Quiana Navigation SA v Pacific Gulf Shipping (Singapore) “Caravos Liberty”
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill DBE,Cockerill J |
| Judgment Date | 21 November 2019 |
| Neutral Citation | [2019] EWHC 3171 (Comm) |
| Date | 21 November 2019 |
| Docket Number | Case No: CL-2019-000228 |
| Court | Queen's Bench Division (Commercial Court) |
[2019] EWHC 3171 (Comm)
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
Mrs Justice Cockerill DBE
Case No: CL-2019-000228
Mr Robert Bright QC and Mr Henry Moore (instructed by Norton Rose Fulbright LLP) for the Claimant
Ms Karen Maxwell (instructed by MFB Solicitors) for the Defendant
Hearing dates: 18 November 2019
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 appeal under s. 69 of the Arbitration Act 1996 arises out of a Partial Final Award dated 7 March 2019 of Mr Mark Hamsher, Mr Alistair Schaff QC and Mr David Owen QC (“the Award”).
The issue concerns the BIMCO Non-Payment of Hire Clause for Time Charter Parties, and in particular the question of whether it is possible to withdraw a vessel under this clause when the breach in question relates to non-payment for an earlier period of hire. The appeal is brought by permission of Teare J on the basis that, this being a standard form clause, it is a question of law of general public importance and the decision of the Tribunal is open to serious doubt.
The Facts
The time charter in question (“the Charterparty”) was concluded on 26 May 2017 between the Claimant/Appellant (“Owners”) and the Respondent (“Charterers”) in respect of MV “Caravos Liberty” (“the Vessel”). The Charterparty was drafted on an amended New York Produce Exchange form with rider clauses and a fixture recap.
The Vessel was delivered into Charterers' service on 27 May 2017.
Relevant provisions of the Charterparty were:
i) Clause 4: “the Charterers shall pay for the use and hire of the said vessel at the rate of USD9,000 daily including overtime, payable every 15 days in advance.… BIMCO non-payment of hire clause for time charterparties to apply …”.
ii) Clause 5: “ Payment of said hire to be made in cash in United States Currency (as per clause 34) every 15 days in advance…”. The “ said hire” in clause 5 was the US$9,000 daily hire set out in clause 4.
iii) Clause 34: “ Hire and all monies due to the Owner under this Charter Party will be paid to Owner's bank account…First hire 15 and value of bunkers on delivery to be paid within 3 banking days after vessels delivery and charterer's receipt of scanned/signed/stamped relevant hire statement, thereafter every 15 days hire in advance Bimco Non Payment of hire clause for time Charter Parties to apply”.
The key provision is the BIMCO Non-Payment of Hire Clause, incorporated as clause 37 of the Charterparty. It governs the right to suspend service, the right to withdraw the Vessel and the anti-technicality procedure to be followed prior to withdrawal. It should in the context of this appeal be reproduced in full:
“Clause 37
BIMCO Non-Payment of Hire Clause for Time Charter Parties
If the hire is not received by the Owners by midnight on the due date, the Owners may immediately following such non-payment suspend the performance of any or all of their obligations under this Charter Party (and if they so suspend, inform the Charterers accordingly) until such time as the payment due is received by the Owners. Throughout any period of suspended performance under this Clause, the Vessel is to be and shall remain on hire. The Owners' right to suspend performance under this Clause shall be without prejudice to any other rights they may have under this Charter Party.
The Owners shall notify the Charterers in writing within 24 running hours that the payment is overdue and must be received within 72 running hours from the time hire was due. If the payment is not received by the Owners within the number of running hours stated, the Owners may by giving written notice within 12 running hours withdraw the Vessel. The right to withdraw the Vessel shall not be dependent upon the Owners first exercising the right to suspend performance of their obligations under this Charter Party pursuant to sub-clause (a). Further, such right of withdrawal shall be without prejudice to any other rights that the Owners may have under this Charter Party.
The Charterers shall indemnify the Owners in respect of any liabilities incurred by the Owners under the Bill of Lading or any other contract of carriage as a consequence of the Owners' suspension of and/or withdrawal from any or all of their obligations under this Charter Party.
If, notwithstanding anything to the contrary in this Clause, the Owners choose not to exercise any of the rights afforded to them by this Clause in respect of any particular late payment of hire or a series of late payments of hire, this shall not be construed as a waiver of their right either to suspend performance under sub-clause (a) or to withdraw the Vessel under sub-clause (b) in respect of any subsequent late payment under this Charter Party”.
The clause naturally falls into four sub-clauses, which have been referred to as sub-clauses (a) to (d). So:
i) Sub-clause (a) deals with the gateway to the clause and suspension of performance.
ii) Sub-clause (b) provides for the service of an anti-technicality notice (ATN) and withdrawal.
iii) Sub-clause (c) deals with indemnities for liabilities as a result of suspension/withdrawal.
iv) Subclause (d) is an anti-waiver provision, which appears to be primarily directed to Scaptrade type arguments (that acceptance of late payments in the past precludes future prompt withdrawal).
The dates for advance payment could be calculated from delivery and initial payment of 15 days' advance hire on 27 May 2017. The next payment date was 15 days later on 11 June 2017, followed by 26 June 2017, followed by 11 July 2017, followed by 26 July 2017, followed by 10 August 2017. If the Charterparty had not been terminated, this 15-day pattern would have continued until the end of the charter period.
The sum payable by Charterers to fund the 15 days of earning between due dates was US$130,652 (being 15 days of hire at US$9,000 per day, less commission). This would be subject to any deductions for off-hire.
Each payment date was preceded by the parties producing Hire Statements. In this instance these hire statements were “rolled-up” documents, setting out previous hire instalments as well as the current one and setting out a running account of sums due. It was not contended before me that this fact was of any legal relevance, though an argument was made before the Tribunal that this practice informed the construction of the relevant clause. The highest it was put before me was that as a result both parties knew what the argument in this case was about, because they could see the difference between them on their rival statements.
On 11 July 2017 (the 4th date), following an exchange of statements showing different amounts, Charterers underpaid by US$8,015.40. They tendered US$122,637 instead of the full US$130,652 payable because they claimed (wrongly) that there had been overconsumption of fuel. There were protests from Owners but no ATN was served.
On 26 July 2017 (the 5th date) and on 10 August 2017 (the 6th date), Charterers paid 15 days' worth of hire (US$130,652). The statements from Owners leading up to the 5th and 6th dates made clear that Charterers were asked to pay the shortfall from the fourth instalment, but Charterers never made up the shortfall of US$8,015.40. No ATN was served after the 5 th date in July.
However, after the 6 th date, on 11 August 2017, Owners served anti-technicality notices calling for payment of the full balance of hire due. The second such notice complied with the requirements of the BIMCO Clause, and would have justified Owners' withdrawal of the Vessel (which occurred on 14 August 2017, following Charterers' failure to comply with the demand in the notice) had the BIMCO Clause been held by the Tribunal to apply.
The Tribunal held, however, that the BIMCO Clause was not engaged.
The Tribunal accepted that Charterers' deduction on 11 July 2017 was wrongful and resulted in a short payment, and that the shortfall persisted and remained due thereafter, including on 10 August 2017. This means that the total sum due, owing and payable in respect of hire as at 10 August 2017 was US$130,652 + US$8,015.40 = US$138,667.40.
However, in the Tribunal's view, Owners were not entitled to invoke the withdrawal procedure in respect of the payment made on the 10 August 2017 due date, because that payment date equated to the 15 days' worth of hire which fell due on that date.
The Tribunal's view was that the BIMCO Clause was not concerned with whether Charterers paid all the hire due on 10 August 2017; only whether they paid the hire that fell due for the first time on that day, i.e. 15 days' worth (US$130,652).
The Tribunal therefore ruled that Owners acted in “ renunciatory/repudiatory breach” by withdrawing the Vessel without contractual justification.
The essence of this appeal is therefore whether the BIMCO Clause is engaged in circumstances where:
i) There was a short payment on the 4th payment date;
ii) Owners objected, but did not serve an anti-technicality notice within the 24-hour period allowed under the BIMCO Clause;
iii) The payments made on each of the 5th and 6th payment dates equated to 15 days' worth of hire, but did not make up the shortfall; and
iv) Owners served an anti-technicality notice, and then withdrew, on the basis of that shortfall, in the context of the payment due on the 6th date, i.e. 10 August 2017.
Owners say it was; Charters and the Tribunal said that it was not.
The specific question raised is:
“In the...
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