Parbulk II A/S (Arbitration Claimant) v Heritage Maritime Ltd SA (Arbitration Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 08 November 2011 |
| Neutral Citation | [2012] EWHC 3916 (Comm),[2011] EWHC 2917 (Comm) |
| Docket Number | Claim No. 2011 FOLIO 72 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 November 2011 |
[2011] EWHC 2917 (Comm)
Mr Justice Eder
Claim No. 2011 FOLIO 72
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
David Joseph QC (instructed by Lawrence Graham) for Heritage
David Lewis (instructed by Wikborg Rein) for Parbulk
Hearing dates: 4 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.
Introduction
This is an appeal under section 69 of the Arbitration Act 1996 against an arbitration award of Edward Mocatta, Dr Colin Ong and Mark Hamsher dated 23 December 2010 pursuant to which it was awarded and adjudged that Heritage Maritime Ltd (the "Charterers") pay Parbulk II AS (the "Owners") the sum of US$27,031,759.04. Leave to appeal the Award was granted by David Steel J on 16 May 2011.
As set out in the Award, the parties entered into a bareboat charterparty of the Owners' vessel "Mahakam" on an amended BARECON 2001 form dated 11 December 2007 for 60 months at a daily rate of US$38,500. The current dispute arises out of the purported termination by the Owners of that charterparty on 22 June 2009. In essence, the Tribunal concluded that the Owners were entitled to terminate the charterparty; that they had validly done so on that date; and that the Owners were entitled to compensation as set out above. The Charterers now challenge those conclusions on a number of grounds as set out below.
The charterparty provided in material part as follows:
"28. Termination (See also Clauses 46 and 47)…
(b) Owners' Default
If the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived of the use of the vessel and such breach continues for a period of fourteen (14) days after written notice thereof has been given by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect, by written notice to the Owners. In case of cancellation by the Charterers as set out in Clause 28(b), the vessel shall be deemed to be off-hire from the time notice in accordance with line 821 is received by Owners."
38 CHARTER HIRE
38.1 The Charterers shall throughout the Charter Period pay charter hire (the "Charter Hire") to the Owners, calculated from the first day of the Charter Period, at a rate of USD 38,5000 net per day.
38.2 Subject to the terms of this Agreement, hire shall be paid continuously throughout the Charter Period;
38.3 The Charterers shall pay hire due to the Owners in accordance with the terms of this Charter punctually, in respect of which time shall be of essence. The Charter Hire shall be paid monthly in advance with the first instalment falling due on the Delivery Date in respect of a period up to the end of that calendar month and with subsequent instalments on the 1 st day of every calendar month (each, a "Payment Date"), however, where there is a failure to make punctual payment of hire due to oversights, negligence or omissions on the part of the Charterers or the Charterers' bankers, the Charterers shall be allowed the number of Banking Days indicated in Box 34 in which to rectify the failure, and when so rectified within that number of Banking Days, the payment shall stand as regular and punctual.
38.4 Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:-
38.4.1 On the relevant Payment Date; and…"
46. EVENTS OF DEFAULT
46.1 Each of the following events and the events referred to in Clause 28(a) shall be a "Event of Default" for the purposes of this Charter:-
46.1.1 If any instalment of Charter Hire or any other sum payable by the Charterers under this Charter shall not be paid on its due date, or in the case only of sums expressed to be payable by the Charterers on demand, within five (5) Banking Days following the date of demand therefore, and such failure to pay is not remedied within three (3) Baking Days' of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial action; or
46.2 The occurrence of an Event of Default shall entitle the Owners by notice to the Charterers with immediate effect to terminate the chartering of the Vessel under this Charter by withdrawing the Vessel from the service of the Charterers, and to recover any and all amounts due and payable hereunder and/or resulting from such termination."
47. OWNERS' RIGHTS ON TERMINATION
47.1 At any time after an Event of Default shall have occurred and be continuing under this Charter, the Owners may, by notice of the Charterers immediately, on such date as the Owners shall specify, terminate the Charter, whereupon the Vessel shall no longer be in the possession of the Charterers with the consent of the Owners, and the Charterers shall redeliver the vessel to the owners in accordance with Clause 15.
…
47.3 If the Owners pursuant to Clause 47.1 hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of such termination (the "Termination Date") or such later date as the Owners shall specify:-
47.3.1 all hire due and payable, but unpaid, under this Charter up to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 38.7 hereof from the due date for payment hereof from the date for payment thereof of the Termination Date;
47.3.2 any sums, other than hire, due and payable, but unpaid under this Charter together with interest accrued thereon pursuant to Clause 38.7 to the Termination Date; and
47.3.3 all costs, expenses, damages and losses incurred by the Owners as a consequence of this Charter having terminated prior to the expiry of the agreed Charter Period (including, but not limited to, loss of Charter Hire and expenses incurred in recovering possession of, and in moving, laying-up, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clauses 15,29 and 52 hereof), provided always that the Owners shall take reasonable steps to mitigate their losses so incurred."
47.4 When making payment to the Owners in accordance with Clauses 47.3.1 through 47.3.3 above, no deduction shall be made by the Charterers in respect of the Sellers' Credit which, pursuant to its terms, is immediately forgiven by the Sellers upon the termination of the Charter, by the Owners following the occurrence of a Termination Event hereunder, it being understood by both parties that amount is a reasonable pre-estimate of minimum damages and is not a penalty and an amount equivalent to the Sellers' Credit shall be deducted from the amount of any claim the Owners have against the Charterers in respect of the terminated Charter. For the avoidance of doubt, if the Sellers' Credit does not cover the Owners' loss, the Owners shall be able to claim further compensation for such loss.
47.5 For the avoidance of doubt, in the event of termination of this Charter by the Owners or the Charterers, each of the Owners and the Charterers shall be entitled to all contractual, legal, statutory or equitable remedies, regardless of whether the reasons for such termination would give rise to an independent right of termination as a matter of law.
47.7 Following termination of the chartering of the Vessel hereunder pursuant to Clause 47.1 hereof the Charterers (i) shall continue to comply with their obligations under this Charter until the Vessel is redelivered to the Owners in accordance with Clauses 15,29 and 52.
47.8 In the event of termination of this Charter, the Owners and the Mortgagee shall be entitled to assume and take over Charterers' position as party to any charterparties exceeding 13 months' (including optional periods) subsequently entered into between the Charterer and sub-charterers so that the Owners will substitute the Charterer under such charterparties. The Charterers undertake to assist the Owners and/or the Mortgagee, as the case may be, to accomplish the aforesaid substitution."
As set out in the Award, the vessel was delivered into the service by the Owners on 14 December 2007 so that the charterparty was to run until 14 December 2012. For present purposes, the relevant facts are set out in the following extracts from the Award:
"14. The evidence from Parbulk was that prior to March 2009 there had been no major problems with the payment of hire. Clearly Heritage were not immune to the effects of the collapse in freight rates that started in the autumn of 2008. On 20 January 2009 Parbulk agreed to Heritage's request that for the period from February to July 2009 hire should be paid on the first and fifteenth of each month rather than monthly in advance as provided for in the charterparty. However, despite this concession, no hire was paid from 16 April 2009 until the termination of the charterparty by Parbulk on 22 June 2009. Parbulk set out their summary of the instalments of hire that were not paid in a table as follows:—
15.….. In so far as it should be necessary, we find as a fact that Parbulk's summary of the instalments that were not paid by Heritage is accurate.
16. When the instalment that was due on 16 April 2009 was not paid, Parbulk sent the following "Notice of outstanding bareboat hire" to Heritage:-
On behalf of Parbulk II AS we hereby tender notice pursuant to clause 46.1.1 of the Bareboat Charter, and ask you to settle the Charter Hire due on 16 th April 2009, promptly. We remind you that if your failure to...
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