Smit Salvage B.v v. Luster Maritime S.A.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 30 March 2023 |
| Neutral Citation | [2023] EWHC 697 (Admlty) |
| Docket Number | Case No: AD-2022-000004 |
| Court | King's Bench Division (Administrative Court) |
[2023] EWHC 697 (Admlty)
Mr Justice Andrew Baker
Case No: AD-2022-000004
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
ADMIRALTY COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
(but handed down at the Cardiff Civil and Family Justice Centre)
Elizabeth Blackburn KC and Andrew Carruth (instructed by Holman Fenwick Willan LLP) for the Claimants
Nigel Jacobs KC and Caroline Pounds (instructed by Stann Law Limited) for the Defendants
Hearing dates: 28 February, 1, 3 March 2023
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied. Copies of this version as handed down may be treated as authentic.
Introduction
The m.v. Ever Given is a leviathan, just shy of 400m long (399.98m, to be exact), close to 60m broad (58.80m), and almost 200,000 DWT (199,489 DWT on a draught of 16m), with a container capacity of 20,388 TEU. She was part of the morning northbound convoy making its way up the southern section of the Suez Canal on Tuesday 23 March 2021. At about 05:40 UTC (07:40 local time), she grounded 200m or so north of the 151 km mark. That is one of the narrowest, if not the narrowest, sections of the Canal.
The grounding blocked the Suez Canal and made headlines around the world. From above, as grounded, Ever Given looked like this:
(Image credit: MAXAR)
As I had recent cause to note, the Suez Canal Authority (‘the SCA’) reserves to itself exclusive authority to order and direct, through its officials, all operations required to refloat a ship grounded in the Canal (see NYK Orpheus c/w Panamax Alexander [2023] EWHC 2828 (Admlty) at [153]). Under such direction, Ever Given was refloated at about 13:05 UTC on Monday 29 March 2021. She proceeded to the Great Bitter Lake, safely anchoring there by about 17:00 UTC that day.
The first claimant (‘SMIT’) is a leading maritime salvage company. By the time Ever Given refloated, SMIT had a team on board (with onshore support from Holland), and two chartered tugs, ALP Guard and Carlo Magno, contributing to the salvage effort. It is not necessary for the purpose of this judgment to introduce the other claimants or their roles save to say that any involvement they had derived from SMIT's involvement.
The defendants (‘Luster’ and ‘Higaki’) are the co-owners of Ever Given (10% Luster, 90% Higaki). Luster is a wholly-owned subsidiary of Higaki. An associated company, Shoei Kisen Kaisha Ltd (‘SKK’), acts under a contract with Luster as the managing agent for the ship.
I do not understand it to be denied that SMIT's involvement contributed to the successful refloatation effort, although it is said by the defendants that the contribution was very limited. They plead that “ [SMIT's] primary role was to provide technical assistance and consult with the SCA as to the refloating plan and to sub-contracted [sic.] two tugs: “ALP GUARD” and “CARLO MAGNO”. The latters' contribution (when they eventually arrived) was minimal.”
The claimants claim salvage under the terms of the International Convention on Salvage 1989 and/or at common law. The claim is denied. The first line of defence is an averment, the burden of proof on which lies with the defendants, that the claimants “ provided technical assistance … under a contract concluded on 26 March 2021 … pursuant to which the parties agreed the scope of, and remuneration for, the technical services.” It is trite law that if that be so, no salvage claim would lie, only a claim under the contract. For example, the first sentence of the opening paragraph of Brice on Maritime Law of Salvage, 5 th Ed., states that “ In English law a right to salvage arises when a person, acting as a volunteer ( that is without any pre-existing contractual or other duty so to act) preserves or contributes to preserving at sea any vessel, cargo, freight or other recognised object of salvage from danger” (my emphasis). For these purposes, the sea includes tidal river or canal waters such as, in this case, the Suez Canal.
By a written Jurisdiction Agreement dated 25 June 2021 between the claimants, acting by their solicitors, and the defendants, their hull and machinery underwriters, Mitsui Sumitomo Insurance Co Ltd (‘Mitsui’), and SKK, acting by the defendants' solicitors:
(i) it was recited inter alia that (a) the claimants say they rendered services entitling them to salvage, and (b) that the defendants dispute that salvage services were rendered by the claimants as alleged, and aver that any services rendered were performed pursuant to a pre-existing contract; and
(ii) it was agreed inter alia that:
(a) “ [the] determination of the dispute as to whether the Claimants' services were in the nature of salvage and the assessment of the amount of the salvage remuneration payable …, together with any other dispute between the parties arising out of the alleged Salvage Services, shall be determined exclusively by the English Courts in accordance with English law and practice”;
(b) the English court would be asked to determine the salvage remuneration (if any) due to the claimants in respect of all salved property and within 28 days of a final and unappealable judgment in that regard the defendants would pay their pro rata proportion of the global salvage sum and SKK would pay cargo's pro rata proportion of that sum, in each case with interest and costs, failing which the claimants would be entitled to claim against certain security that was to be (and was in fact) provided.
The parties appear to have proceeded (at least implicitly) on the basis that the agreed application of “ English law and practice” was an agreement to apply English salvage law to the question whether the claimants are entitled to salvage, including whether, per contra, they performed services under a contract negativing any salvage claim, but not an agreement to dispense with English conflict of laws rules entirely. In particular, questions of actual authority on the defendants' side, to conclude the contract they allege, that English conflict of laws rules would say are governed by Japanese law, were treated on both sides as still so governed. Of course, that does not operate in the abstract. Any case as to the content of Japanese law that is or might be applicable needed to be pleaded. In the event, only four specific, narrow, matters of Japanese law were pleaded, and one of those Mr Jacobs KC did not pursue at trial. It will not be necessary to make findings on the three other points that were pleaded.
With permission I had granted on agreed terms, there was expert evidence as to Japanese law in reports from Mr Jumpei Osada, a partner of Japanese law firm TMI Associates in Tokyo, served by the claimants, and Mr Mitsuhiro Toda of the Law Offices of Toda & Co, also in Tokyo, served by the defendants. Their reports strayed substantially into areas that are properly for the court rather than for expert witnesses as to foreign law; but that may be because their brief as endorsed by the relevant Consent Order was wider than, with hindsight, I ought to have allowed. There was substantial agreement between the experts on the content of Japanese law, as distinct from its application to the facts, and as I said in the previous paragraph only very limited points were pleaded. As a result, the parties agreed between themselves to dispense with cross-examination on the points of difference between the experts, dealing with those points through argument. As a result, the experts were not called to give oral evidence and the parties took the day that had been reserved for that evidence to prepare their closing arguments.
The Alleged Contract
The trial upon which this is my judgment was the trial as a preliminary issue of the question whether “ a binding contract for salvage services [was] concluded by the parties as alleged in paragraphs 1, 13, 35–36B and 47 of the Defence”. I quoted from paragraph 13 of the Defence in paragraph 7 above. The pleaded case that a contract was concluded, on 26 March 2021, is that consensus ad idem as to all essential terms was created, and a mutual intention to be bound thereby was intimated, notwithstanding a mutual intention to agree (and sign) more detailed terms, by the following exchange of emails that morning (UTC):
(i) At 11:35 UTC, from Captain Saumitr Sen on behalf of WK Webster & Co Ltd (‘WKW’), a claims manager acting as agent appointed by Mitsui, to Mr Richard Janssen (Managing Director of SMIT) and Mr Jody Sheilds (also of SMIT), copied to various others, stating:
“ We refer to our telephone conversation subsequent to my previous email and my further conversation with Japan.
As agreed over phone, I am please to confirm as below on behalf of Owners of Ever Given.
Owners agree to the following:
The tugs, dredgers, equipment engaged by SCA and their subsequent salvage claim are separate to the Smit's offer of assistance.
a) SMIT personnel and equipment to be paid on Scopic 2020 rates
b) Any hired personnel and equipment, out of pocket expenses of SMIT to be paid on scopic 2020 rate + 15% uplift
c) Refloatation Bonus of 35% of Gross invoice value irrespective of the type of assistance rendered.
ci) Refloatation bonus not to be calculated on amounts chargeable for quarantine or isolation waiting period.
cii) Refloatation bonus to SMIT will be applicable if refloatation attempt by SCA on 26 March 2021 is unsuccessful.
We look forward to your confirmation. We can then start ironing out the wreck hire draft agreement so that the same can be signed at...
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