View Russia / Ukraine conflict updates here
Case law: Navision Shipping A/S V Precious Pearls Ltd; Conti Lines Shipping Nv V Navision Shipping A/S (The Mv “Mookda Naree”) -  Ewhc 558 (Comm)
News & Insights 31 May 2021
Keywords: Interpretation of contract
Charterparty (time) – Off hire – Vessel arrested for cargo claims between third parties – Allocation of responsibility for arrest and detention under the charterparty
The dispute involved the head owners Precious Pearls Ltd, time charterers Navision Shipping A/S (Navision) and the sub-time charterers Conti Lines Shipping NV (Conti), who sub-chartered the vessel to Cerealis (the ultimate sub-charterers).
The vessel, MV Mookda Naree, was arrested in December 2018 at Conakry, Guinea, where she called to discharge a cargo of wheat. The vessel was arrested for alleged cargo shortage in respect of a different consignment carried on a different vessel involving the ultimate sub-charterers, Cerealis. As a result of the arrest Navision and Conti respectively placed the vessel off hire during the period of arrest from 15 December 2018 until 12 January 2019.
The head and sub- charterparties were on the Asbatime 1961 form with additional clauses.
Clause 47, which was agreed on both charterparties, provided that the vessel would be off hire in case of arrest, “unless such detention or arrest [was] occasioned by any act, omission or default of the Charterers and/or sub-Charterers and/or their servants or their Agents”
Clause 86, which was only present in the head charterparty, provided that “When trading to West African ports Charterers to accept responsibility for cargo claims from third parties in these countries (except those arising from unseaworthiness of vessel) including putting up security, if necessary, to prevent arrest/detention of the vessel or to release the vessel from arrest or detention and vessel to remain on hire".
The dispute was referred to arbitration, where the tribunal held that:
- Cerealis’s failure to act promptly to settle or secure the claim, in order to lift the arrest fell within the scope of clause 47 “act, omission or default of the charterers and/or sub-charterers”; and
- cargo claims as defined in clause 86 were not confined to claims under the head charterparty, or in respect to cargo carried on board that vessel.
As such, the cargo claim and subsequent arrest at Conakry, Guinea fell within the scope of this clause, and the vessel should have remained on hire for the entire period of arrest. Therefore, Navision were liable for damages for breach of clause 86.
Navision and Conti appealed the tribunal’s decision on the following grounds:
- The tribunal had incorrectly interpreted the word ‘omission’ in clause 47; and
- The cargo claim, which led to the subsequent arrest of the vessel did not constitute a cargo claim under clause 86 of the head charterparty.
The Commercial Court held that the tribunal:
- was not wrong in the interpretation of clause 47. Cerealis’s failure to act promptly was an ‘omission’ by the sub-charterers and fell within the scope of clause 47.
- misconstrued clause 86, in that the claim against Cerealis, in respect to cargo, which was carried on a different vessel and under a different charter, did not constitute a cargo claim under clause 86.
As such, the vessel was off-hire under clause 47 “until such time as clause 86 took effect”. The Court held that Navision was not in breach of the charterparty and not liable to pay damages for breach of clause 86.
The charterers in this case sought to rely on the Supreme Court decision in Global Santosh  UKSC 20 to argue that the tribunal had incorrectly interpreted clause 47. However, the Court held that the inclusion of “sub-charterers” in clause 47 intended to provide different outcome to that of the Court’s decision in Global Santosh. The outcome of this case illustrates the importance of careful consideration of the wording of similar clauses by the parties.
Despite an apparently wrongful arrest for a separate claim unconnected with owners, the vessel was still off-hire due to the charterparty wording; the definition of “cargo claim” under clause 86 was not sufficiently wide to trigger that clause and allocate responsibility to charterers. It is also a reminder that in chains of charterparties parties should carefully consider adopting back-to-back terms where appropriate.