Silverburn Shipping (IoM) Ltd v ARK Shipping Company LLC
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Carr |
| Judgment Date | 22 February 2019 |
| Neutral Citation | [2019] EWHC 376 (Comm) |
| Docket Number | Case No: AD-2018-000045 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 February 2019 |
Neutral Citation Number: [2019] EWHC 376 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
In the matter of the Arbitration Act 1996
In the matter of an arbitration claim
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mrs Justice Carr
Case No: AD-2018-000045
In the matter of an arbitration: M/V “Arctic”
Mr Alexander Wright and Mr Edward Jones (instructed by Wikborg Rein LLP) for the Claimant
Mr Nicholas Craig (instructed by Stephenson Harwood LLP) for the Defendant
Hearing date: 7 th February 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.
THE HONOURABLE Mrs Justice Carr
Introduction
This is an appeal pursuant to s. 69 of the Arbitration Act 1996 (“the 1996 Act”) by the Claimant owners (“Owners”) against a Partial Final Award dated 12 March 2018 (“the Award”) of a LMAA arbitral tribunal (“the Tribunal”). Leave to appeal was granted by Phillips J on 14 September 2018 on the basis that the Tribunal reached conclusions on two points of law that were “at least open to serious doubt” and qualified as being of general public importance.
By the Award the Tribunal dismissed Owners' application against the Defendant charterers (“Charterers”) for a final injunction requiring delivery up of M/V ARCTIC (“the Vessel”). That application was based on Owners' claim that Owners had lawfully terminated a bareboat charter dated 17 October 2012 (“the Charterparty”) by which the Vessel had been let to Charterers for a period of 15 years. Amongst other things and materially for present purposes, Owners relied on the expiration of the Vessel's classification certificates on 6 November 2017.
The Charterparty was on an amended standard BARECON '89 form. Clause 9A) of the Charterparty (“Clause 9A)”) provided that Charterers “shall keep the Vessel with unexpired classification of the class indicated in Box 10 and with other required certificates in force at all times.” Although it was common ground that the Vessel's class certificates were allowed to expire, the Tribunal held that there had been no breach of what it concluded was a qualified obligation only to take steps to reinstate expired class certificates within a reasonable time. It held that that this obligation was not a condition but rather an intermediate obligation. Owners had failed to prove a breach of that obligation since they had not advanced a good evidential case as to what would have been a reasonable time to reinstate the Vessel's class. Thus Owners' application failed.
The appeal is said to raise two questions of law:
i) Is Charterers' obligation in Clause 9A) “to keep the Vessel with unexpired classification of the class indicated in Box 10 and with other required certificates in force at all times” (“the classification obligation”) an absolute obligation, or merely an obligation to reinstate expired class certificates “within a reasonable time”? (“Question 1”)
ii) Is the classification obligation a condition of the contract or an innominate term? (“Question 2”)
The two questions need to be addressed separately and in logical order: whether or not the classification obligation is to be treated as a condition of the Charterparty cannot properly be determined until the nature and scope of the obligation itself have been ascertained.
The BARECON '89 form is an industry standard form. In The “Ocean Victory” [2017] 1 WLR 1793 Lord Sumption JSC (at [95]) referred to it as follows: “…. The form was originally drafted in 1974 by the Documentary Committee of the Baltic and International Maritime Council, and revised in 1989. It is said to have become, in one or other of its variants, the most commonly used form of bareboat charter worldwide”. The questions raised can therefore be said to be of general public importance.
The relevant facts
The relevant facts are to be taken from the face of the Award and can be stated shortly. Owners are the registered owners of the Vessel which was classed by Bureau Veritas (“BV”). On 17 October 2012 Owners let the Vessel to Charterers under the Charterparty for a period of 15 years. The Vessel was delivered in the charter service on or about 18 October 2012. She arrived at the Caspian port of Astrakhan for repairs and maintenance on 31 October 2017. Her class certificates expired on 6 November 2017, before she entered dry dock for repairs, some five years after her last special survey.
On 7 December 2017 Owners terminated the Charterparty inter alia because the Vessel's class had expired and so Charterers were in breach of Clause 9A) (“the Termination Notice”). The Termination Notice included the following:
“Without prejudice to the previous termination of the charter on 15 March 2017 it has recently come to our attention that the vessel is currently in a very poor condition and, of very serious concern that the vessel's class certificates have expired. It is your position that the charter between us continues (despite the fact that until 6 December 2017 no hire at all has been paid hire continues to be outstanding) and if that position is correct (which we do not accept) then it is your responsibility to strictly comply with your obligations under the bareboat charter. Clause 9 of Part II of the above charter expressly states that as Charterers you must maintain the Vessel in a good state of repair, in an efficient operating condition and in accordance with good commercial maintenance practice. Further, you have an express obligation to keep the vessel with unexpired classification certificates in force. You are also required to take immediate steps to have any necessary repairs done to the vessel within a reasonable period of time which you have clearly failed to do.
…
Given your continuing failure to pay hire in full for the vessel, your serious failure to maintain the vessel in class and in a good state of repair and in particular your failure to take immediate steps to repair the vessel as required by Clause 9 of the bareboat charter, and further without prejudice to our position that this Charter has already been terminated on 15 March 2017, we notify you that we are today immediately withdrawing the vessel from your service under Clause 9 of the charter. This termination is effective immediately and we require you forthwith to place the Vessel at our disposal at the port of Astrakhan. Further and in the alternative your conduct in relation to performance of this charter has evidenced a complete disregard by you to comply with your obligations which conduct we consider to be repudiatory and which we accept as terminating the charter with immediate effect…”
Owners thus demanded the return of the Vessel. On 8 and 11 December 2017 Charterers resisted that demand, denying any breach and contending that the Charterparty remained alive. They denied Owners' allegations of disrepair and stated that Owners were fully aware that the Vessel was currently under going scheduled maintenance works. The Vessel had arrived at the dock prior to expiration of the documents and representatives of BV were constantly monitoring the Vessel during her repairs and maintenance works. The Vessel was not out of class. Upon completion of the works, the BV surveyors would undertake a final inspection and a new set of documents would be issued accordingly. Further exchanges continued between the parties until Owners issued their application on 12 January 2018.
On that day Owners applied to the Tribunal on an urgent basis for a Partial Final Award for a declaration that the Charterparty had been lawfully terminated inter alia due to Charterers' breach of Clause 9A) and requesting relief that included an order for delivery up of the Vessel under s. 48(5) of the 1996 Act.
By consent of the parties, the Tribunal proceeded to its Award on the basis of written submissions alone. As already indicated, it dismissed Owners' application.
Since the Award dismissing Owners' injunctive application, the Tribunal (now including a third arbitrator) has recently published two further awards (in November 2018 and January 2019), determining that Owners were entitled to withdraw the Vessel and terminate the Charterparty for non-payment of hire in June 2018. It has also ordered delivery up of the Vessel.
The outcome of this appeal nevertheless remains material, since it will affect the calculation of Owners' claims for damages and mesne profits. Further, Charterers have sought leave to appeal the award of November 2018.
The terms of the Charterparty
The Charterparty was in standard form (as amended by the parties) and, as usual, contained Parts 1 and II.
Part 1 contained the following box entries:
i) Box 8: When/Where built
2012, Turkey;
ii) Box 10: Class (Cl. 9)
Veritas Bureau, perpetual;
iii) Box 11: Date of last special survey by the Vessel's classification society 2012;
iv) Box 14: Time for delivery (Cl. 3)
01-30.11.12;
v) Box 16: Port or Place of redeliver (Cl. 14)
-Astrakhan, Russia;
vi) Box 18: Frequency of dry-docking if other than stated in Cl. 9f)
In accordance with the classification documents;
vii) Box 20: Charter period
15 years;
viii) Box 30: Latent defects (only to be filled in if period other than stated in Cl. 2) No.
Part II included the following clauses:
“ 2. Delivery (not applicable to newbuilding vessels)
The Vessel shall be delivered and taken over by the Charterers at the port or place indicated in Box 13, in such ready berth as the Charterers may direct. The Owners shall before and at the time of delivery exercise due diligence to...
To continue reading
Request your trial
-
ARK Shipping Company LLC v Silverburn Shipping (IOM) Ltd
...pursuant to s.69 of the Arbitration Act 1996 (“the 1996 Act”), Carr J, in her judgment dated 22 February 2019 (“the judgment”) [2019] EWHC 376 (Comm); [2019] 1 Lloyd's Rep. 554, held that the term was a 5 From that judgment, Charterers appeal to this Court. THE CHARTERPARTY 6 A bareboat c......
-
Alegrow S.A. v Yayla Agro Gida San Ve Nak A.S.
...(§ 33), particularly where (as here) permission was granted on the papers (§ 31(3)). Agile was applied by Carr J in Silverburn Shipping (IoM) Ltd v Ark Shipping Company LLC [2019] EWHC 376 (Comm), [2019] 1 Lloyd's Rep 554 § 34 (reversed by the Court of Appeal on other grounds). (2) The Ap......
-
Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd
...(1978) 18 ALR 1 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Silverburn Shipping (10M) v Ark Shipping Company LLC (the “Arctic”) [2019] EWHC 376 (Comm) Stirling v Maitland (1864) 5 B&S 840 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Tricontinental Corporation Limited v ......
-
UnipolRe v Covéa Insurance; Markel International v General Reinsurance
...assists it in determining a question of law, “the court will accord some deference to the tribunal's decision” ( Silverburn Shipping (IOM) Ltd v Ark Shipping Co LLC (The Arctic) [2019] EWHC 376 (Comm), [20]). iii. Where the arbitral tribunal's decision is one of mixed fact and law, the cou......
-
English Commercial Court Releases Updated S68 And S69 Statistics: Challenges Down, And The Hurdle For Success Remains High
...a sale contract) had an obligation to make certain payments to the buyer, and Silverburn Shipping IOM Ltd v Ara Shipping Company LLC [2019] EWHC 376 (Comm) regarding the construction of an obligation in a contract which a tribunal had wrongly held not to be a The low success rate referred t......