Pacific Basin Ihx Ltd v Bulkhandling Handymax as
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE TEARE,Mr. Justice Teare |
| Judgment Date | 25 January 2012 |
| Neutral Citation | [2011] EWHC 2862 (Comm),[2012] EWHC 70 (Comm) |
| Docket Number | Case No: 2010 FOLIO 1377,Case No: 2011 FOLIO 23 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 25 January 2012 |
[2011] EWHC 2862 (Comm)
Mr. Justice Teare
Case No: 2010 FOLIO 1377
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Nolan (instructed by Swinnerton Moore LLP) for the Claimant
Julian Kenny (instructed by Ince and Co. LLP) for the Defendant
Hearing dates: 24 and 25 October 2011
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.
This is an appeal from an award dated 14 December 2010 made by three LMAA arbitrators, Mr. Clark, Mr. O'Donovan and Mr. Sheppard. The appeal has been brought with leave of the Court pursuant to section 69 of the Arbitration Act 1996. It concerns the risk of attack by pirates on merchant vessels in the Gulf of Aden and centres upon the true construction and implementation of the CONWARTIME 1993 clause which had been incorporated into a time charter of the vessel Triton Lark, a geared bulk carrier, built in 2005, with 5 holds, a summer deadweight of 56,025 mt. and a speed of about 14 knots.
The Claimant ("Pacific") chartered the vessel from the Defendant ("Bulkhandling"), the disponent owner of the vessel, and instructed the vessel to carry a cargo of potash in bulk from Hamburg to China via Suez and the Gulf of Aden. Bulkhandling refused to proceed via Suez and the Gulf of Aden on account of a risk from pirates and instead proceeded via the Cape of Good Hope. The extra cost of proceeding via the Cape was US$462,221.40. The tribunal held that the extra costs should be borne by Pacific as charterer. Pacific submits that such decision was wrong in law.
The chain of charters
The head owners, Triton Navigation BV had let the vessel to Klaveness Chartering on the NYPE form dated 14 July 2006 on terms which incorporated the CONWARTIME 2004 which in all material respects contained the same wording as CONWARTIME 1993. Klaveness in turn entered into a Pool Participation Agreement dated 14 July 2006 with Bulkhandling on the same terms as the Head Owners/Klaveness charter.
Bulkhandling chartered the vessel to Pacific on the NYPE form dated 29 August 2008 at the rate of US$53,000 per day.
Pacific voyage chartered the vessel on the GENCON form to K & S Kali GmbH to carry 44,000 tonnes of bulk potash from Hamburg to Zhanjiang. The charter included the VOYWAR 2004 clause, parts of which are for all material purposes the same as CONWARTIME 1993.
The terms of the charter between the Claimant and the Defendant
The material terms are as follows:
Clause 8:
"The Captain shall prosecute his voyages with due despatch and…shall be under the orders and directions of the Charterers as regards employment and agency…"
Clause 75:
" BIMCO Standard War Risk Clause for Time Charters, 1993
Code Name: 'CONWARTIME 1993'
(1) For the purpose of this Clause, the words:
(a) "Owners" shall include the shipowners, bareboat charterers, disponent owners, managers or other operators who are charged with the management of the Vessel, and the Master; and
(b) 'War Risks' shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the Government of any state whatsoever, which, in the reasonable judgement of the Master and/or the Owners, may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.
(2) The Vessel, unless the written consent of the Owners be first obtained, shall not be ordered to or required to continue to or through, any port, place, area or zone (whether of land or sea) or any waterway or canal, where it appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Master and/or the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel be within any such place as aforesaid, which only become dangerous, or is likely to be or to become dangerous, after her entry into it, she shall be at liberty to leave it.
(3) The Vessel shall not be required to load contraband cargo, or to pass through any blockade, whether such blockade be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever, or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent right of search and/or confiscation.
(4)
(a) The Owners may effect war risks insurance in respect of the Hull and Machinery of the Vessel and their other interests (including, but not limited to, loss of earnings and detention, the crew and their Protection and Indemnity Risks), and the premiums and/or calls thereof shall be for their account.
(b) If the Underwriters of such insurance should require payment of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such Underwriters as being subject to additional premiums because of War Risks, then such premiums and/or calls shall be reimbursed by the Charterers to the Owners at the same time as the next payment of hire is due.
(5) If the Owners become liable under the terms of employment to pay to the crew any bonus or additional wages in respect of sailing into an area which is dangerous in the manner defined by the said terms, then such bonus or additional wages shall be reimbursed to the Owners by the Charterers at the same time as the next payment of hire is due.
(6) The Vessel shall have liberty :-
(a) to comply with all orders, directions, recommendations, or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are given by the Government of the Nation under whose flag the Vessel sails, or other Government to whose laws the Owners are subject, or any other Government, body or group whatsoever acting with the power to compel compliance with their orders or directions;
(b) to comply with the order, directions or recommendations of any war risks underwriters who have the authority to give the same under the terms of the war risks insurance;
(c) to comply with the terms of any resolution of the Security Council of the United Nations, any directives of the European Community, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement;
(d) to divert and discharge at any other port any cargo or part thereof which may render the Vessel liable to confiscation as a contraband carrier;
(e) to divert and call at any other port to change the crew or any part thereof or other persons on board the Vessel when there is reason to believe that they may be subject to internment, imprisonment or other sanctions.
(7) If in accordance with their rights under the foregoing provisions of this Clause, the Owners shall refuse to proceed to the loading or discharging ports, or anyone or more of them, they shall immediately inform the Charterers. No cargo shall be discharged at any alternative port without first giving the Charterers notice of the Owners' intention to do so and requesting them to nominate a safe port for such discharge. Failing such nomination by the Charterers within 48 hours of the receipt of such notice and request, the Owners may discharge the cargo at any safe port of their own choice.
(8) If in compliance with any of the provisions of sub-clauses (2) to (7) of this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfilment of this Charter Party.
The facts giving rise to the dispute
The arbitrators recounted the relevant communications between the parties in paragraphs 8–46 of their reasons. They may be summarised as follows:
On 7 November 2008 Mr. Chesman of Pacific emailed the master of the vessel with the details of the cargo, a cargo of potash in bulk, to be carried from Hamburg to Zhanjiang in China. On the same day Mr. Kohashi of the head owners emailed Mr. Mikkelsen of Bulkhandling stating that the shortest route was via the Suez Canal which would require the vessel to pass through the Gulf of Aden "where …pirates situation has not been solved." He requested Mr. Mikkelsen to provide the charterers' routing and their thoughts about pirates. Mr. Mikkelsen passed on the request to Pacific, adding that on 28 October 2008 there had been four attacks by pirates. Three had been unsuccessful but the fourth, on a bulk carrier, had been successful. The vessel had been hijacked and her crew had been taken hostage in an unknown location in Somalia.
On 11 November 2008 Pacific replied to Bulkhandling. Pacific said that the vessel was fixed on a voyage from Hamburg to Zhanjiang, China, and "we intend for the ship to transit the Suez Canal." Pacific passed on information to the effect that of the vessels hijacked the majority had been taken from an area of "high risk", that the safest route was to hug the north side of "the safe MSPA channel 1", that no...
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