In ST Shipping & Transport Pte Ltd -v- Space Shipping Ltd (“CV STEALTH”), the Commercial Court (“the Court”) heard an application arising out of an Arbitrator’s Award in respect of a dispute under a charterparty on an amended SHELLTIME 4 form.

The Charterers had sub-chartered the vessel on an amended BPVOY form to a company which had intended to export a cargo of crude oil unlawfully from Venezuela. Unaware of this, the Charterers gave orders for the vessel to proceed to Venezuela to load the sub-Charterers’ cargo. Suspicions were aroused when the documents were presented at the loadport and the vessel was detained in September 2014 in Venezuela, where she remained at the time of judgment.

The Court considered the relationship between clauses 21, 27 and 28 of the SHELLTIME 4 standard form, which provide, amongst other things that:

Clause 21(a) On each and every occasion that there is loss of time [Not in standard form: for more than 6 (six) hours]… (v) due to the detention of the vessel by authorities at home or abroad attributable to legal action against… the vessel, the vessel’s owners or Owners (unless brought about by the act or neglect of Charterers)… the vessel shall be off-hire….

Clause 27(a) …Further, neither the vessel, her master or Owners, nor Charterers shall, unless otherwise in this charter expressly provided, be liable for any loss or damage or delay or failure in performance hereunder arising or resulting from… arrest or restraint of princes, rulers or people.

Clause 28 …No voyage shall be undertaken, nor any goods or cargoes loaded, that would expose the vessel to capture or seizure by rulers or governments.”

It was found as a matter of fact that the orders from the Charterers in this case were not merely to proceed to the load port to await orders, but rather to proceed to the terminal for the purposes of loading sub-Charterers’ cargo when presented at the vessel’s manifold. The Court found that there was the necessary causative link between these orders and the detention of the vessel.

In relation to Clause 28, it was said that the reference is to the undertaking of a voyage. If the increased risk materialises in the course of a voyage, the clause comes into effect irrespective of whether it arises subsequently to the original voyage orders, ie the position is analogous to that relating to safe ports.

In any event, in this case, there was no reason to suppose that the intended cargo was any more authorised when the orders were given than it was when the Charterers’ operator first began to question the documents he had received in respect of the cargo to be loaded, and/ or the vessel was arrested.

The Charterers were therefore in breach of clause 28 and liable for the hire until redelivery of the vessel, and Owners were also entitled to compensation for the continued detention of the vessel under the express indemnities in clause 13 (“for all consequences and liabilities that may arise from (i) the Master otherwise complying with Charterers’ or their agent’s orders …(ii) from any irregularities in papers supplied by Charterers or their agents”). Clause 27(a) provided no answer as the charter “otherwise… provided”, and the vessel was not off hire because the detention was brought about by the “act or neglect of Charterers”.

A salutary reminder of the risks which charterers need to consider.

The Court also considered a bespoke clause of the Charter which provided that “The parties hereby agree that either party may – (a) appeal to the High Court on any question of law arising out of an award”.

It was held that this was drafted with s 69 Arbitration Act 1979 in mind, and limited to questions of law whose determination may serve a useful purpose for the parties. It was emphasised that (i) the issue is whether the determination of the question of law will substantially affect the rights of the parties, not whether it may; and (ii) it is for a party asserting that he does not need the permission of the Court under s 69(2)(d), on the grounds that he has an agreement falling under s69(1)(a), to establish that fact.