Court’s power  to order sale of liened cargo

In The Moscow Stars [2017] EWHC 2150 (Comm) a cargo of crude oil was loaded in October 2016 under a time charter with PDVSA, the Venezuelan state-owned oil and gas company. Shortly afterwards the owners gave notice of lien to charterers in respect of shortfalls of hire accruing since January 2016. The charter provided for London arbitration and December 2016 the claimant sought and obtained permission from the arbitral tribunal to apply to the court for an order for sale of the cargo.  The vessel with its cargo is currently drifting off Curacao, there being no other viable way of exercising the lien such as discharge into storage.

The first question before the court was whether the court had jurisdiction to order a sale under s.44 of the Arbitration Act 1996. Under s44(1) the court has “same power of making orders about the matters listed below as it has for purposes of and in relation to legal proceedings.”  The matters listed below are set out in s44(2) and heading (d) provides for “the sale of any goods the subject of the proceedings.” Males J held that the court did have power to order a sale and s.44(2)(d) applied where a contractual lien is being exercised over a defendant’s goods as security for a claim which is being advanced in arbitration. The time charterer here was the owner of the cargo. There was no need to consider the position had the cargo been owned by a third party that was not a party to the arbitration.

The second question was whether an order for sale fell within the powers of the court under CPR 25.1 which gives the court the power to make an order for “the sale of relevant property which is of a perishable nature or which for any other good reason it is desirable to sell quickly.”  The cargo was not perishable but there were good reasons why it was desirable for it to be sold quickly. The cargo had been on board the vessel for over nine months and, in the absence of an order, would likely remain there for many months to come.  This prejudiced the owner which was not receiving hire but was continuing to incur the operating costs of the vessel and was faced with approaching deadlines to drydock in January 2018 to comply with SOLAS and Class requirements.  Accordingly, Males J  ordered that the cargo be sold and directed the time charterers to sign any contract of sale as the seller.

 

 

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