St Shipping and Transport Pte Ltd v Space Shipping Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 06 February 2018 |
| Neutral Citation | [2018] EWHC 156 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000709 |
| Date | 06 February 2018 |
Neutral Citation Number: [2018] EWHC 156 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Mr. Justice Teare
Case No: CL-2017-000709
Richard Southern QC (instructed by Clyde & Co LLP) for the Claimants
Yash Kulkarni (instructed by Lax & Co LLP) for the First Defendant
Alexander Wright (instructed by Ince & Co LLP) for the Second Defendant
Hearing date: 26 January 2018
Judgment Approved
This judgment concerns a stakeholder claim pursuant to CPR Part 86 by ST Shipping and Transport of Singapore who were the time charterers of the vessel CV STEALTH. They served their stakeholder claim on Psara Energy of the Marshall Islands, the registered owners of the vessel, and on Space Shipping of Malta, the disponent owners of the vessel. In addition to the charterers Glencore International of Switzerland and Glencore PLC of Jersey are also named as stakeholders. They are, respectively, the named guarantors of the charterers in the charterparty and the issuers of a letter of undertaking to the disponent owners by which they agreed to pay sums that are due to the disponent owners from the charterers. This stakeholder claim, which has arisen in the context of (i) awards made in two London arbitrations and (ii) a Rule B attachment order made in Connecticut, has given rise to questions concerning the circumstances in which stakeholder relief can properly be given.
The story leading up to the stakeholder claim is long and detailed. I shall attempt to summarise the most pertinent facts.
In 2010 the vessel was bareboat chartered by the registered or head owners to the disponent owners for a period of 5 years. In 2014 the disponent owners chartered the vessel to the time charterers for a period of about 8 months. The time charterers directed the vessel to Venezuela where she was detained whilst waiting to load cargo. She was only released from that detention in October 2017 but has not yet been given permission to sail by the harbour master. Whilst the vessel was redelivered to the disponent owners in 2015 the bareboat charter remains in force. Thus the disponent owners have remained liable to pay hire under the bareboat charter whilst being unable to trade the vessel.
The detention of the vessel has given rise to claims by the head owners against the disponent owners for unpaid hire and by the disponent owners against the charterers pursuant to the indemnity. Both sets of claims were referred under the respective charterparties to arbitration in London. Several awards have been issued in both references.
The head owners have obtained four arbitration awards against the disponent owners in respect of unpaid hire. The first award (which held that the bareboat charter had not been frustrated and that the disponent owners remained liable for hire) was dated 1 November 2016. Pursuant to that award the disponent owners were ordered to pay the head owners $5.2m.
The disponent owners have also obtained no less than seven arbitration awards against the charterers. The first award held that the time charter had not been frustrated and that the charterers were liable to the disponent owners for certain sums. The second award dealt with quantum of ongoing claims for damages. The third award was an award in respect of the charterers' costs of the second award. By a 4 th. Partial Final Award dated 25 May 2017 it was held that the charterers were liable to pay to the disponent owners some $4.3m. in respect of the disponent owners' liability to the registered owners and some $3.5m for operating expenses less certain sums and a credit in respect of saved costs. Permission to appeal from that 4 th. award was refused on 10 November 2017. A demand was then made on Glencore PLC by the disponent owners. There have since been further awards, the 5 th., 6 th. and 7 th Partial Final Awards, pursuant to which the charterers have been ordered to pay the disponent owners sums of $4.6m, $774,000 and $5.1m.
In recognition of the cashflow difficulties faced by the disponent owners, the head owners and the disponent owners entered into a Settlement Agreement dated 8 December 2016 pursuant to which the first $4m. paid by the charterers to the disponent owners was to be retained by the disponent owners, the next $1,787,375 reflecting 181 days' hire under the bareboat charter was assigned to the head owners and any further sums were to be paid to the disponent owners. On 5 July 2017 the head owners gave notice of the assignment to the charterers.
The disponent owners' demand on Glencore in November 2017 took no account of that assignment. As a result, stakeholder proceedings were issued by the charterers and Glencore on 20 November 2017. On the same day the disponent owners accepted that of the sum of US$6.4m. (“the stakeholder account”) held by Clyde and Co. (the charterer's solicitors) to the order of the court, $1,787,375 representing 181 days of hire could be paid to the head owners. The disponent owners accepted that that sum, at least, had been assigned to the head owners. But there remained a dispute between the head owners and the disponent owners as to the scope of the assignment. That issue was determined against the head owners in the third award between head owners and the disponent owners and in consequence the head owners accept that they have no further claim pursuant to the assignment.
That however did not resolve the stakeholder claim because, on 1 November 2017, the head owners had obtained from the US District Court of Connecticut a Rule B attachment order which attached or garnished “the debts of [the charterers] to [the disponent owners]”. This order was in support of claims by the head owners against the disponent owners totalling some US$19.6m. The greater part of that claim, some $15m., relates to a claim in respect of the alleged breach of the disponent owners' maintenance obligations under the bareboat charter. However, as held by the arbitration tribunal in the bareboat charter reference, it is not clear that there has been a breach and in any event any damages suffered would not crystallize unless and until the vessel was redelivered in an unrepaired condition.
The head owners gave notice of the Rule B attachment order on 2 November 2017 pursuant to which they said that the charterers were directed to “attach and freeze and all tangible or intangible property and/or assets held for the benefit of [the disponent owners]”.
However, that order was vacated on the application of the charterers on 20 November 2017. The reason for that decision was that the court was unable to exercise personal jurisdiction over the charterers and accordingly property held by the charterers was outside the jurisdiction of the court. The head owners have appealed against that decision but their applications for a stay from the court at first instance and from the US Court of Appeals have been refused.
One might have thought that in those circumstances the basis for the stakeholder application had fallen away. The assignment point has been resolved against the registered owners and the Rule B attachment order has been vacated. Yet the charterers continue to fear that if they were to pay the sums due to the disponent owners under the arbitration awards they might be exposed to having to pay them again to the head owners.
The reason for that fear is that the head owners maintain that by reason of having served the Rule B attachment order on the charterers they have a proprietary claim on the debt owed by the charterers to the disponent owners which can be enforced in the event that their appeal against the vacation of that order succeeds. That argument is said to be supported by the advice of a lawyer from the US; Mr Miller is licensed to practise in the US Supreme Court and certain other courts..
Those are the circumstances in which the court must decide what order to make upon the charterers' stakeholder claim. The disponent owners ask the court to order that the sums held by Clyde and Co. to the order of the court should be paid to them. The head owners say that that should not happen and that the court should order a trial of the issue as to whether the head owners have a proprietary claim on the debt owed by the charterers to the disponent owners. The charterers say that there should be no order for payment to the disponent owners and no order for the trial of an issue because, were the court to decide that there was no proprietary claim and order payment to the disponent owners, the court in Connecticut may disagree with the decision of the English court thereby leaving the charterers exposed to having to pay a second time. These submissions have given rise to a number of questions.
Is this a stakeholder claim within the CPR?
CPR Part 86 provides as follows:
Scope of this Part and interpretation
Rule 86.1
(1) This Part contains rules which apply where—
a person is under a liability in respect of a debt or in respect of any money, goods or chattels; and
competing claims are made or expected to be made against that person in respect of that debt or money or for those goods or chattels by two or more persons.
(2) In this Part—
(a) ‘stakeholder’ means any person to whom paragraph (1) applies;
(b) ‘stakeholder application’ means an application made under rule 86.2(1).
Stakeholder Application
Rule 86.2
(1) A stakeholder may make an application to the court for a direction as to whom the stakeholder should—
pay a debt or money; or
give any goods or chattels.
(2) Such application must be...
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