MSC Mediterranean Shipping Company SA v Owners of the ship 'Tychi' [QBD (Admiralty)]
| Jurisdiction | England & Wales |
| Judge | Peter Gross,Otton,Waller,Clarke L JJ. |
| Judgment Date | 31 March 1999 |
| Date | 31 March 1999 |
| Court | Queen's Bench Division (Admiralty) |
Queen's Bench Division (Admiralty Court);
Court of Appeal (Civil Division).
Peter Gross QC (sitting as a deputy Admiralty Judge); Otton, Waller and Clarke L JJ.
Timothy Young QC and Christopher Smith (instructed by More Fisher Brown) for the appellant.
Dominic Kendrick QC (instructed by Richards Butler) for the respondent.
The following cases were referred to in the judgment of Peter Gross QC:
Antonis P Lemos, TheELR [1985] AC 711.
Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance CoELR [1985] AC 255.
Policon Ltd v Owners of Ship “Lloyd Pacifico” [1994] CLC 680.
River Rima, TheWLR [1988] 1 WLR 758.
Span Terza, TheUNK [1982] 1 Ll Rep 225.
The following additional cases were referred to in the judgment of Clarke LJ:.
Aegean Sea Traders Corp v Repsol Petroleo SA (“The Aegean Sea”) [1998] CLC 1090.
Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (“The Torenia”)UNK [1983] 2 Ll Rep 210.
Andrea Ursula, TheELR [1973] QB 265.
Antonis P Lemos, TheELR [1985] AC 711.
Caffin v AldridgeELR [1895] 2 QB 366, 648.
Congreso del Partido, IELR [1978] QB 500.
Djatianom, The [1982] 2 HKLR 427.
Eschersheim, TheWLR [1976] 1 WLR 339.
Evpo Agnic, TheUNK [1988] 2 Ll Rep 411.
Fua Kavenga, The [1987] 1 NZLR 550.
Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance CoELR [1985] AC 255.
Laemthong International Lines Co Ltd v BPS Shipping LtdUNK (1997) 149 ALR 675.
Ledesco Uno, TheUNK [1978] 2 Ll Rep 99.
Maritime Trader, TheUNK [1981] 2 Ll Rep 153.
Permina 108, TheUNK [1978] 1 Ll Rep 311.
Policon Ltd v Owners of Ship “Lloyd Pacifico” [1994] CLC 680.
Sextum, TheUNK [1982] 2 Ll Rep 532.
Span Terza, TheUNK [1982] 1 Ll Rep 225.
Shipping — Arrest of ship — Whether “slot charterer” was charterer of ship so as to give rise to right of arrest — Whether plaintiff's claim sufficiently connected with ship to give rise to right of arrest — Supreme Court Act 1981, s. 20(2)(h), 21(4)(ii).
This was an application to discharge the arrest of a ship and an appeal against the deputy Admiralty judge's decision not to discharge the arrest.
The plaintiff, “MSC”, and defendant, “POL”, entered into an agreement in 1993 under which MSC, as a vessel operator, would charter to POL, as the container operator, container “slots” on vessels operating on MSC's North Atlantic service. Under the slot charter agreement POL agreed to charter a number of slots per sailing on a “whether used or not” basis at a specified basic slot price. POL ran into financial difficulties and MSC claimed from POL sums due under or damages arising out of breach of the agreement. In support of its claim MSC arrested the Tychi, a vessel owned by POL, relying on s. 20(2)(h) and s. 21(4)(ii) of the Supreme Court Act 1981. POL applied for release of the vessel arguing that it was not a “charterer” within s. 21(4)(i) of the 1981 Act. The deputy Admiralty judge held that the decision of the Court of Appeal in The Span TerzaUNK[1982] 1 Ll Rep 225 showed that “charterer” in s. 21(4)(i) was not confined to a demise charterer and that a slot charterer could therefore be within the section despite the fact that he did not charter the whole of the ship. The slot charter was recognisably a charterparty and POL was therefore a charterer within s. 21(4). POL appealed arguing that, even if a slot charterer could be within s. 21(4), the payment terms under the agreement meant that POL was no longer a charterer once the credit term of 21 days had expired.
Held dismissing the appeal:
1. The term “charterer” in s. 21(4)(i) of the 1981 Act was not limited to demise charterers. (The Span TerzaUNK[1982] 1 Ll Rep 225applied; Laemthong International Lines Co Ltd v BPS Shipping LtdUNK(1997) 149 ALR 675considered.)
2. The expression “charterer” in s. 21(4)(i) could include a slot charterer. If charterer included time charterer it had to include also a voyage charterer. A voyage charterer of only part of a ship could still be “the charterer” of a ship and the same reasoning applied to a slot charterer.
3. POL were charterers of the ships on the basis that, as the judge held, the slot charter was a charterparty.
4. POL were charterers when each cause of action arose. The charter remained on foot so long as obligations remained to be preformed under it, including POL's obligation to pay.
Peter Gross QC: Introduction
On 17 March 1999 the vessel “TYCHI” was arrested. The defendant, Polish Ocean Lines (“POL”), which, as is common ground, is the owner of the vessel, applies by notice of motion for various relief, designed to secure the release of the vessel. At the conclusion of the hearing on Monday 22 March, I indicated that I would refuse the application and not discharge the arrest. These are the reasons for my decision. I say at once that I am grateful to Mr Smith, who appeared for POL and to Mr Kendrick QC, who appeared for the plaintiff (“MSC”), for their helpful submissions.
By way of summary and neutrally, MSC and POL entered into an agreement dated 17 May 1993, providing for MSC to “charter” container slots to POL on vessels operating on MSC's North Atlantic service. As the claim was clarified in argument, MSC now claims sums due under or damages arising out of the breach of that agreement from POL. In support of its claim, MSC arrested the Tychi, a vessel owned by POL, relying on s. 20(2)(h) and 21(4)(ii) of the Supreme Court Act 1981 (“SCA 1981”).
The Tychi is not one of the ships in connection with which the claim is said to have arisen. This is, instead, one of those comparatively unusual cases where the arrest is of a vessel owned by the alleged charterer at the suit of what might be termed the original shipowner, rather than the more usual case where the charterer instigates an arrest of one of the shipowner's vessels.
As provided by s. 20(1) and 20(2)(h) of the SCA 1981, the court in its admiralty jurisdiction has power to hear and determine:
“any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship”.
So far as material, s. 21(4) of the SCA 1981 provides that:
“In the case of any such claim as is mentioned in 20(2)(e)-(r) section 20(2)(e) to (r), where –
(a) the claim arises in connection with a ship; and
(b) the person who would be liable on the claim in an action in personam (‘the relevant person’) was, when the cause of action arose, the charterer of the ship,
an action in rem…maybe brought in the High Court against –
…
(ii) any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it.”
Against this background, the principal issues which arose on this application were as follows.
-
(a) Was POL a charterer within s. 21(4) of the SCA 1981?
The argument here concentrated on (i) whether a slot charterer was capable of being a charterer within s. 21(4) and, if so, (ii) whether under the agreement in question POL was such a charterer.
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(b) Is the claim sufficiently connected with a particular ship or ships so as to come within s. 20(2)(h) and s. 21(4)(a) of the SCA 1981?
Here, the focus of the argument turned on the connection required between the underlying agreement(s) and the claim advanced on the one hand and a particular ship or ships on the other, so as to satisfy the requirements of the statutory provisions in question.
It will be apparent that MSC needed to succeed on both issues (1) and (2) to maintain the arrest; conversely, in order to have the arrest discharged, it would have been sufficient for POL to succeed on either issue (1) or issue (2).
Before proceeding further, I should record that POL reserves its position to argue that the arrest should in any event be discharged on the ground that there was a novation of the slot charter agreement; the argument is that POL was replaced as a party to the agreement by a separate entity POL-Atlantic. If that is right, then it would seem to follow that POL was not the “relevant person” within s. 21(4)(b). If so, the arrest could not be sustained. This may be termed the “novation argument”. POL did not pursue it on this application but reserved its position to challenge the continuation of the arrest on this ground if it otherwise failed to have the arrest lifted. For simplicity, I shall so far as possible ignore the novation argument in setting out the facts relevant to this application.
Reverting to issues (1) and (2) and given their nature, it did not seem to me right that I should approach them simply on the basis of inquiring whether MSC has a good arguable case. Instead it appeared necessary to “bite the bullet” and decide these issues, albeit on the assumption that MSC could make good its claim on the facts for the sums due or damages in lieu thereof. I do not think that either counsel ultimately disagreed with this approach.
By a “Memorandum of decisions among ACL/MSC/POL regarding their slot charter agreement under the trans atlantic agreement FMC No. 202-01135” dated 17 May 1993 (“the 17 May agreement”) POL agreed to charter from MSC (and ACL, with whom I am not concerned) a number of slots per sailing on a “whether used or not” basis at a specified basic slot price. In the light of the arguments deployed by the parties, there is no escaping the need to refer to a number of the terms of the 17 May agreement. In the circumstances, the most convenient course is to set out all these terms now; they provide as follows:
“Definitions
In this Memorandum of Decisions and the Schedules hereto:
Containership means Those vessels identified from time to time in Schedule 1
Container Operator means the Party which is the carrier under the bill of lading or other contract of carriage in respect of goods
Slot means the space on any Containership for the equivalent of a...
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