Round up of recent shipping cases Emma Burrage Elizabeth McArthur Senior Associate Associate Norton Rose Fulbright LLP October 25, 2017
Round up of recent shipping cases Contractual interpretation – the limits of commerciality • Gard Shipping AS v Clearlake Shipping Pte Ltd [2017] Performance warranties in charterparties • Imperator I Maritime Company v Bunge SA (Coral Seas ) [2016] Delivery orders and technological advances • Mediterranean Shipping Company SA v Glencore International AG [2017] The meaning of “in light ballast condition” • Regulus Ship Services Pte Ltd v (1) Lundin Services BV (2) Ikdam Production SA [2016] Rule against penalties • Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Limited v Beavis [2015] 2 Round up of recent shipping cases: The Standard Club seminar
Contractual interpretation – judicial developments in recent years Rainy Sky SA v Kookmin Arnold v Britton and Bank [2011] others [2015] • Where parties have used “the reliance placed in some ambiguous language, the cases on commercial common courts will adopt a commercial sense and surrounding interpretation over a literal one circumstances • The court is entitled to favour … should not be invoked to the approach which is more undervalue the importance of consistent with business the language of the provision common sense which is to be construed” 3 Round up of recent shipping cases: The Standard Club seminar
Contractual interpretation – the limits of commerciality Wood v Capita Insurances Limited [2017] • No inconsistency between the approaches in Rainy Sky and Arnold v Britton • Court must balance the wording of the contract and the commercial implications of competing constructions • In doing so, the court will look at three factors: – Quality of the drafting – One party might have signed up to a bad bargain – The drafting might be a negotiated compromise 4 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] 5 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] – agreed facts 30/12/2015 26/01/2016 31/03/2016 01/04/2016 2300 2250 2020 0345 Commence Load Port, Final Discharge discharge UST – Luga Discharge instructions NOR Port given 04/04/2016 served Rotterdam Vessel fast at 0340 NOR berth Discharge Served completed 64.708 days on demurrage 6 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] – relevant terms • Standard demurrage rate US$ 32,500 PDPR • Escalated rate – additional clause 11 “…Charterers shall have the liberty … of instructing the vessel to stop and wait for orders FOR MAX 3 DAYS at a safe place …Charterers shall be entitled to instruct the vessel not to tender NOR on arrival at or off any port or place or to delay arriving at any port or place until Charterers give the order to do so… AFTER FIRST 5 DAYS WAITING FOR ORDERS/DISCH INSTRUCTIONS AT SEA VESSEL TO BE CONSIDERED AS BEING USED FOR STORAGE, AND, UNLESS OTHERWISE AGREED, FOLLOWING INCREASE OF DEMURRAGE RATE TO APPLY – DAYS 6-15 DEMM RATE PLUS $5,000 – DAYS 16-25 DEMM RATE PLUS $10,000 – DAYS 26-35 DEMM RATE PLUS $15,000” 7 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] – legal issues Owners’ arguments: Alternatively: • Charterers were not allowed to • Implied term stating "Whenever, instruct the vessel to stop and after first five days waiting for wait for orders for more than orders/disch instructions at sea three days or in port, for reasons not beyond the Charterers' reasonable • Charterers were not entitled to control..." use the vessel as floating storage • Commercial purpose was to • The vessel was to be considered make charterers liable for as being used for floating storage demurrage at escalating rates if stopped for more than five days where they used the vessel as • If used for floating storage, floating storage charterers to pay demurrage at the escalated rates 8 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] – legal issues (cont.) • Court adopted a literal interpretation • Storage clause had been deleted • Fundamental issue was whether or not an order was given • Specific trigger required for each demurrage regime • Charterers had tendered NOR – ordinary demurrage regime applied • No implied term: – There was no commercial necessity for the implication of such term – The implication of the term was inconsistent with the charterparty properly construed 9 Round up of recent shipping cases: The Standard Club seminar
Gard Shipping v Clearlake Shipping [2017] – take home points • Arguments that it must be "obvious" how the contract was meant to work will not always succeed • Court will be reluctant to imply meaning where the contractual terms are clear • Clear drafting important - particularly when relying on a fixture recap and previously drafted terms • Where notices are required to trigger entitlement to payment – ensure the contractually required steps have been followed • At the outset – assess precisely what the contract requires • How would a tribunal interpret the wording? • Strategise accordingly 10 Round up of recent shipping cases: The Standard Club seminar
Performance warranties in charterparties Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] 11 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] Facts • Owners chartered the vessel to Bunge SA (head-charterers) • Bunge sub-chartered to C Transport Panamax • The vessel remained in tropical waters for four weeks at Guaiba Island 12 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) Facts • The vessel was notably slower on departure from Guaiba • The fall in performance resulted in her taking on emergency bunkers at Jakarta before arriving at Singapore • An underwater inspection revealed heavy fouling of the propeller by barnacles and light fouling on the bottom of the vessel 13 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) Facts • Charterers deducted $ 389,379.51 from hire for the underperformance, asserting that Owners had breached the speed warranty in the charterparty • Owners claimed $ 280,720.69 and charterers and sub-charterers each counterclaimed $ 32,825.56 • The claims were referred to LMAA arbitration 14 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) Charterparty performance warranty NYPE 1946 form with additional rider clauses Clause 29 (b) Speed Clause Throughout the currency of this Charter, Owners warrant that the vessel shall be capable of maintaining and shall maintain on all sea passages, from sea buoy to sea buoy, an average speed and consumption as stipulated in clause 29(a) above, under fair weather condition not exceeding Beaufort force four and Douglas sea state three and not against adverse current. 15 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) Clause 29 (a ) Vessel’s description … D Speed/consumption (expected as a new building) About 14.5 knots ballast/about 14 knots laden on about 33.5 mts ISO 8217:2005 (E)RMG 380 plus about 0.1 mts ISO8217:2005 (e) DMA in good weather condition up to Beaufort scale four and Douglas sea state three and calm sea without adverse current…Plus : Daily Generator Consumption about 2.5 mt at sea/about 2.0 mt (at sea/idle) ISO 8217:2005 (E)RMG 380… All details about All details are given in good faith as per shipbuilders’ plans and as a new building vessel can be described. 16 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) LMAA Arbitration • The vessel did not maintain the warranted speed • The voyage had been extended by 90.245 hours • This was caused by underwater fouling during the stay at Guaiba Island • Such marine growth was fair wear and tear 17 Round up of recent shipping cases: The Standard Club seminar
Imperator I Maritime Company v Bunge SA (Coral Seas) [2016] (cont.) Arbitrators’ decision • The speed warranty in clause 29(b) applied to all sea voyages • Owners assume the risk of underperformance due to fouling • Owners claim for hire was dismissed and sums were due to the charterers 18 Round up of recent shipping cases: The Standard Club seminar
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