo was not discharged, and the vessel was not redelivered by the Charterers to the Owners until 28 August 2021.
Except for a period of five days between 22 and 26 May 2021, the Charterers did not pay any hire for the vessel between 4 May and 28 August 2021. They contended that the vessel went off-hire on 4 May 2021 and remained off-hire thereafter on the basis that three crew members had positive rapid lateral flow tests for Covid on 1 May 2021. The Charterers relied in this regard on clause 67 quoted above.
The Owners disputed that the vessel was off-hire for any of the period at issue, relying in particular on line 146, and applied for a partial final award of hire under section 47 of the Arbitration Act 1996 in the sum of US$2,147,717.79.
(C) THE AWARD
The Owners and the Charterers respectively appointed two very experienced maritime arbitrators, Michael Baker-Harber (now, sadly, deceased) and Bruce Harris.
The arbitrators noted that there was a dispute about the underlying facts:
“9. There is a dispute as to the precise situation on board the vessel concerning infection, and the facts in that regard will have to be investigated later in the arbitration if it proceeds. The owners contend that 3 crew members tested positive with rapid lateral flow tests on 1 May, 3 days before the vessel arrived off Lanquiao [ sic], but 2 weeks after she had arrived at Visakhapatnam, which the owners said indicated that the crew in question were not infected when the vessel had arrived at that port.
10. It was impossible to arrange for PCR testing of those crewmembers, but on the owners' case if they had Covid-19 (lateral low tests not being wholly reliable) they had recovered by no later than 13 May, as their temperature records for that day and subsequent days showed. Meanwhile, the charterers asserted that the vessel went off hire on 4 May and remained off hire thereafter. They relied on clause 67, quoted above. This situation continued – subject to a brief excepted period referred to below – until 28 August when, the owners said, the agreed trip was completed, and the vessel redelivered. …”
The arbitrators...
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