Latvian Shipping Compay v The Russian People's Insurance Company (Rosno) Open Ended Joint Stock Company
| Jurisdiction | England & Wales |
| Judge | Mr Justice Field |
| Judgment Date | 01 June 2012 |
| Neutral Citation | [2012] EWHC 1412 (Comm) |
| Docket Number | Claim No 2011 Folio 783 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 June 2012 |
[2012] EWHC 1412 (Comm)
Mr Justice Field
Claim No 2011 Folio 783
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND IN THE MATTER OF AN ARBITRATION
AND IN THE MATTER OF AN APPEAL UNDER SECTIONS
68 AND 69 OF THE ARBITRATION ACT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Philip Riches (instructed by Clyde & Co LLP) for the Claimant
Mr Thomas Macey-Dare (instructed by Stephenson Harwood) for the Defendant
Hearing dates: 25 & 26 January 2012
There are before the court three applications. The first two challenge an arbitral award dated 20 May 2011 made Mr R Lindsay Gordon, Mr Christopher J W Moss and Mr Brian Williamson. The first is made under s. 68 of the Arbitration Act 1996 ("the Act") and relies on eight compendious grounds of serious irregularity. The second is an appeal under s. 69 of the Act on two questions of law, leave having been granted by Burton J on 23 September 2011. The third is an application to set aside the order made by Burton J on the ground that he was misled by the Claimant ("LSC").
The issue that fell to be decided by the Tribunal was whether damage to the controllable pitch propeller and/or tail shaft hub (hereinafter "the propeller") of the "Ojars Vacietis" ("the vessel") had occurred when she grounded at Wilmington, North Carolina, on 30 January 2008, or subsequently when she was sailing through ice in the Gulf of St Lawrence and the St Lawrence River. The vessel was an ice strengthened chemical/products motor tanker, classed by the Russian Register, RRMS. LSC as operator of the vessel was the assured under a policy of marine insurance issued by the defendant ("ROSNO") dated 29 June 2007 ("the policy"). It was common ground that whilst the vessel was in the Gulf of St Lawrence from 07.15 hours on 9 February 2008 until 5.45 hours on 18 February 2008 she was not covered by the policy.
The vessel arrived off Wilmington, North Carolina, on 30 January 2008, and, shortly after having picked up the pilot, grounded in an area known as Baldhead Shoal at 08.08 hours. She succeeded in refloating at 10.15 hours. The US Coastguard ("USCG") ordered that prior to departure a classification society surveyor was to attest to the proper operating condition of the vessel's navigation, steering and propulsion system, and the hull. On 31 January 2008 three USCG officials conducted inspections as the vessel proceeded to the sea buoy and about 3 hours later USCG permitted the vessel to enter port and discharge that part of her cargo of methanol destined for Wilmington. The vessel's Master at this time was Captain Korolovs, who was replaced soon afterwards by a relief Master, Captain Zakks. Mr Parkhomenko was the Chief Engineer and the Second Engineer was Mr Sofijans.
Whilst the vessel was discharging, further inspections and tests were carried out by USCG officials and by a Class surveyor, Mr Utrobin. Despite the fact that the propeller was not visible from the quay and that inside the tank spaces numerous indentations were seen in the vessel's double bottom, neither Mr Utrobin nor USCG required an underwater survey to be carried out.
In the event, Mr Utrobin issued a report recommending that the vessel have permission to proceed to Quebec to discharge the remainder of her cargo before having the hull repaired by 16 February 2008.
On 1 February 2008, Mr Aizenstadts, LSC's technical director, or Mr Piskunovs, LSC's technical superintendent, sent approaches to six ship repair yards concerning the repair of the double bottom shell plating after the grounding of the vessel. None of these approaches mentioned any damage to the propeller. The following day the vessel left Wilmington and the pitch of her propeller was set at 8.0 for full ahead. Over the next seven hours to 11.40 on 3 February, her average speed over the ground was 9.2 knots which was noticeably less than was to be expected. The following day requests for quotes for repair of the hull were sent by Mr Piskunovs to two shipyards in Eastern Canada and these referred to damaged propeller blades. On 6 February the pitch of the propeller was reduced to 7.0 pursuant to an instruction from the charterers that she was to proceed at economical speed. Also on that date Mr Piskunovs informed a shipyard that the damage to the vessel included the possible deformation of the propeller blades on the radius about 200 mm from the edge, and similar information was provided to another shipyard the following day.
On 7 February, it having become clear that the vessel could not reach a dry dock for repairs by 16 February, Mr Aizenstadts requested the Class surveyor due to attend the vessel at Quebec for an extension of the repair date. In doing so, he stated that the vessel was "in good seagoing state" and "have not found any negative consequences of the vessel's grounding; loss of speed, vibration or any leakages."
In the evening of 8 February, the vessel picked up the Ice Adviser, Mr Nunn, and the LSC superintendent, Mr Sorins. She encountered ice for the first time at 22.00 hours on 9 February and proceeded through pack ice and brash ice and at one point required the assistance of an icebreaker. She berthed at Quebec on 14 February in the presence of brash ice and discharged her cargo.
Whilst she was discharging a Class surveyor extended the period in which repairs were to done to 4 March. On 15 February LSC sent a message to propeller repairers reporting that blades Nos 1 and 2 were bent at their tips towards the stern by 15 degrees and 10 degrees respectively.
The vessel completed discharging on 15 February and she left the berth in the presence of ice and passed through areas of ice on her outbound voyage from Quebec. She left the Gulf of St Lawrence on 18 February and then proceeded to Las Palmas en route for Dakar where she was to be repaired. At Las Palmas a dive survey revealed extensive damage to her propeller. The repairs to the hull and propeller carried out in Dakar took a total of 160 days. LSC claimed a total of US$3,715, 328 under the policy for the losses resulting from the damage to both the hull and the propeller maintaining that all of the damage occurred as a result of the grounding. ROSNO accepted that the grounding was an insured peril and paid out US$2,105,987.09 1 for losses in respect of the hull damage agreeing that this had occurred during the grounding. However, it refused to pay out for losses in respect of the damage to the propeller, contending that this damage had not been incurred as a result of the grounding. The policy contained an arbitration clause providing that disputes should be decided by LMAA arbitration. Thus it was that the dispute between the parties came before the arbitrators appointed in this reference, Messrs Gordon, Moss and Williamson.
The parties'cases before the Tribunal
LSC's case
LSC contended that the whole of the damage to the propeller repaired at Dakar occurred during the grounding and sought to be awarded the whole of the propeller repair costs. It did not run an alternative case designed to cover the situation where the Tribunal found that part only of that damage was caused by the grounding.
LSC accepted that it had to prove its case that the damage to the propeller occurred during the grounding on the balance of probabilities and submitted that any alternative scenario would only prevent it from succeeding in discharging this standard of proof if it were sufficiently cogent and credible to amount to a real possibility. On the evidence, ROSNO had failed to show that ice damage to the propeller was a real possibility; and even if it were such a possibility, there had been no such damage: the propeller was ice strengthened and too strong to have been damaged by ice and there had been no further deterioration in the propeller's performance after berthing and deberthing at Quebec, which was where ROSNO's experts said the damage was most likely to have occurred.
LSC submitted that in the course of the proceedings ROSNO admitted that part of the damage to the propeller may have been sustained during the grounding but contended that the bulk of the damage repaired at Dakar had been suffered during the ice passage. In respect of this submission, LSC contended that its consequence was that LSC did not have to prove damage not denied, but ROSNO had failed to specify which part of the propeller damage may have occurred during the grounding and this was unsatisfactory. However, as a result of the admission, it was much more straightforward for LSC to show that all of the damage was sustained during grounding; the non-specific admission eased the burden of proof on LSC.
LSC relied on the evidence of individuals who were on board the vessel at the time of grounding (Mr Sofijans and Capt. Zakks) to the effect that: (i) there were noises from the propeller consistent with it coming into contact with the seabed and/hard materials on the seabed during the grounding; (ii) following the grounding, the vessel began to experience abnormal vibrations when the propeller was at a low pitch, consistent with the propeller having suffered damage.
LSC also relied on expert evidence that: (i) there was a large number of stones and rocks in the area of the grounding; (ii) the damage suffered by the propeller as seen at Dakar was of a type associated with hitting hard materials such as rock and stones and not of a type associated with hitting ice; and...
To continue reading
Request your trial
-
Gabriele Volpi v Delanson Services Ltd
...or expressed its conclusions on the essential issues at greater length ( Latvian shipping v. Russian People's Insurance Co [2012] 2 Lloyd's Rep 181, para 30). (viii) A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue ( Fidel......
-
S v A and Another
...fault that can be found with it: per Zermalt, as cited and followed in, for example, the post-Act case of The Ojars Vacietis [2012] 2 Lloyd's Rep 181 at [34]. 49 As to the present case, Mr Lewis QC submitted that the high threshold for serious irregularity had been met. In essence, he submi......
-
The Islamic Republic of Pakistan v Broadsheet LLC
...what has occurred is “far removed from what could reasonably be expected from the arbitral process”: Field J in The Ojars Vacietis [2012] 2 Lloyd's Rep 181 at [30]; iii) the importance of upholding arbitration awards has been repeatedly stressed: Bingham J in Zermalt Holdings SA v Nu Life ......
-
ZCCM Investments Holdings Plc v Kansanshi Holdings Plc
...it to be corrected. I have been reminded of the words of Field J in Latvian Shipping Company v The People's Insurance Company OEJSC [2012] EWHC 1412 (Comm): “the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, in......
-
The English High Court Shuts Out “Inadequate Reasons” as a Basis to Set Aside an International Arbitration Award – ‘Non-Intervention’ Approach of Courts in the Arbitration Process is Reinforced
...Act was to reduce drastically the extent of intervention of courts in the arbitral process. [emphasis added]. 2 The Ojars Vacietis [2012] 2 Lloyd's Rep 181 Field J at paragraph 3 Zermalt Holdings SA v Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14 Bingham J (as he then was) stated (cited i......
-
English Court Refuses To Set Aside Arbitral Award On Grounds Of 'Inadequate Reasons'
...[4] Arbitration Act 1996, s 68. [5] Islamic Republic of Pakistan & Anor v Broadsheet LLC at para 17, citing The Ojars Vacietis, [2012] 2 Lloyd's Rep 181 and Terna Bahrain Holding Co YJJ v Bin Kamel Al Shamzi, [2013] 1 Lloyds Rep [6] Ibid at para 31, citing UMS Holding Ltd v Great Statio......