Causation and Contingencies. The CV Stealth, again.

In The CV Stealth [2016] EWHC 880 (Comm) an attempt by the sub-charterer to load a cargo of oil from Venezuela without the necessary export permission led to the detention of the vessel. Popplewell J upheld the arbitrator’s finding that the bareboat charterers could recover the resulting expenses from time charterers by way of an indemnity under cl. 13 of Shelltime 4 form. The time charterer’s employment order to load the cargo was the effective cause, or at least an effective cause of the detention of the vessel up to and including 21 July 2015.

The judicial detention of the vessel in Venezuela continued and on 25 May 2017 the Arbitrator issued a Fourth Partial Final Award awarding owners detention expenses and hire paid to the owners for the period after 21 July 2015, but subject to a provisional deduction of $1.4 m for saved drydocking expenses. The deduction was made because “as matters stand there must be a substantial possibility that the vessel will never, in her lifetime, be redelivered to the head owners and thus that the drydocking costs will never have to be borne by the owners here.”

The charterers appealed against the award on the grounds that in considering the issue of causation the arbitrator had merely asked himself whether anything had changed since his initial Partial Award. Charterers argued he should have asked whether the employment order continued to be an effective cause of the detention of the Vessel, or whether the sole effective cause of that detention eventually became the intractable and perverse refusal of the Venezuelan courts to order the release of the vessel as required by Venezuelan law.

Popplewell J held that the arbitrator had not misapplied the test for causation ([2017] EWHC 2808 (Comm). The arbitrator had already found that the employment order had causative potency up to 21 July 2015. The fact that the approach of the Venezuelan courts had not changed from then, could legitimately be taken as evidence that the chain of causation had not been broken; a finding confirmed by the arbitrator’s finding that the subsequent judicial behaviour was insufficient to “obliterate the original cause of the detention”, which reflected the language of the test in Borealis v Geogas [2011] 1 Lloyd’s Rep 482, [44], on when an effective cause will be replaced by another intervening cause.

The owners also appealed against the provisional deduction of saved drydocking expenses, arguing that deductions could only be made if there were a finding that there was a benefit and that the benefit was legally caused by the breach. Popplewell J dismissed the disponent owner’s appeal. The arbitrator had adopted a “wait and see” approach of considering loss by reference to events as they unfolded which was a permissible approach to the date of assessment of loss where its extent may depend upon future contingencies.

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