Samsun Logix Corporation v Oceantrade Corporation

JurisdictionEngland & Wales
JudgeTHE HON MR JUSTICE GROSS,The Hon Mr Justice Gross
Judgment Date18 October 2007
Neutral Citation[2007] EWHC 2372 (Comm)
Docket NumberCase No: 205–681: 2007–421
CourtQueen's Bench Division (Commercial Court)
Date18 October 2007

[2007] EWHC 2372 (Comm)





The Hon Mr Justice Gross

Case No: 205–681: 2007–421




Samsun Logix Corporation
Oceantrade Corporation
Deval Denizeilik Ve Ticaret A.S
Oceantrade Corporation (1)
Samsun Logix Corporation (2)

Poonam Melwani (instructed by Birketts LLP) for the Claimant, Samsun Logix Corporation

Dominic Happé (instructed by E.G.Arghyrakis & Co.) for the Claimant, Deval Denizeilik V.E. Ticaret S.A.

(The Defendant Oceantrade Corporation was not represented)

Hearing dates: 10 th & 11 th September 2007

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.




There are before the court competing applications by Samsun Logix Corporation (“Samsun”) and Deval Denizcilik Ve Ticaret AS (“Deval”), each in effect claiming, inter alia, priority in respect of the same sum of money held in the client account of a firm of solicitors, Mills & Co (“Mills”).


Though at first blush a little confusing, the background may be shortly summarised. As will be seen, the villain of the piece, so to speak, is an entity Oceantrade Corporation (“OTC”), incorporated in the Marshall Islands, currently and since about September 2005 subject to Chapter 11 proceedings under the jurisdiction of the US Bankruptcy Court of the Southern District of New York (“the US Bankruptcy Court”). Both Samsun and Deval, almost in parallel, chartered vessels to OTC. Both have unsatisfied claims against OTC; hence the competing claims to the funds held by Mills. I turn to outline how this position has come about.


Samsun : By a time charterparty dated 3 rd March, 2005 on an amended NYPE form and with additional clauses, Samsun, as disponent owners, chartered the vessel, the “NORD MONACO” to OTC (“the Samsun charterparty”).


Plainly, all was not as it should have been under the Samsun charterparty and, on the 18 th August, 2005, Samsun obtained, ex parte, a worldwide freezing injunction from Aikens J (“the Aikens order”) against OTC. The Aikens order prohibited OTC from removing from this jurisdiction any of its assets in England and Wales up to the value of US$3.5 million. The order made specific reference to:

“…any sums due or becoming due to [OTC]…from Helm AG in respect of freight payable under a voyage charterparty relating to the vessel 'ORHAN DEVAL'”


Pausing there, as will become apparent, the “ORHAN DEVAL” was a vessel time chartered by Deval to OTC and sub-voyage-chartered by OTC to Helm AG (“Helm”); at the time in question, hire was due from OTC to Deval and freight was due from Helm to OTC.


Returning to the Aikens order, it contained an additional prohibition (not in standard form) as follows:

“9.…[OTC] must not…..

(1) give directions for and/or request the payment of and/or receipt of and/or acceptance of any sums due or becoming due to [OTC] from Helm AG in respect of freight payable under a voyage charterparty relating to the vessel 'ORHAN DEVAL'”

On the evidence before me, that prohibition was due to Samsun's concern that OTC would dissipate any moneys received, notwithstanding the existence of the freezing injunction.


Both the injunction and the prohibition contained in para 9(1) of the Aikens order were challenged by OTC at the inter partes hearing before Smith J on the 30 th August, 2005. In the event, by order of Smith J, made on that day (“the Smith order”), the Aikens order was varied, with particular reference to the payment of freight in respect of the “ORHAN DEVAL”. On the undertaking of Mills & Co. to hold the “ORHAN DEVAL” Freight (as defined later in the order) to the order of the Court, the Aikens order was varied, insofar as presently material, as follows:

“2. Paragraph 9 of the Freezing Order be varied so as to permit the payment of the freight in relation to the ORHAN DEVAL therein referred to ('the ORHAN DEVAL Freight') to Mills & Co., [OTC's] Solicitors.

3. The parties by their solicitors write forthwith to Helm AG and Helm Dungemittel GmbH (being the voyage charterers of the ORHAN DEVAL), advising them (i) of the terms of this order and (ii) that it is permissible for the said charterers to discharge their obligations regarding the payment of the ORHAN DEVAL freight by paying the same to the United States Dollar account of Mills & Co., Solicitors….

4. No payment of the monies constituting the ORHAN DEVAL freight be made by Mills & Co., save:

(1) To the Owners of the ORHAN DEVAL in the sum of not more than US$202,125 (being the net sum falling due on 19 August 2005 in respect of hire under the charteerparty between the said Owners and [OTC] dated 8 February 2005…..

(2) In the ordinary course of [OTC's] business….”

Payments made under (2) were subject to various requirements as to consent and notification, the detail of which need not be set out here.


On the material before me, on or about the 7 th September, 2005, Helm paid the freight due from it (the “ORHAN DEVAL” Freight, as defined in the Smith order) in the amount of US$662,040.64 to the relevant Mills account (“the Mills account”). On the 9 th September, 2005, using the money in the Mills account, OTC paid hire to Deval in the sum of US$322,812.50, apparently representing sums already due for certain instalments of hire; as this sum is greater than that set out in para. 4(1) of the Smith order, I assume that appropriate consents were obtained. Also on the 9 th September, 2005, again using the money in the Mills account, OTC paid US$103,184.82 to Samsun in the ordinary course of business. These payments having been made, there remained – and still remains—a balance of about US$236,000 in the Mills account The competing applications before me, in effect relate to that sum of money.


Continuing with the history so far as concerns Samsun, its disputes with OTC proceeded to arbitration. In an award dated 19 th October, 2005 (“the Samsun award”), the arbitration tribunal held that OTC, in repudiatory breach of the Samsun charterparty, had redelivered the “NORD MONACO” prematurely and was liable to Samsun in damages in the amount of US$1,244,666.82, plus interest and costs. By order of Field J, dated 3 rd April, 2007, Samsun was given permission to enforce the Samsun award as if it were an order or judgment of the court. As I understand the position, the Samsun award remains unpaid.


Deval : By a time charterparty on the NYPE form, as amended and with additional clauses, dated 8 th February, 2005, Deval chartered the vessel, the “ORHAN DEVAL” to OTC (“the Deval charterparty”).


Here too concerns must have arisen, because on the 9 th September, 2005, Deval's solicitors, E.G. Arghyrakis & Co. (“Arghyrakis”) wrote to Mills, acknowledging receipt of the US$322,806.93 and going on to say this:

“…we hereby put you on notice that our clients now exercise their lien on sub-freights pursuant to cl.18 of the charter. This lien is exercised in relation to the balance of the sub-freights held in your client account, to the extent of the sums which are still due to our clients from Charterers to date and until these sums are paid to our clients.

For the avoidance of doubt, our clients' calculation of the sums currently due to them as of today is as follows:

- Balance as per our clients' hire statement 06.09.05 …$578,750.00

- Less received today ($322,806.93)

- Balance: $255,943.07”


Cl. 18 of the Deval charterparty, reflecting the NYPE standard form, provided as follows:

“That the Owners shall have a lien upon all cargoes, and all sub-freights for any amounts due under this Charter….”

To that clause (“the cl.18 lien”), I shall return in due course.


It will at once be appreciated that Deval's purported exercise of its rights under the cl.18 lien came two days after the payment by Helm of the “ORHAN DEVAL” freight into the Mills account.


Subsequently, on the 30 th September, 2005, Deval obtained a freezing injunction from Tugendhat J (“the Tugendhat order”) against OTC, inter alia prohibiting OTC from removing from England and Wales any of its assets in England and Wales up to the value of US$880,000.


Disputes having arisen under the Deval charterparty, Deval commenced London arbitration. In the arbitration, Deval claimed various amounts, by way of damages or otherwise and also claimed a declaration that it was entitled to and had validly exercised a lien over sub-freights from the 9 th and/or the 20 th September, 2005. As I understand it, the arbitration was conducted by way of written submissions; Mills, who continued for a time to represent OTC, disputed Deval's claim, including its entitlement to the declaration sought as to the exercise of the lien. In the event, by an award dated 25 th April, 2007 (“the Deval award”), the arbitrator found in favour of Deval. He awarded Deval the total sum of US$783,026.09; additionally, he declared that Deval had at and from the 9 th September, 2005 validly exercised its right to a lien under cl. 18 of the Deval charterparty over sub-freights held in the Mills account and that those sub-freights were subject to Deval's lien and were accordingly due to Deval. With regard to the exercise of the lien on sub-freights, the arbitrator expressed his conclusion in the following terms:

“44. …It seemed to me to be clear…that the sub-freights remitted by Helm had not been paid to the Charterers [OTC] at all but rather to their solicitors [Mills].., as stakeholders and that these sub-freights were never intended to be 'paid' over to the...

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