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In DHL Project & Chartering Ltd v. Gemini Ocean Shipping Co Ltd [2022] EWHC 181 (Comm), DHL (“Charterers”) succeeded in an application against Gemini (“Owners”) to set aside an arbitration award pursuant to section 67 of the Arbitration Act 1996 (the “Act”).

Mr Justice Jacobs held that a “subject” provision in a putative fixture requiring “shipper/receivers approval” was of an unqualified character. The Court found that the contract would not become binding unless and until Charterers lifted the “subject”, and on the facts, this had never occurred. Accordingly, no arbitration agreement came into existence and the Tribunal did not have substantive jurisdiction when it determined that Charterers had repudiated the charterparty.
Continue Reading To what are “subjects” subject?

Two Ocean Tankers’ vessels were held in Houthi-controlled Hodeidah, Yemen in 2016 due to a payment dispute. That dispute – for around US$19 million (excluding interest) – has now been decided by an interesting commercial court decision that highlights the importance of careful wording in demurrage provisions.

Background

The claimant, Gunvor SA (the Seller), entered into a contract (the Sale Contract) in April 2015 with CruGas Yemen Ltd (and/or CruGas Ltd) (the Buyer) for the sale of gasoline in 12 monthly shipments CIF Hodeidah.

In order to fulfil the Sale Contract, the Seller had entered into a long-term contract of affreightment (CoA) with one of its group companies, Clearlake Shipping Pte Ltd (Clearlake), in January 2015. The CoA stated that, when the Seller needed a vessel, Clearlake would charter-in a vessel from the open market and then sub-charter her to the Seller “at cost”. In other words, the freight and demurrage rate from each charter would be incorporated into the CoA.

Several cargoes of gasoline were delivered to the Buyer without a major issue. However, problems arose under shipments on the Chang Hang Xian Feng (sub-chartered by the Seller around 10 July 2015), Ocean Mars (sub-chartered around 22 July 2015) and Hong Ze Hu (sub-chartered around 10 September 2015 and again around 10 February 2016).

The key issue was the Buyer’s failure to make the agreed pre-delivery payments for each shipment and also to pay outstanding demurrage. The Seller therefore refused to permit the vessels to discharge the gasoline at Hodeidah. While being held, the vessels incurred substantial demurrage (for example, the Hong Ze Hu was on demurrage for 261 days) and expenses such as anchorage fees and increased AWR premiums.

Eventually the Seller terminated the Sale Contract and issued a claim for around US$19 million plus interest. This comprised demurrage which had accrued under each of the three vessels, market losses in relation to the 55,000 tonnes of gasoline remaining on-board the Hong Ze Hu, and other expenses. The key issues which arose during the hearing (which the Buyer did not attend) are summarised below.

Issues

Who was the Buyer – CruGas Yemen Ltd (the first defendant) or CruGas Ltd, the party named in the Sale Contract (the second defendant)?Continue Reading Parties to a contract: demurrage liability under sales contracts – lessons learned from Gunvor SA v. CruGas Yemen Ltd & CruGas Ltd [2018] EWHC 2061 (Comm)