NKD Maritime Ltd v Bart Maritime (No. 2) Inc.
| Jurisdiction | England & Wales |
| Judgment Date | 24 June 2022 |
| Neutral Citation | [2022] EWHC 1615 (Comm) |
| Year | 2022 |
| Docket Number | Case No: CL-2020-000216 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1615 (Comm)
THE HON Mr Justice Butcher
Case No: CL-2020-000216
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Simon Rainey QC and Ms Claudia Wilmot-Smith (instructed by Brookes & Co.) for the Claimant
Mr Timothy Young QC and Ms Colleen Hanley (instructed by Wikborg Rein LLP) for the Defendant
Hearing dates: 3–5, 9–12 May 2022
Approved Judgment
THE HONOURABLE Mr Justice Butcher
This case involves a dispute as to whether the termination of an agreement for the sale of a vessel was valid. The backdrop to the dispute is the onset of COVID-19 restrictions in India and one of the issues is whether lock down measures imposed by the Indian authorities constituted or gave rise to a relevant force majeure event.
The Parties
The Defendant (‘Bart’) was, in March 2020, the owner of the ‘SHAGANG GIANT’, a converted Very Large Ore Carrier (‘the Vessel’), which had been built in 1993. Bart wished the Vessel to be scrapped. To that end Bart entered into a contract to sell the Vessel to the Claimant (‘NKD’), which is a company specialising in the acquisition of shipping tonnage for scrapping and / or recycling. It is unusual for vessel owners to sell directly to recycling yards; normally they sell to cash buyers, who sell to the recycling yards. NKD is the exclusive cash buyer for the Shree Ram Group, which operates recycling yards at Alang, India, and the intention was that the Vessel should be scrapped at Alang.
The MOA
The contract between Bart and NKD for the sale of the Vessel was contained in a Memorandum of Agreement dated 5 March 2020 (‘the MOA’). The MOA defined Bart as ‘the Seller’ and NKD as ‘the Buyer’. Amongst the provisions of the MOA were the following:
‘ The Seller agrees to sell and the Buyer agrees to purchase the Vessel … on the following terms and conditions which, in particular, include an undertaking to recycle the Vessel in a safe and environmentally sound manner consistent with international and national law and relevant guidelines …
Ship Recycling Facility …
Ship Recycling Facility of Shree Ram and associated yards, to be declared latest 5 (five) days prior to Vessel's arrival at the Delivery Location. …
1. Purchase Price & Payments
a. Purchase Price
The Buyer shall pay a rate of US$ 366.00 (United States Dollars Three Hundred Sixty Six) per long ton lightweight, totalling US$14,215,743.78 (United States Dollars Fourteen Million Two Hundred Fifteen Thousand Seven Hundred Forty Three and Seventy Eight cents) in cash …
b. Initial Payment
Latest within 2 (two) Banking Days after the Buyer has counter-signed this Agreement by e-mail attachment, the Buyer shall pay 30% (thirty per cent) of the Purchase Price i.e. US$4,264,723.13 (United States Dollars Four Million Two Hundred Sixty Four Thousand Seven Hundred Twenty Three and Thirteen cents) nett of bank charges, to the Seller …
c. Balance Payment
The 70% (seventy per cent) balance of the said Purchase Price i.e. US$9,951,020.65 (United States Dollars Nine Million Nine Hundred Fifty One Thousand Twenty and Sixty Five cents), less the Buyer's 3% (three per cent) address commission of US$426,472.31 (United States Dollars Four Hundred Twenty Six Thousand Four Hundred Seventy Two and Thirty One cents), totalling US$9,524,548.34 (United States Dollars Nine Million Five Hundred Twenty Four Thousand Five Hundred Forty Eight and Thirty Four cents), shall be paid with same day value nett of bank charges … for the Seller to confirm receipt of payment within 2 (two) Banking Days of the Seller tendering Notice of Readiness for delivery to the Buyer and/or their representatives in exchange for the documents listed in Clause 4 hereunder.
…
2. Delivery
a. Delivery Location
The Vessel shall be delivered and taken over safely afloat at outer anchorage Alang, West Coast India, which shall be the “Delivery Location”.
If, on the Vessel's arrival, the Delivery Location is inaccessible for any reason whatsoever including but not limited to port congestion, the Vessel shall be delivered and taken over by the Buyer as near thereto as she may safely get at a safe and accessible berth or at anchorage which shall be designated by the Buyer, always provided that such berth or anchorage shall be subject to the approval of the Seller which shall not be unreasonably withheld. If the Buyer fails to nominate such place within 24 (twenty four) hours of arrival, the place at which it is customary for vessel (sic) to wait shall constitute the Delivery Location. The delivery of the Vessel according to this paragraph shall constitute full performance of the Seller's obligations and all other terms and conditions of this Agreement shall apply as if delivery had taken place.
Upon delivery, the Vessel shall be recycled at a Ship Recycling Facility …
b. Laydays and Cancelling
Expected time of delivery: 1 st March 2020 to 15 th April 2020 in the Seller's Option (hereinafter called the ‘Laydays’);
With cancelling at 1700 hours local time on 15 th April 2020 in Buyer's option (hereinafter called the ‘Cancelling Date’) …
c. Delivery Notices
The Seller and/or their agents will give 5, 3 and 1 (five, three and one) days approximate notice of arrival at the Delivery Location, in accordance with the terms and conditions of this Agreement.
…
If for reasons beyond the Seller's control the Vessel has not arrived at the Delivery Location on or before 1700 hours local time on the Cancelling Date and the Seller and the Buyer have failed, having acted in good faith, to reach mutual agreement on an extension to the Cancelling Date then the Buyer shall have the right to cancel this Agreement provided written or telegraphic notice of such cancellation is given to the Seller by the Buyer within 48 (forty eight) hours after notice of such delay is given by the Seller to the Buyer. …
d. Delivery Condition
The Buyer has accepted the Vessel without inspection. This Agreement is therefore outright and subject only to the terms and conditions of this Agreement.
The Vessel is to be delivered on an “as is, where is” basis …
3. Notice of Readiness
The Notice of Readiness should be served to the Buyer or the Buyer's agent or the Buyer's nominated representative at the delivery port, complete with the documents referred to in clause 4.e. below, during regular business hours …
4. Delivery Documents
a. Delivery Documents to be provided by the Seller:
i) Commercial invoice …
ii) Original Bill of Sale made in favour of the Buyer …
iii) A letter from the Seller undertaking full responsibility and consequences for any debts, loans, encumbrances … incurred up to the date and time of delivery of the Vessel …
iv) Letter of Undertaking from the Seller stating that they will immediately upon receipt of the Purchase Price of the Vessel in full, instruct the agents of the Vessel at Delivery Location, to deliver the Vessel to the Buyer …
v) A Letter of Undertaking from the Seller stating that they will provide a deletion certificate from the authorities of the Vessel's port of registry within 8 (eight) weeks from the date of delivery of the Vessel to the Buyer …
vi) Copies of the relevant pages of the Lightweight Proof …
vii) Certificate of Ownership and Encumbrance or equivalent …
viii) Minutes of the resolutions of the Board of Directors or Unanimous Written Consent of the Directors of the Vessel approving the sale…
ix) Power of Attorney authorising the Seller's representative(s) to act on their behalf …
x) Photocopy of the Vessel's Certificate of Registry.
…
d) The Seller … shall … provide draft copies of the above documents (except document a(vii) to the Buyer) at least 5 (five) days prior to tendering Notice of Readiness. The remaining original documents are to be handed to the … Buyer … at the time of closing.
e) Prior to, or at the time of tendering Notice of Readiness, the Seller will give originals of the following documents to the Buyer or their agents for Buyer's information only:
— A letter addressed to the Buyer from the Seller, written and signed by the Master of the Vessel, confirming that all crew wages and dues are fully paid …
— A document on board confirming the material of working propeller.
— A statement from the Seller's local agents stating that they have no pending dues against the Vessel at the time of delivery.
— Copies of the Lightweight Proof in the name or ex-names of the Vessel are to be onboard the Vessel at the time of delivery and handed to the Buyer's representatives.
The Buyer and/or their agents will also cooperate with the Seller and/or their agents to obtain the following documents from the relevant authorities:
— A Portworthy Certificate issued by an independent local surveyor.
— Pre-arrival documentation (identification of hazardous materials on board), clearances and certificates issued by all local and customs authorities, GMB, GPCB, AERB and Explosives Department.
The Seller are to provide necessary details and information for “Desk Review”, as provided to the Seller by the Seller's agents, 7 (seven) days prior to the expected date of the Vessel's arrival at Alang, West Coast India.
…
8. Buyer's Default
If any default is made by the Buyer to fulfil this Agreement and pay the Purchase Price within the time stipulate (sic) in Clause 1.c. … the Seller has the right to cancel this Agreement in which case the Initial Payment referred to in Clause 1.b., if lodged, shall belong to the Seller automatically without the Seller having to seek any judgment or prove any loss. The Seller shall also be at liberty (but not bound) to resell the Vessel by public or private sale, and in...
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