Vrinera Marine Company Ltd v Eastern Rich Operations Inc.
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Langley |
| Judgment Date | 21 July 2004 |
| Neutral Citation | [2004] EWHC 1752 (Comm) |
| Docket Number | Case No: 2003 Folio 947 |
| Date | 21 July 2004 |
| Court | Queen's Bench Division (Commercial Court) |
[2004] EWHC 1752 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEENS BENCH DIVISION
The Honourable Mr Justice Langley
Case No: 2003 Folio 947
In the Matter of the Arbitration Act 1996 and
In the Matter of an Arbitration
Miss G. Andrews QC and Mr N. Hart (instructed by Rodgers & Co) for the Claimant/Owners
Mr J. Turner (instructed by DLA LLP) for the Defendant/Charterers
Hearing date: 16 July 2004
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 Appeal
"Vrinera" appeals, with the permission of Cooke J, given under Section 69(3)(c)(i) and/or (ii) of the Arbitration Act 1996, on two related questions of law arising from an arbitration Award dated 29 September 2003. The questions are whether the costs of an arbitration brought by "ERO" against sub-charterers, "Bao Steel", were caused by breach of the obligation of seaworthiness in the head charter and/or were too remote in law to be recoverable.
The Claim in the Arbitration.
Vrinera time chartered its vessel m/v "Vakis T" to ERO. ERO sub-chartered the vessel to "Bao Steel" on a voyage charter.
In July 1999 Vrinera brought arbitral proceedings against ERO claiming that bottom damage to the vessel had been caused by breach of the safe port/berth obligation in the charterparty. ERO denied liability and asserted that the claim was frivolous, vexatious and an abuse of the arbitral process. It put Vrinera to proof of the seaworthiness of the vessel.
On 30 January 2003 ERO commenced an arbitration against Bao Steel alleging breach of the safe port/berth obligation in the sub-charterparty. Bao Steel defended that claim including making positive allegations of unseaworthiness and ERO adopted much of Bao Steel's defence by way of a counterclaim against Vrinera in the main arbitration. ERO claimed damages and an indemnity in respect of their own costs and Bao Steel's costs of the sub-arbitration. There was, however, no claim in the sub-arbitration by either ERO or Bao Steel for damages for breach of the obligation of seaworthiness, nor did ERO expressly allege such a breach in its counterclaim in the main arbitration.
The two arbitrations were not the subject of consolidation but they were ordered to be the subject of concurrent hearings on liability issues.
At the hearing it became apparent on Vrinera's own evidence that Vrinera's case was indeed spurious. The vessel had not docked at the allegedly unsafe berth but at a berth which, on the evidence, plainly was safe. It was also, as the Tribunal held, shown that the cause of the undoubted damage to the vessel was its own unseaworthy condition at the commencement of the charterparty. On 17 September 2003 Vrinera discontinued the claim against ERO, and, in consequence, ERO discontinued the claim against Bao Steel. ERO sought an order for payment against Vrinera of their own costs and the costs payable to Bao Steel in the sub-arbitration as damages for breach of contract by reason of unseaworthiness. The Tribunal gave permission to ERO to amend the counterclaim to plead a positive case of unseaworthiness and to allege that those costs were incurred in consequence.
Vrinera contended that the costs were incurred as a consequence of ERO's own decision to make a claim against Bao Steel on a basis which ERO in fact believed (rightly) to be wholly without foundation.
The Award.
One of the issues the Tribunal had to address, because it was raised by Vrinera, was whether it had jurisdiction to decide ERO's claim for damages. It decided that it had and in the course of doing so remarked (at paragraph 25):
"The dispute in this case has always been whether, as the Owners contended, the pattern of bottom set-up and the structural collapse seen in dry dock in Nantong in late 1999 was brought about with an appreciable external force being applied to the hull (i.e. a grounding ….) or, as the Charterers said, because of a catastrophic failure of the under frame rings in the lower part of the side ballast tanks …due to unchecked corrosion."
In the following paragraph the Tribunal described the matters raised by ERO as "the obverse of the Owners' claim for a breach of the warranty of safety".
On causation and remoteness the Tribunal found in favour of ERO in the following terms:
"39. The Owners are quite right that claims to recover costs as damages in chain arbitrations usually fail, coming to grief on the rocks of causation and remoteness. However, here we agreed with the Charterers that, whilst in most cases it will be appropriate simply to protect time by commencing arbitration proceedings and then awaiting the outcome of those arbitration proceedings before deciding whether to pursue an indemnity claim down the line, here that was not (in practice) an option open to them. They plainly took the view earlier this year that it would be necessary to bring Bao Steel...
To continue reading
Request your trial
-
Pacific Basin Ihx Ltd v Bulkhandling Handymax as
... ... , rebellion, civil commotion, warlike operations, the laying of mines (whether actual or ... Limited A Merrill Communications Company 165 Fleet Street, London EC4A 2DY Tel No: 020 ... ...
-
Pacific Basin IHX Ltd v Bulkhandling Handymax as [QBD (Comm)]
...for the Defendant. The following case was referred to in the judgment: Vrinera Marine Co Ltd v Eastern Rich Operations Inc (The Vakis T)[2004] 2 CLC 1148. Arbitration Award Remission Meaning of exposed to War Risks in cl. (2) of Conwartime 1993 Phrase exposed to War Risks properly construed......