Gravelor Shipping Ltd v GTLK Asia M5 Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 27 January 2023 |
| Neutral Citation | [2023] EWHC 131 (Comm) |
| Docket Number | Case No: CL-2022-000493 |
| Court | Queen's Bench Division (Commercial Court) |
[2023] EWHC 131 (Comm)
Mr Justice Foxton
Case No: CL-2022-000493
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexander Wright KC and Edward Jones (instructed by HFW LLP) for the Claimant
Chris Smith KC and Andrew Leung (instructed by Tatham & Co) for the Defendants
Hearing date: 12 January 2023
Draft judgment to parties: 23 January 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 27 January 2023 at 10:30am.
INTRODUCTION
This is the expedited hearing of:
i) the Claimant's ( Gravelor's) application for summary judgment in the form of declaratory relief as to and an order for specific performance of obligations arising under two bareboat charterparties; and
ii) the Defendants' ( GTLK M5 and GTLK M6 and together the Owners) application for a stay of part of the dispute pursuant to s.9 of the Arbitration Act 1996.
The Owners' stay application had originally been advanced in relation to the entirety of Gravelor's claim, and for that reason, I had directed that it be argued and determined first. However, Mr Smith KC made it clear in his skeleton argument that the argument was only maintained in relation to a limited and essentially consequential issue. For that reason, I deal with the stay application (briefly) at the end of the judgment.
THE BACKGROUND
The Charterparties
This dispute arises out of two bareboat charterparties (as novated) dated 24 June 2019 and 16 July 2019 ( the Charterparties) for the bulk carriers MV “WL TOTMA” ( Totma) and MV “WL KIRILLOV” ( Kirillov) (together the Vessels).
Gravelor, a Cypriot company, is the bareboat charterer of the Vessels. On 5 November 2019, the Charterparties were novated to the Owners, who are the registered owners of the Vessels. The Owners are direct subsidiaries of GTLK Asia Maritime Limited ( GAML) which is owned by GTLK Asia Limited ( GTLK Asia). The ultimate parent company of the GTLK group was JSC State Transportation Leasing Company ( JSC GTLK), which is owned and/or controlled by the Russian Ministry of Transportation. There is a dispute between the parties as to whether GAML is still in the ultimate beneficial ownership of the Russian state, or whether the ultimate beneficial ownership changed following a transaction in August last year.
The Charterparties were essentially finance leases, providing Gravelor with a means of financing the purchase of the Vessels, and they contemplated that at their expiry, title to the Vessels would be transferred to Gravelor. The Charterparties set out a formula for the calculation of the sums payable by Gravelor for the Vessels, which would depend upon the circumstances in which the Charterparties came to an end. Thus:
i) If the Charterparties were terminated for Gravelor's default, Gravelor would be obliged to purchase the Vessels against the payment on demand of the total of the amounts set out in clause 18.3 of the Charterparties, which would include default interest and other costs, expenses and losses incurred by the Owners ( the Clause 18.3 Sum).
ii) Gravelor also had early purchase options, and a purchase obligation at the end of the Charterparties' term if they expired without breach on its part, in which eventuality certain of the items making up the Clause 18.3 Sum were not payable.
The key terms of the Charterparties
By clause 23, the Charterparties are governed by English law.
In the definitions section:
i) “Sanctions and Export Controls” were defined as “…any and all of the following: … (ii) U.S. sanctions and export controls including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (the ‘OFAC’), the U.S. Department of State, the U.S. Department of Commerce or any other U.S. Government authority or department; (iii) EU restrictive measures implemented pursuant to any EU Council or Commission Regulation or Decision adopted pursuant to a Common Position in further of the EU's Common Foreign and Security Policy…(v) any other sanctions or export control laws and regulations applicable to the Ship, any Obligor, the Owner or any part thereof which are in relation to the supply, use, operation or financing or commercial ships or the transactions contemplated under the Charter Documents”.
ii) “Sanctions Target” was defined as: “…a target or subject of any Sanctions and Export Controls including, without limitation, any person or entity designated as a Specially Designated National and Blocked Person or included in the annex to the Executive Order by OFAC”.
Clause 8.3 provided that all amounts payable by Gravelor under the Charterparties must be paid for value on the due date to the Owners' bank account held with JP Morgan Chase Bank NA, Hong Kong Branch or “such other account as notified by the Owner to the Charterer from time to time”.
By clause 8.6:
“(a) All amounts payable by the Charterer under any Charter Document (other than payments under clause 9 (Expenses and indemnities) will be paid in Dollars in time to enable the funds to be cleared on the due date for payment…
(d) If any sum due from the Charterer under any Charter Document…is received or recovered in the Second Currency, the Charterer will, when the Owner receives that sum, indemnify and hold harmless the Owner from and against any loss suffered as a result of any discrepancy between: (A) the rate of exchange used for converting the sum in question from the First Currency in the Second Currency; and (B) the rate or rates of exchange at which the Owner may in the ordinary course of business purchase the First Currency with the Second Currency”.
Clause 8.10 was entitled “Sanctions payment restrictions” and provided as follows:
“Where a payment under this Charterparty is incapable of being processed by the relevant banking institution and has not been received by the Owner on the due date by virtue of the Owner becoming a Sanctions Target, the Owner and the Charterer shall cooperate and promptly take all necessary steps in order for the payments to be resumed. Any delay in payments resulting solely from the circumstances referred to in the immediately preceding sentence shall not be deemed an Event of Default contemplated by clause 17.1(a) of this Charterparty.”
Clause 12.16, entitled “Sanctions”, states:
“(a) The Charterer must not employ and will procure that the Ship is not employed nor permit the Ship to be employed:
(i) in breach of any Sanctions …
(ii) in any manner or for any purpose which would violate or cause the Owner to violate, when and as applicable, any Sanctions
(b) While engaging in any activities with or related to the Ship, the Charterer shall not violate and shall not cause or permit any of its affiliates or the Owner to be in violation of any Sanctions or Export Controls…”
Clause 17, entitled “CHARTERER DEFAULT” provides:
“17.1 Charterer Events of Default
The following events or circumstances will be Events of Default:
(a) If any Charterhire or other amount payable by the Charterer under this Charterparty or under any Charter Document is not received within three (3) Business Days of the due date in the case of a scheduled payment or five (5) Business Days from a demand or any other applicable due date set out in this Charterparty in the case of an unscheduled payment…”
Clause 17.2, entitled “Consequences of an Event of Default”, provides:
“The Charterer agrees with the Owner that:
(a) it is a condition of this Charterparty that the occurrence of any of the events described in clauses 17.1(a) to 17.1(d) inclusive will constitute an event of default and a repudiatory breach of this Charterparty; and
(b) the occurrence of any of the events described in clauses 17.1(e) to 17.1(s) inclusive will constitute an event of default,
which in each case will entitle the Owner to terminate the chartering of the Ship in accordance with clause 18.1 (Owner's rights) and to recover the amounts specified in clause 18.3 (Payments upon termination) from the Charterer as liquidated damages in the case of a repudiatory breach and as a liquidated sum or debt in the case of an event of default.”
Clause 18.1, entitled, “Owner's rights” relevantly provides:
“At any time after an Event of Default has occurred and provided the same is continuing the Owner may, at its option:
(a) direct the Charterer either:
(i) to leave the Ship at the port where it is then located or, if it is not then in port, to direct it to the port designated by the Owner, in which event the Charterer's right to retain possession of the Ship will terminate immediately (if the Ship is then in port) or upon the Ship's docking at the designated port; or
(ii) to redeliver the Ship to the Owner immediately in accordance with clause 16 (Redelivery); and/or
(b) without being obliged to give notice to the Charterer, retake possession of the Ship wherever it is located; and/or
(c) (in the case of an Event of Default described in clauses 17.1(a) to 17.1(d) (inclusive)) accept the Charterer's repudiatory breach and (in the case of any Event of Default) by notice to the Charterer (a “Default Notice”) terminate the chartering of the Ship immediately; and/or … .”
Clause 18.3 entitled “Payments upon termination” states:
“On termination of the Chartering of the Ship or the acceleration...
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