Marine Brief: latest decisions July 2021

In this briefing, we consider some recent decisions addressing issues including jurisdiction disputes following wrongful arrest, conflict of terms within a sales contract, forum shopping to attempt to avoid the limits agreed in security provided, and implied terms within a charterparty.

Eastern Pacific Chartering Inc. v Pola Maritime Ltd. [28.06.21]

A relatively modest and typical balance of hire dispute between owners and charterers, pursuant to a charter containing an exclusive English law and jurisdiction clause, resulted in the owners arresting a vessel they understood to be beneficially owned by the charterers in Gibraltar. Upon the charterers providing evidence that they were only the time charterers of the arrested vessel, the arrest was lifted.

In the English proceedings commenced by the owners, the charterers counterclaimed for various items within the scope of the exclusive jurisdiction clause and also damages alleged to have been suffered as a result of wrongful arrest of the vessel in Gibraltar. The owners argued that the claim should be brought before the Gibraltar court where the arrest took place.

The High Court found that the counterclaim in respect of the arrest was subject to the exclusive jurisdiction clause, taking a broad approach to the clause. The exclusive jurisdiction clause applied to “any dispute arising out of or in connection with this charter” – the arrest in Gibraltar was said to be a direct consequence of the owners’ contractual claim “and therefore closely connected to the contract and the legal relationship there created”. The court therefore had jurisdiction to hear that element of the counterclaim pursuant to Article 17 of the Brussels Conventions 1968 (as applicable between the English High Court and the Supreme Court of Gibraltar) on the basis that the parties had agreed to the applicable jurisdiction.

It may often be thought that arrest in a foreign jurisdiction will only be a matter for that jurisdiction however this decision affirms the position that an exclusive jurisdiction clause can have the effect of displacing that belief and if the parties agree on English law and jurisdiction, it may have jurisdiction over elements of the arrest.

Contact: Michael Biltoo

Septo Trading v Tintrade Ltd (The NOUNOU) [18.05.21]

Court of Appeal allows appeal by Tintrade Ltd (seller of 42,000 mt of high sulphur fuel oil to Septo Trading) against first instance finding that the fuel oil cargo was contractually off spec on the basis that on a true construction of the sale contact between the parties, the independent quality certificate issued by SGS Latvija at the load port was binding.

The sale contract was a recap based on an amended BP 2007 General Terms and Conditions for free on board (FOB) sales. The recap stated that the quality certificate was to be binding, but the BP Terms provided that the quality certificate would be conclusive and binding for invoicing purposes, without prejudice to the buyer’s right to bring a claim for off spec quality. The BP Terms were to not apply when in conflict with the recap terms. Septo successfully argued at first instance that the cargo was off spec and that a breach of contract had been established. Tintrade appealed.

Court of Appeal found that the BP Terms were in conflict with the recap terms, and did not therefore apply as they could not be sensibly read together.

Contact: Craig Boyle-Smith

Enemalta Plc v The Standard Club Asia Ltd [26.04.21]

Shipowners’ vessel, the DI MATTEO, was alleged to have caused damage to a cable in international waters which caused a nationwide power outage in Malta. The English High Court had to address its jurisdiction in respect of security (the LoU) provided.

The LoU secured the claimant’s claim for the maximum amount provided for by the 1996 Protocol to the Convention of Limitation for Marine Claims 1976 (the 1996 Protocol). The LoU was expressly subject to English law and to the exclusive jurisdiction of the High Court. However, shipowners commenced the limitation proceedings in Singapore, which is not a signatory to the 1996 Protocol, and so questions were raised as to the validity of the LoU if the Singapore court should make any order in respect of it.

The English High Court found that where security is put up subject to English law, a party cannot escape the extent of the limits agreed in that security by pursuing proceedings in another jurisdiction where the limits might be less.

Contact: Michael Biltoo

Related item: Limitation actions and the return of security

Alpha Marine Corp v Minmetals Logistics Zhejiang Co Ltd (The MV SMART) [21.04.21]

The owners of the MV SMART chartered the vessel to Minmetals for a time-charter trip. The vessel grounded while departing Richards Bay and was lost. Disputes arose as to who was entitled to recover freight under a voyage party entered into by the defendant charterers and two bills of lading issued by the owners with freight payable “as per charterparty”.

Owners alleged that the loss was a result of the charterers’ breach of a safe port warranty. The charterers denied that this was the case, instead arguing that the grounding was a result of negligent navigation.

A partial arbitration award held that the loss was due to the master’s negligence. The remaining issue for determination was the remedies to which the owners and charterers were entitled. The tribunal had held that charterers could recover as damages the value of freight not paid by the voyage charterer. The relevant question of law for appeal was “Did the charterparty contain an implied obligation that the claimant would not revoke the defendant’s authority to collect from GNR [sub-charterer] the freight payable under the bills of lading unless hire and/or sums were due to the claimant under the charterparty?”.

The court held that there was no such implied obligation. The appeal was allowed and the Award set aside in relevant parts.

Contact: Jonathan Biggins

Read other items in Marine Brief - July 2021