Article III(1) and IV(1) of the Hague Rules. Navigational errors by master in passage plan preparation before and at the beginning of the voyage.

Yesterday, the Supreme Court gave judgment in Alize 1954 and another (Appellants) v Allianz Elementar Versicherungs AG and others (Respondents) [2021] UKSC 51.

The case arose out of the grounding of the container vessel CMA CGM LIBRA on leaving the port of Xiamen, China, on a voyage to Hong Kong. The Admiralty Judge, Teare J, found that the vessel’s defective passage plan was causative of the grounding and that this involved a breach of the carrier’s seaworthiness obligation under article III rule 1 of the Hague Rules. The Court of Appeal upheld the decision. Owners contended that these decisions were wrong because the vessel was not unseaworthy and/or due diligence was exercised, and that any negligence in passage planning was a navigational fault which is exempted under article IV rule 2(a) of the Hague Rules.

Two issues were raised the appeal. First, is the carrier’s seaworthiness obligation under the Hague Rules subject to a category-based distinction between a vessel’s quality of seaworthiness, its attributes and equipment, or navigability and the crew’s act of navigating which concerns how the crew operates the vessel using those attributes? Second, what amounts to due diligence under article IV rule 1 of the Hague Rules? Has the carrier shown due diligence if it has equipped the vessel with all that is necessary for her to be safely navigated, including a competent crew?

The Supreme Court upheld the decisions of the Court of Appeal and the Admiralty Court. The carrier’s obligation under the Hague Rules was not subject to a category based distinction between a vessel’s quality of seaworthiness or navigability and the crew’s act of navigating. Given the “essential importance” of passage planning for the “safety … of navigation”, applying the prudent owner test, a vessel is likely to be unseaworthy if she begins her voyage without a passage plan or if she does so with a defective passage plan which endangers the safety of the vessel. The fact that the defective passage plan involves neglect or default in “the navigation of the ship” within the article IV rule 2(a) exception was no defence to a claim for loss or damage caused by the vessel being rendered unseaworthy before and at the beginning of the voyage as a result of that navigational  negligence. The vessel was therefore unseaworthy before and at the beginning of the voyage by reason of the defective passage plan.

The owners were unable to show that they had taken due diligence to make the vessel seaworthy. Their duty was non-delegable and the crew’s failure to navigate the ship safely was capable of constituting a lack of due diligence by the carrier. It made no difference that the delegated task of making the vessel seaworthy involved navigation. The carrier is liable for a failure to exercise due diligence by the master and deck officers of his vessel in the preparation of a passage plan for the vessel’s voyage, irrespective of the fact that navigation is the responsibility of the master and involves the exercise by the master and deck officers of their specialist skill and judgment.

Additional freight claim. Effect of change of nominated discharge port/s by voyage charterers.

In London Arbitration 20/21 a shipowner claimed additional freight for discharge ports nominated by the voyage charterer who then changed the nomination to discharge ports which were not subject to additional freight. The vessel was chartered to carry 60,000 mt bulk soya to ½ ports in China with the sole/1st disport to be declared 10 days prior to the vessel passing Singapore. The charterers nominate Zhoushan for lightening and Taixing for discharge of the balance of the cargo. The charter provided for $1.75 per mt extra on entire cargo if Taixing was the nominated discharge port. Thirteen days later charterer changed the discharge port to Tianjin. Owners sent charterers an invoice for Zhoushan and Taixing, and charterers insisted on Tianjin. Eventually the disputed extra freight was paid into an escrow account and the vessel discharged at Tianjin.

The tribunal held that in accordance with established authorities culminating with The Jasmine B [1992] 1 Lloyd’s Rep. 39 the initial declaration of the discharge ports made by charterers had the effect of treating those ports as have been written into the charter from the outset. Charterers assumed the risk of any change of nomination subsequently made by their sub-contractors. The nomination provision was a typically worded nomination provision and nothing in it was special in permitting a change of nomination.

The fact that the owners only proceeded to Tianjin under protested, confirmed by the terms of the escrow agreement, was fatal to all charterer’s arguments as to variation, waiver and estoppel. Nor had owners been unjustly enriched at charterer’s expense because the voyage for which additional freight was contemplated was never performed. Nothing in the charter obliged owners to relinquish the freight for the contractual voyage if in the event that voyage was not performed. Owners were accordingly entitled to the freight payable on the original nomination which was held in the escrow account.

Nineteen years on — the Prestige saga, continued

Nearly twenty years after the VLCC Prestige broke up and sank off the Galician coast, spreading filth far and wide, Spain and France remain locked in battle with the vessel’s P&I club Steamship Mutual. Put briefly, they want to make Steamship pay out gazillions on the basis of judgments they have obtained locally on the basis of insurance direct action statutes. Steamship, by contrast, refers to the Prestige’s P&I entry, and says that both states are bound by “pay to be paid” clauses and in any case have to arbitrate their claims in London rather than suing in their own courts.

The background to the latest round, The Prestige (Nos 3 and 4) [2021] EWCA Civ 1589, is that Steamship, having got a declaratory arbitration award in its favour substantiating the duty to arbitrate, which it has transmuted into a judgment under s.66 of the Arbitration Act 1996, now wants to take the battle to the enemy. It wants (a) to commence another arbitration claiming damages for breach of the original arbitration agreement, reckoned by the damages and costs represented by the court proceedings in France and Spain; (b) damages for those states’ failure to abide by the declaratory award; and (c) damages for failure to abide by the s.66 judgment. Spain and France resist service out on the basis that they are entitled to state immunity, and that the claims based on the award and the judgment must in any case fail.

The High Court held, in two different proceedings (see here and here), that sovereign immunity did not apply; that claims (a) and (b) succeeded; and that claim (c) failed because of the effect of the insurance provisions in what is now Articles 10-16 of Brussels I Recast (this being, of course, a pre-Brexit affair). Both sides appealed, and the appeals were consolidated.

On sovereign immunity the Court of Appeal have now sustained the judgment of non-applicability and as a result allowed claim (a) to go ahead. They have equally upheld the first instance judgment against Steamship on claim (c): although in name a claim under a judgment this is, it says, still in substance a claim by an insurer against its insured which, under what is now Art.14 of Brussels I Recast, can only be brought in the domicile of the latter. On claim (b), however, it has held (contrary to an earlier suggestion in this blognostra culpa, we can’t be right every time) that while the jurisdiction rules of the Brussels regime do not stand in the way, the claim is bound to fail. The award being merely declaratory, there can be no duty to perform it because there is nothing to perform, and hence no liability for disregarding it.

The arbitration will now therefore go ahead. Assuming it leads to an award in Steamship’s favour, Steamship will then no doubt seek New York Convention enforcement and/or get a s.66 judgment which they will oppose to any attempt by France and Spain to get judgment here, and doubtless also try to weaponise in order to get their Spanish and French costs back. (Meanwhile they may rather regret not having asked in the original arbitration proceedings for a positive order not to sue in France or Spain, rather than a mere declaration: but that’s another story.)

There’s little to add at this stage. But there is one useful further confirmation: s.9 of the State Immunity Act, removing state immunity in the case of a written agreement to arbitrate, applies not only to a direct contractual obligation to arbitrate, but also to an indirect duty to do so Yusuf-Cepnioglu-style. Useful to know.

Will France and Spain now come quietly, thus putting an end to this saga (which has already appeared in this blog here, here, here, here and here)? It’s possible, but We’re not betting. We have a sneaking suspicion that the events of November 2002 may well continue to help lawyers pay their children’s school fees for some little time yet.

Dock brief

In July last year we noted the holding of Teare J that Holyhead Marina came within the dock-owner’s right to limit liability under s.191 of the Merchant Shipping Act 1995. The issue arose because the Marina faced multiple claims from yacht owners following devastation wrought by Storm Emma in 2018.

We approved then, and are happy to say that the Court of Appeal does now. Today in Holyhead Marina v Farrer [2021] EWCA Civ 1585 it confirmed Teare J’s conclusion that while not a dock, the Marina was a landing place, jetty or stage (which are included in the definition of places entitled to limit), and that there was no reason whatever to limit the entitlement to purely commercial port facilities. ‘Nuff said. Marina owners can breathe a sigh of relief, while hull insurers no doubt will mull putting up rates yet again on yachts to mark the loss of another source of subrogation rights.

Confidential information v trade secrets

Image by Aymanejed from Pixabay

Richard Baker Harrison Ltd v Brooks and others – [2021] All ER (D) 94 (Oct) offered the opportunity for a further exploration of the new legal relationship between trade secrets and confidential information, yet ultimately the case demonstrates how the legal community remains comfortable addressing trade secrets through the prism of confidentiality.

Richard Baker Harrison Limited (“RBH”) is a leading distributor of minerals and chemical raw materials which it supplies to manufacturers worldwide. Whilst not in itself a manufacturer it occupies a key position within the plastic, rubber, coating, adhesive and sealant, composite, ceramic and polishing sectors. In this case RBH sought to enforce obligations of non-competition, confidentiality, and post-termination restrictions against two former employees – Mr Brooks and Mr Sambrook – who had left RHB to establish SBS Sourcing Limited (a mineral sourcing and supply services business).

It was not in dispute that Brooks and Sambrook owed express obligations to protect RBH’s confidential information under their contract of employment but both defendants accepted that their contracts of employment also included the implied term of good faith and fidelity. Deputy High Court Judge Margaret Obi noted, “[T]his abstract concept includes an obligation to refrain from conduct which would be regarded as unacceptable by reasonable and honest people. In essence, it is no more than an obligation to loyally carry out the role of an employee. However, unlike a fiduciary duty, it does not require the employee to act solely in the interests of the employer … and mere preparations to set up a competing business after the termination of the employment are not necessarily a breach of contract.”

Mr Brooks admitted that he was under a duty, whilst employed, to maintain the confidentiality of RBH’s trade secrets and/or confidential information, and not to use any information obtained in confidence as a consequence of his employment to the detriment of RBH. However, he denied that there were any equitable duties in relation to trade secrets and/or confidential information that were not covered by the express terms or applicable implied terms of the contract. Accepting this submission Judge Obi denied the existence of any equitable duty relating to misuse of trade secrets.

Finding it to be “trite law that during the currency of the employment relationship the employer is entitled to protect confidential information whether it amounts to a trade secret or not”, Judge Obi was satisfied that RBH’s “customer/supplier connections, the stability of its workforce and the protection of its confidential information are all legitimate business interests requiring protection”.

PROTECTING YOUR MARITIME TRADE SECRETS & COMMERCIAL REPUTATION

Image by Erich Westendarp from Pixabay

Salt Ship Design AS v Prysmian Powerlink SRL [2021] EWHC 2633 is the latest case to offer us a valuable insight into the operation of the Trade Secrets (Enforcement etc.) Regulations 2018 [TSR]. Heard before Justice Jacobs in the Queen’s Bench Division (Commercial Court) the case concerns the design of a Cable Laying Vessel to become named The Leonardo Da Vinci – a specialist vessel used to lay undersea cable for power transmission, telecommunications etc. – owned by the Prysmian Group.

In 2017 Prysmian held a competitive tender process to appoint a designer for the new vessel, which was won by Salt (an independent Norwegian ship design company), who were appointed as the “exclusive designer” for the Project under a Short Form Agreement (SFA) dated 13th July 2017.

In due course it was the Vard Group AS (part of the Fincantieri Group) which entered into a ship building contract for the vessel with Prysmian in April 2018, from which point Salt played no effective further part in the design of the vessel, as Vard Group AS used a wholly owned subsidiary, Vard Design AS, for future design work (despite Vard Design AS having been an unsuccessful competitor to Salt in the 2017 tender process).

Salt brought legal proceedings against Prysmian on two grounds, breach of contract and misuse of confidential information and it is the latter which is now our focus.

Jacob J notes Salt’s case is Prysmian (together with the Vard group of companies) wrongly used Salt’s confidential information to develop an alternative design for the vessel. Salt relies upon the speed at which Vard purported to develop an alternative design for the vessel between 21st December 2017 and 3rd January 2018, and described this at trial as “the Christmas miracle”. Salt also relies upon what it alleges to be striking similarities between aspects of this alternative design and Salt’s. It is therefore alleged that Salt’s design work was wrongly used as a springboard, with Vard piggy-backing on it, and being encouraged to do so by Prysmian, so as to win the design work and cut out Salt. [8]

Salt sought a determination of the applicability of TSR, relying upon these Regulations for remedial purposes, specifically the appropriate dissemination and publication of the judgement at Prysmian’s expense, given the “allegedly damaging effects of Prysmian’s conduct on Salt’s reputation in the market.” [448]

Referring to relevant case law Jacob J concluded that Prysmian had acted in breach of both clause 6.4 of the SFA and its equitable obligations of confidence. In so doing he felt entirely satisfied that the requirements of Regulations 2 & 3 of TSR had been fully satisfied. [474-475]

Whereas Regulation 14 of TSR provided for injunctive or similar relief for Salt, Regulation 16 provides for compensation instead of an order under Regulation 14, as follows:

“(1) A person liable to the imposition of an order under regulation 14 may apply for, and a court may make, an order for compensation to be paid to the injured party instead of an order under regulation 14 – a) if at the time of use or disclosure the person neither knew nor ought, under the circumstances, to have known that the trade secret was obtained from another person who was using or disclosing the trade secret unlawfully,

b) if the execution of the measures in question would cause disproportionate harm to the person liable to the measures, and

c) if it appears reasonably satisfactory to pay compensation to the injured party.”

Prysmian submitted that compensation should not be available under Regulation 16, because any infringement was not made with the knowledge that unlawful acquisition, use or disclosure of a trade secret was being engaged in. Nor ought it to have known that it was, given the assurances it had received from Vard, a well-respected and reputable shipbuilder. This argument was, however, rejected on the facts by Jacob J. who regarded this, “as a bad case of breach of confidence…Prysmian did engage in blatant misuse of confidential information to facilitate an outcome where it could obtain a ship built by Vard with the benefit of the Salt design, but at a significantly lower cost.” [470]

Prysmian went on to advance two further arguments to Jacob J in relation to TSR:-

“First, it contended that they do not apply outside the UK, [because] all the alleged infringements took place in Norway, Italy and/or Singapore. Salt submitted, and I agree, that that the Regulations apply in the present case because Prysmian is subject to the in personam jurisdiction of this court and English law is the applicable law for the claims made.

Secondly, Prysmian contended that the regulations only came into force on 9th June 2019, after Vard’s design work … and… the conclusion of the shipbuilding contract. I agree with Salt that this is irrelevant. Regulation 19 provides that they apply to proceedings brought before a court after the coming into force of the Regulations, in respect of a claim for unlawful acquisition use or disclosure of a trade secret. In the present case, the claim form was issued on 12th July 2018 and the relevant temporal requirement is met.” [480 & 481]

Demurrage time bar clause. What is the time for “completion of discharge”?

In Euronav NV v Repsol Trading SA (mt Maria) [2021] EWHC 2565 (Comm) Henshaw J was faced with a dispute between owners and charterers as to whether a demurrage claim was barred by clause 15(3) of the Shellvoy 6 form, which requires notification to be made of a demurrage claim “within 30 days after completion of discharge” failing which the claim becomes time-barred. The Vessel discharged at Long Beach and disconnected hoses at 21:54 local time (PST – Pacific Standard Time) on 24 December 2019, as noted in the Statement of Facts and laytime statement. On 24 January the Charterers received owners’ brokers an email stating that: “According to owners, demurrage has incurred on above [subject] voyage. Hence, please take this email as demurrage notice”.

Whether owners’ notification was within the thirty days after completion of discharge depended on which time zone was used in respect of ‘completion of discharge’. It was agreed that when computing a period of time within which a certain thing must be done, the first day is not ordinarily counted and that the date of discharge – whichever date it was – was ‘day 0’ and not counted as one of the 30 days within which notification had to be given. In addition ‘day’, absent any contrary indication meant a calendar day, i.e. the period of twenty-four hours beginning and ending at midnight, and not merely a period of twenty-four consecutive hours.

If as charterers’ argued, one took local time in California, where discharge took place, day one would be 25 December and the claim submitted on 24 January would be out of time and time-barred. Owners argued that for three alternatives which would give the date of completion on 25 December, and day one on 26 December:   (a) the time zone of the recipient of the required notice (here, Spanish time, that of Charterers), (b) the time zone of the giver of the required notice (here, Belgian time, that of Owners) or (c) GMT, given that the contract applied English law?  On each of these approaches the claim would not be time-barred.

Henshaw J held that the date of completion of discharge is to be determined applying local time at the place of discharge for the following reasons [61]:

“i)                   The ordinary and natural approach is to allocate to an event (e.g. a historical event, or a person’s birth, marriage or death) the date that was current in the place where the event occurred.

ii)                 That approach gains some support from the authorities and commentary referred to in §§ 30-35 above.

iii)               The discharge of cargo from a vessel is a tangible physical event, which occurs at a specific location and in a particular time zone.  It will in the ordinary course be recorded in documents, such as the Statement of Facts and any laytime statement, as having occurred at the time and date current applying local time.  A contracting party would naturally expect the date stated in such documents to be the date of completion of discharge for contractual purposes.

iv)               The date of discharge of the cargo is significant not only for the purpose of notification of demurrage claims, but also for other purposes.  It represents the end of the contractual service to the shipper, and ends the running of laytime or demurrage.  Under clause 15(3) itself it is also the start date for the separate 90-day period for service of supporting documents.  It is generally the starting point for the time limit under the Hague-Visby rules for cargo claims.  It would be unnatural and illogical either (a) for there to be more than one date of discharge, used for different purposes, or (b) for the date of discharge pursuant to (say) the Hague-Visby rules to be determined by something as potentially arbitrary and non-transparent as the place of receipt (or, even, potential receipt) of a notice of any demurrage claim.  Whether the date of delivery for Hague-Visby purposes is determined using local time at the place of discharge (which I am inclined to consider the obvious approach) or using the relevant court’s own time zone (as was mooted during submissions but appears to me less attractive), Owners’ case creates the prospect of the same event being differently dated for different purposes.

v)                  The use of local time at the place of discharge gives rise to a single, clear and easily ascertainable date and time of completion of discharge.  It tends to promote certainty and reduce the risk of confusion.

vi)               It is inherent in a date based system that different time zones may apply to the events which define the start and end of the period, if they are in different countries.

vii)             The point that it is not essential to apply the same time zone to the beginning and end of the 30 day period under clause 15(3) is illustrated by a case where daylight saving time changes during the period.  If, for example, discharge is completed on a particular day in the UK, and a notice is served at half past midnight on day 31, the notice would be out of time even if the clocks had gone forward an hour to GMT + 1 in the meantime (so that half past midnight was 11.30pm on day 30 GMT).  

viii)           If it were appropriate to determine both dates using a single time zone, it would be more logical for that to be the time zone of the place of discharge.  As already noted, the completion of discharge is a significant physical event, with a natural date, usually recorded in contemporaneous documents, and with several consequences under the contracts relating to the voyage.

ix)               The considerations discussed in section (D) above give no compelling or sufficient to depart from the natural approach.

x)                  There is no ambiguity in clause 15(3) that might justify a contra proferentem interpretation.”

Extent of The Right of Subrogation in Insurance Law  

Sompo Insurance Singapore Pte Ltd v. Royal & Sun Alliance Insurance Plc [2021] SGGC 152

.

Singapore Marine Insurance Act 1994 (which is based on English Marine Insurance Act 1906) s. 79(1) stipulates (emphasis added):

Where the insurer pays for a total loss, either of the whole, or in the case of goods of any apportionable part, of the subject-matter insured, he thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject-matter so paid for, and he is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject-matter as from the time of the casualty causing the loss.

The question in this case was: “does an insurer’s right of subrogation extend to the right to call upon a performance bond issued to the assured?”  

The facts can be summarised as follows: In December 2013, the Government of Singapore entered into a contract with Geometra for the transport of military cargo. It was a condition under the contract that Geometra would provide an unconditional performance bond for 5 % of the contract price. This was satisfied by Sompo issuing a bond in favour of the Government.

The Singapore Government also purchased an insurance policy from RSA with regard to this shipment against the risk of loss or damage to cargo. When the cargo was damaged during transport the Government sought and obtained indemnity for the loss from RSA, which then commenced a subrogated recovery action under s. 79(1) of the Act and called on the performance bond issued by Sompo. To this end, RSA’s lawyers wrote to Sampo and made a demand on the bond “on behalf of the Government of Singapore”. Sampo refused the call and the matter was then litigated. In the District Court, RSA secured a judgment in its favour. Sampo appealed the decision to the High Court.

One of the arguments put forward by Sompo was that the bond had ultimately expired as it was not called upon by the Singapore Government. This point was easily disposed by the High Court on the ground that the letter of the RSA’s lawyers was in effect written “on behalf of Singapore Government” as they acquired the right to wear the shoes of the assured, in this case the Government, pursuant to their right of subrogation.

The main discussion was whether the insurer’s right of subrogation extended to the right to call on the performance bond.  The High Court had no doubt that it did. Philip Jeyaretnam JC confirmed that the common law principle of subrogation grants an insurer the entitlement to every right the assured has to recover in respect of a loss including the right to call on a performance bond.    

The judgment is not only in line with the wording and ethos behind s. 79(1), but is in accord with the case law on the subject especially Castellian v. Preston (1883) 11 QBD 380; London Assurance Corp. v. Williams (1892) 9 TLR 96 and more recently England v. Guardian Insurance Ltd [2000] Lloyd’s Rep IR 409. Moreover, it would have been incongruous to hold that insurers are entitled to pursue subrogated recoveries against the person responsible for the loss but not use all rights and remedies that the assured would be able to pursue for recovery including calling on performance bonds. It is very likely that a similar judgment would have been delivered, had the case been litigated in England & Wales.

Misrepresentation in Procuring Insurance- Avoidance or Not?  

Jones v. Zurich Insurance [2021] EWHC 1320 (Comm)

When obtaining insurance cover for his Rolex watch in May 2018, Mr Jones made a representation to the insurer (Zurich), through his insurance broker, that he had not made any other insurance claim in the previous five years. This was not accurate as Mr Jones had previously claimed for a lost diamond in 2016.

Mr Jones put forward an insurance claim for loss of his beloved Rolex watch (valued at £ 190,000), said to have come off his wrist while skiing. The insurer turned down the claim on the basis that Mr Jones made a misrepresentation on his claim history and it would not have written the policy, or would have written it on materially different terms, had the true state of affairs been disclosed (s. 2(2) of the Consumer Insurance (Disclosure and Representation) Act (CIDRA) 2012). In the alternative, the insurer argued that if it had known the true state of affairs, it would have charged a substantially higher premium and the claim should be reduced proportionately. The insurer did not plead that the misrepresentation was “deliberate or reckless”.

His Honour Judge Peeling QC had no hesitation in holding that the assured failed to take reasonable care not to make a misrepresentation to the insurer when questioned about his claim history and he was also satisfied that the insurer could avoid the policy as it managed to demonstrate that it would not have entered into the insurance contract at all had it been aware of the previous claim made in 2016 for a lost diamond. In reaching this decision, the judge considered expert evidence from underwriters. Both experts agreed that some underwriters might accept this particular risk at higher premium and others would refuse to underwrite altogether, but different in emphasis as to how usual a refusal to underwrite would be. However, what ultimately swayed the judge was the fact that the underwriter (Mr Green) had expressed concern in his written notes about the jewellery element of the cover. He also stated in his evidence that “the answer to whether or not there had been ant previous claim was extremely significant to my assessment of the risk… it was already a case which was borderline declinature… it’s just not one which would fit our underwriting strategy.”. The judge accepted his evidence.

The judgment makes clear that the burden of proof on the insurer to establish that it would not have entered into an insurance contract is a high one but can certainly be satisfied especially in cases where underwriters could present to judge written notes confirming their hesitancy to take the risk in the first instance supported by reliable expert evidence. The relevant underwriter’s contemporaneous notes and records giving clues about his thought process at underwriting stage as well as copes of e-mails and documents provided by the assured and his broker were very helpful to advance the insurer’s case.       

The case was considered under the CIDRA 2012 (as this was personal insurance) but it is certainly a good illustration as to how the judges might interpret certain parts of the Insurance Act (IA) 2015 since CIDRA 2012 and IA 2015 share similar provisions (i.e. both of these legal instruments allow an insurer to avoid the policy for misrepresentation if the insurer can demonstrate that the misrepresentation was “deliberate or reckless” or “the insurer would not have underwritten the policy on any terms had there been no misrepresentation”).    

Time charter trip. Quantifying shortfall of bunkers remaining on board on redelivery.

In London Arbitration 19/21 the bunker clause in a trip time charter from the Far East to Egypt provided:

“8. BUNKER CLAUSE:

BOD about 830 metric ton IFO 380 CST about 78 metric ton LSMGO.

Prices both ends: USD425 PMT for IFO 380 and USD685 PMT for LSMGO. 

BOR about same as BOD of IFO and BOR as onboard of LSMGO.”

The vessel was delivered with 888.56 mt of IFO on board and redelivered with 686.07 mt. The owners were prepared to allow a margin of 2 per cent for the term “about” but submitted that even on that basis the charterers had redelivered with a shortfall of 184.7188 mt of IFO. They said that the prevailing market price of IFO at the place of redelivery in Egypt was US$510 per mt, and claimed the difference between that price and the charterparty price of US$425 per mt on the shortfall, a total of US$15,701.10.

The Tribunal  held that the word ‘about’ without further clarification imported a 5 percent margin for both delivery and redelivery. Owners argued that this was not the case on redelivery because the charterers had the opportunity of supplying further bunkers to make up the shortfall but deliberately decided not to do so. Although the Tribunal could see the attraction of the argument it rejected it as adding such a gloss to the usual understanding of the term ‘about’ would cause uncertainty and leave the parties in the dark as to the nature and extent of their obligations.

The Tribunal then held that the charter prices on redelivery only applied to legitimate quantities on delivery and redelivery and not to any quantities as submitted by the charterers. The appropriate comparison to be made was between the charterparty price and prevailing market price at the place of redelivery. Speculation as to where and at what price the owners might have taken on bunkers after redelivery had to be discounted as a matter of an independent commercial decision of the owners after redelivery. 

The Tribunal rejected Charterer’s argument that they had requested the owners to load more bunkers at Singapore but were told that the vessel did not have sufficient tank capacity to load the quantity proposed by the charterers. The charterers had not then taken on additional bunkers in Egypt because the supply of bunkers there was unreliable both in terms of service and quality. There was no warranty as to the bunker capacity of the vessel and/or its ability to take on board any quantity of bunkers required by the charterers at any time at Singapore, or elsewhere, during the course of the trip.