Navision Shipping A/S v Precious Pearls Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 10 March 2021 |
| Neutral Citation | [2021] EWHC 558 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2020-000119 / 000138 |
(in Claim 119)
(in Claim 138)
[2021] EWHC 558 (Comm)
Mr Justice Andrew Baker
Case No: CL-2020-000119 / 000138
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Nigel Cooper QC (instructed by Lax & Co LLP) for Conti Lines Shipping NV
Nevil Phillips (instructed by Birketts LLP) for Navision Shipping A/S
Timothy Young QC (instructed by Stembridge Solicitors Ltd) for Precious Pearls Ltd
Hearing date: 1 March 2021
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied.
Copies of this version as handed down may be treated as authentic.
Introduction
In The Global Santosh [2016] UKSC 20, [2016] 1 WLR 1853, the ship was substantially delayed at Port Harcourt, Nigeria, laden with bulk cement for discharge there pursuant to a chain of charterparties. Transclear SA, the final sub-charterer in the chain, caused the ship to be arrested in connection with its claim for demurrage against IBG Investments Ltd, its buyer for that cargo. The head charter, a time charter on the Asbatime form with additional clauses, was between NYK Bulkship (Atlantic) NV as owner and Cargill International SA as charterer. Cargill sub-chartered to Sigma Shipping Ltd, and there was no finding as to whether there were further links in the chain or whether, rather, Transclear sub-chartered directly from Sigma. Additional clause 49 put the ship off hire inter alia upon being arrested or detained, until the time of her release, “ unless [the] arrest [etc] [was] occasioned by any personal act or omission or default of the charterers or their agents”. The Supreme Court held that Transclear's (and IBG's) acts in the course of the demurrage dispute were not any vicarious performance of an obligation of Cargill's as charterer. Therefore, they were not acts, omissions or defaults of an agent of Cargill's so as to trigger the clause 49 proviso, because Transclear was only in any sense Cargill's agent when and to the extent acting, if it did, as the agency by which Cargill sought to discharge some obligation of its under the time charter.
In this case, the m.v. Mookda Naree arrived at Conakry, Guinea, in early December 2018, to discharge c.10,700 m.t. of milling wheat carried from Novorossiysk, Russia. She was arrested at Conakry on 15 December 2018, and remained under arrest until 12 January 2019, at the instance of a Guinean company, Societe Moulin d'Or Guinea (“SMG”). The arrest was procured to secure a claim that SMG asserted against Cerealis, a French wheat trading company.
SMG's claim alleged short delivery of a cargo of milling wheat at Conakry in June/July 2018 as against the bill of lading quantity for which SMG said it had paid pursuant to a sale contract between Cerealis as seller and SMG as buyer. The carrying vessel on that occasion, of which Cerealis had been a sub-charterer, was the m.v. Supertramp, a ship unrelated to the Mookda Naree. The Mookda Naree cargo was destined for a different Cerealis buyer, Moulin Moderne du Mali Segou (“MMMS”).
The December 2018 call at Conakry was pursuant to a head charter between Precious Pearls Ltd (“the Owner”) as owner and Navision Shipping A/S (“Navision”) as charterer, a sub-charter between Navision as disponent owner and Conti Lines Shipping NV (“Conti”) as charterer, and a sub-sub-charter between Conti as disponent owner and Cerealis as charterer.
The head charter and the sub-charter were time charters on the Asbatime form with additional clauses. In both cases, additional clause 47 put the ship off hire inter alia upon her being detained or arrested by any legal process, until the time of her release, “ unless such … detention or arrest [was] occasioned by any act, omission or default of the Charterers and/or sub-Charterers and/or their servants or their Agents.” It is common ground that in the context of both time charters, Cerealis was a “ sub-Charterer” within the clause 47 proviso.
By separate arbitration awards each dated 11 February 2020, supported by a single set of reasons, following arbitration references conducted together, Simon Croall QC, Mark Hamsher and Prof Charles Debattista held that the clause 47 proviso applied, so that Mookda Naree was not off hire after 12:00 hrs on 17 December 2018, because her detention under arrest thereafter was occasioned by Cerealis' failure promptly to deal with or secure SMG's claim so as to procure her release.
Additional clause 86 of the head charter, not included in the sub-charter, provided as follows:
“ Trading Exclusions
…
When trading to West African ports Charterers to provide adequate security guards during port stays in these countries to protect the vessel her crew and cargo.
When trading to West African ports Charterers to accept responsibility for cargo claims from third parties in these countries (except those arising from unseaworthiness of vessel) including putting up security, if necessary, to prevent arrest/detention of the vessel or to release the vessel from arrest or detention and vessel to remain on hire.
…”
The arbitrators held that the second of those paragraphs within clause 86 applied, being in their view not limited to claims concerning cargo carried under the head charter, and so for that reason also under that charter, the Mookda Naree was not off hire, indeed she was on hire for the entire period under arrest. For brevity below, whenever I refer to ‘clause 86’ I shall in fact be referring only to that paragraph held by the arbitrators to be applicable.
Conti and Navision appeal against the resulting awards in favour of Navision and the Owner respectively, with leave granted by Foxton J by order dated 23 June 2020. The awards were for US$266,946.38 and damages to be assessed, plus interest and costs, in the head charter reference, and US$419,198.55, plus interest and most of the costs, in the sub-charter reference.
It is both necessary for Conti, and sufficient for its appeal to succeed in full, that the arbitrators should have erred in law in relation to clause 47, as Conti contends they have. For Navision's appeal to succeed, there must have been an error of law in relation to clause 86, the impact of which, if there is such an error, will depend on whether the arbitrators also erred in relation to clause 47. If the arbitrators misconstrued clause 86 but not clause 47, a proportionately small adjustment is needed to the hire awarded in the head charter reference and the award of damages to be assessed cannot stand, as it was founded solely upon clause 86. For Navision's appeal to succeed in full, the arbitrators must have erred as regards both clauses.
The Questions of Law
The questions of law on which Foxton J granted leave to appeal are these:
(1) In the sub-charter appeal:
Where an off-hire clause in a time charter provides that the vessel is to be off hire during any period of capture, detention, seizure or arrest unless such capture, seizure or arrest is occasioned by any act or omission or default of the charterers and/or sub-charterers and/or their servants or agents, what is the test for whether or not there has been an omission by a sub-charterer such that the vessel remains on hire during a period of arrest?
No such generic question arises or is capable of an answer except the glib answer that it is a matter of construing the particular clause. The question is whether the arbitrators misconstrued clause 47 in saying that the proviso applied on the facts of this case.
(2) In the head charter appeal:
On a proper construction of the [sub-charter] (i) was the Vessel on hire during the period of an arrest in respect of a claim by a buyer against a seller under a sale contract for short delivery of goods carried on board a vessel other than the chartered vessel and (ii) did [Navision] have an obligation to put up security to prevent the arrest or to release the Vessel from arrest.
With respect, I do not find that helpful either. The real questions are (a) as above, whether the arbitrators misconstrued clause 47, and (b) whether SMG's claim against Cerealis for short delivery of the Supertramp cargo was a “ cargo claim” within clause 86.
The argument by Conti and Navision (as appellant) on clause 47 is that upon its proper construction there is only an “ omission” by a sub-charterer when it fails to do something its sub-charter obliged it to do. There is no finding that Cerealis was under any obligation under its sub-charter to deal with or secure SMG's claim, or otherwise to procure the prompt release of Mookda Naree from arrest.
The argument in response by the Owner and Navision (as respondent) is that the arbitrators were not wrong to construe clause 47 as they did, namely as follows:
“68. Not all inaction will qualify as an omission or default in this context. For there to be an omission within the meaning of clause 47, there must be a failure to act. … [N]either an act nor an omission necessarily connotes any degree of culpability. However an omission does connote a failure to act. Such a failure requires that there is either an obligation to act or that the circumstances are such that it could reasonably be expected that a party in that position would or should appreciate that action is appropriate and/or that failing to act might give rise to adverse consequences.”
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