Onego Shipping & Chartering BV v JSC Arcadia Shipping (The "Socol 3")

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Hamblen
Judgment Date23 April 2010
Neutral Citation[2010] EWHC 777 (Comm)
Date23 April 2010
Docket NumberCase No: 2009 —FOLIO 687

[2010] EWHC 777 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION COMMERCIAL COURT

Before:MR JUSTICE HAMBLEN

Case No: 2009 —FOLIO 687

Between
Onego Shipping & Chartering Bv
Claimant (Charterers)
and
Jsc Arcadia Shipping M/v “socol 3”
Defendant (Owners)

Mr Luke Parsons QC and Ms Poonam Melwani (instructed by Reed Smith LLP) for the Claimant

Mr Chirag Karia (instructed by Bentleys Stokes and Lowless) for the Defendant

Hearing dates: 25 th & 26 th March 2010

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Hamblen

Mr Justice Hamblen:

Introduction

1

The Claimants appeal pursuant to section 69 of the Arbitration Act 1996 in respect of an Award published on 28 April 2009 (“the Award”) in a reference between Onego Shipping & Chartering BV as Charterers (“the Charterers”) and JSC Arcadia Shipping as Owners (“the Owners”) in relation to a time charter of the vessel “Socol 3” (“the Vessel”) dated 12 February 2008 (“the Charterparty”). The Charterparty was on the NYPE 1993 Form with certain additions and amendments.

2

The dispute between the parties concerned a casualty at sea on 1 March 2008 during which there was some loss of deck cargo and following which the Vessel had to take refuge at the port of Halmstad.

3

The Award was a First Final Award which allowed the Owners’ claim for hire during the Halmstad period, dismissed the Charterers’ claims for expenses relating to the Halmstad discharge and re-stowage of cargo and found that the Charterers were obliged to indemnify the Owners in respect of any cargo claims.

4

In their Reasons, the Tribunal found that the casualty was caused by a combination of: an inadequate method of stowage of the deck cargo and the use of unsatisfactory lashing equipment by or on behalf of the Charterers; inadequate care of the lashings during the voyage by the crew, and the instability and consequent unseaworthiness of the Vessel following the loading of the cargo, for which the Owners were responsible.

5

Permission to appeal in respect of the questions of law set out in paragraph 9 of the Grounds of Appeal was granted by Andrew Smith J on 30 July 2009. Those questions are:

Question 1

Where a Charterparty incorporates the Hague/Hague-Visby Rules and the Charterparty envisages deck cargo will or may be carried but does not state and/or identify what and/or how much deck cargo is being carried (“an on-deck statement”), do the Rules apply to the carriage of deck cargo or is their application excluded by virtue of Article 1(c) of the Hague/Hague-Visby Rules.

Question 2

In respect of what loss and/or damage and/or liability does Clause 13(b) of the NYPE 1993 Form, on its true construction, provide an indemnity. In particular does clause 13(b):—

(1) Provide Owners with an indemnity even in respect of loss and/or damage and/or liability caused by negligence and/or breach of Article Rule 1 of the Hague/Hague Visby Rules on the part of Owners, their servants and agents;

(2) Extend to situations where the loss and/or damage and/or liability is not related to risks inherent or peculiar to deck cargo;

(3) Apply in respect of liabilities incurred by the Owners (as opposed to the Vessel) and in respect of liabilities incurred not just to third parties but also to the Charterers themselves;

(4) Apply so as entitle Owners to claim hire against Charterers where the vessel was otherwise off-hire due to a default of officers and crew within the meaning of Clause 17 of the NYPE 1993 Form.

The Charterparty

6

The Charterparty was for one time charter trip from Finland/Sweden intention Loviisa and Kokkola to Egypt/Med with timber products and was on the NYPE 1993 form with additions and amendments. The most relevant provisions of the Charterparty are as follows:

“Clause 2 D elivery

The Vessel on her delivery shall be ready to receive cargo with clean-swept holds and tight, staunch, strong and in every way fitted for ordinary cargo service, having water ballast and with sufficient power to operate all cargo-handling gear simultaneously.

Clause 6 Owners to Provide

The Owners shall provide and pay for the insurance of the Vessel, except as otherwise provided, and for all provisions, cabin, deck, engine-room and other necessary stores, including boiler water, luboil and fresh water; shall pay for wages, consular shipping and discharging fees of the crew and charges for port services pertaining to the crew; shall maintain the Vessel's class and keep her in a thoroughly efficient state in hull, machinery and equipment for and during the service, and have a full complement of officers and crew.

Clause 8 Performance of Voyages

(a) The Master shall perform the voyages with due despatch and shall render all customary assistance with the Vessel's crew. The Master shall be conversant with the English language and (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and the Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging and tallying, at their risk and expense, under the supervision of the Master.

Clause 13 Spaces Available

(a) The whole reach of the Vessel's holds, decks and other cargo spaces (not more than she can reasonably and safely stow and carry), also accommodation for supercargo, if carried, shall be at the Charterers’ disposal….

(b) In the event of deck cargo being carried, the Owners are to be and are hereby indemnified by the Charterers for any loss and/or damage and/or liability of whatsoever nature caused to the Vessel as a result of the carriage of deck cargo and which would not have arisen had deck cargo not been loaded.

Clause 17 Off Hire

In the event of loss of time from deficiency and/or default and/or strike of officers or crew, or …….. any other similar cause preventing the full working of the Vessel, the payment of hire and overtime, if any, shall cease for the time thereby lost.

Clause 27 Cargo Claims

Cargo claims as between the Owners and the Charterers shall be settled in accordance with the Inter-Club New York Produce Exchange Agreement of February 1970, as amended May 1984, or any subsequent modification or replacement thereof. See Clause 90.

Clause 28 Cargo Gear and Lights

The Owners shall maintain the cargo handling gear of the Vessel which is as follows …..

Clause 31 Protective Clauses

This Charterparty is subject to the following clauses all of which are also to be included in all bills of lading or waybills issued hereunder:

(a) CLAUSE PARAMOUNT

This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, the Hague Rules, or the Hague-Visby Rules, as applicable, or such other similar national legislation as may mandatorily apply by virtue of origin or destination of the bills of lading, which shall be deemed to be incorporated herein and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said applicable Act. If any term of this bill of lading be repugnant to said applicable Act to any extent, such term shall be void to that extent, but no further.”

The Award

7

The Vessel is a multi-purpose general cargo ship with capacity for deck cargo. Pursuant to the Charterparty, packs of timber were loaded under deck at Loviisa and the Vessel then proceeded to Kokkola where packs were loaded under deck and on deck. It was whilst en route to the discharge port of Alexandria that the casualty occurred (paragraph 1 of the Award):

“The vessel then sailed, departing Kokkola at around 1600, 27 th February, bound for Alexandria. Owners said that at 1930, 1 st March, the cargo shifted to starboard in heavy WSW winds and high seas, causing cargo to be lost overboard. Power was lost on the main engine and the Master was forced to anchor with 8 shackles in the water in what were plainly unpleasant conditions. Having sorted out the engine problems the vessel then proceeded to nearby Halmstad as a port of refuge. There all the remaining deck cargo was discharged and most of it subsequently reloaded.”

8

This gave rise to various claims and cross claims. As the Tribunal found (paragraph 1):

“The diversion and stay in Halmstad took both time and money. Charterers made deductions from hire in respect of off-hire, bunkers and alleged costs incurred and additionally claimed further expenses of €305,455.55. Owners in turn counterclaimed for hire and expenses totalling €403,931.71. Owners further sought an indemnity in respect of any cargo claims that might be brought against them arising out of the loss.”

9

The arbitration was primarily concerned with the likely cause of the shift of cargo and subsequent loss of part of it. In that regard “attention focused on three elements: the stowage of the cargo, the lashing of it and the stability of the vessel” (paragraph 2 of the Award).

10

The Tribunal's conclusion on this central issue is set out in paragraphs 14 and 15 of the Award as follows:

“14. Pulling the somewhat limited factual evidence together, based largely as it was on photographs taken at Kokkola and Halmstad and the survey reports made whilst the vessel discharged and reloaded the deck cargo at Halmstad, and taking all the expert evidence into account we reached two firm and one perhaps not so firm conclusions. Firstly we had no doubt that the method of stowage was unsatisfactory. The excess height of the “special” packages on the first tier in deck meant that it was not possible to bind in the outboard tiers tight with the hatch cover...

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