Contractual Issues

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The Reed Smith Shipping Group recently published a client alert that looks at the effectiveness of what are commonly termed “no variation” or “anti-oral variation” clauses (i.e. clauses which purport to prevent the contract in question from being amended absent compliance with specified requirements). They are commonly found in commercial contracts in numerous guises. Normally…

NYK Bulkship (Atlantic) NV (Respondent) v Cargill International SA (Appellant) (“The Global Santosh”) [2016] UKSC 20 (overturning the Court of Appeal [2014] EWCA Civ 403)

The Supreme Court last week handed down an important decision concerning the issue of when a charterer will be held responsible for its agents under a charterparty.

Contractual position

NYK was the disponent owner of the m.v. Global Santosh (“the Vessel”). NYK time chartered the Vessel to Cargill on an Asbatime form, which is a variation of the NYPE 1946 form. Cargill sub-chartered the Vessel to Sigma Shipping Limited under a voyage charter. The Vessel carried a cargo of cement in bulk from Sweden to Nigeria under a sale contract between Transclear SA (“Transclear”) and IBG Investments Ltd (“IBG”). It is likely that Transclear was a further sub-charterer of the Vessel.Continue Reading The Global Santosh: The Supreme Court provides guidance on a charterer’s responsibility for its agents

We often see contracts containing wording along the lines of: “This Agreement may not be amended, except by the mutual written agreement of the Parties.”

The recent decision of the Court of Appeal in Globe Motors Inc., et al. v TRW Lucas Varity Electric Steering Ltd., et al. [2016] EWCA Civ 396, considered the impact of similar clauses, in that case one which provided “Entire agreement; amendment: This Agreement, which includes the Appendices hereto, is the only agreement between the Parties relating to the subject matter hereof. It can only be amended by a written document which (i) specifically refers to the provision of this Agreement to be amended and (ii) is signed by both parties.”

This is of particular interest because there were previously two inconsistent Court of Appeal decisions on this point, which the Court had to consider.

Purpose of such clauses

The starting point for the party seeking to rely on the clause was that it meant that any amendment had to be in writing and be signed by both parties, and that it was not open to the parties to amend the Agreement orally. It was said that the purpose of the clause was to promote certainty and avoid false or frivolous claims of an oral agreement. Such clauses can also prevent a person in a large organisation from producing a document which unwittingly and unintentionally is inconsistent with a contract to which the organisation is a party, and they therefore set an evidential threshold.Continue Reading Contractual amendments – “only in writing and signed by the parties”

In Shipowners’ Mutual Protection & Indemnity Association (Luxembourg) -v- Containerships Denizcilik Nakliyat ve Ticaret AS (The “Yusuf Cepnioglu”) [2016] EWCA Civ. 386, the Court of Appeal considered the juridical nature of a foreign statute which gives a victim (in this case, a charterer) the right to sue a defendant’s insurer (in this case, an owners’ club) directly without first suing the insured, and in the circumstances of the case, whether it was appropriate to uphold an anti-suit injunction (“ASI”) which had been made by the court below.

Reliance was placed on the previous decisions dealing with similar foreign legislation, such as The “Hari Bhum” (No. 1) [2004] 1 Lloyd’s Rep. 206; and [2005] 1 Lloyd’s Rep. 67, which considered the provisions of the Finnish Insurance Contract Act 1994 and The “Prestige” (No. 2) [2014] 1 Lloyd’s Rep 309 and [2015] 2 Lloyd’s Rep. 33 concerning the Spanish Penal Code.

In this case, the Court was looking at Turkish law, which provided, amongst other things, that “Article 1478 – the victim may claim its loss up to the insured sum directly from the insurer provided that the claim is brought within the prescription period to the insurance contract”.Continue Reading Direct claims against insurers and anti-suit injunctions

The recently decided case of SBT STAR BULK & TANKERS (GERMANY) GMBH & CO KG V COSMOTRADE SA (THE “WEHR TRAVE”) [2016] EWHC 583 (Comm) in the Queen’s Bench Division of the Commercial Court and before The Hon Sir Bernard Eder will, perhaps, come as a surprise.

This was an appeal pursuant to section 69 of the Arbitration Act 1996 following an arbitration.

The question to be decided related to the interaction between the nature of a trip time charterparty for “one trip”, and the language of the contract governing the range of load and discharge ports. The question before the arbitrators, and then before the court, was whether the charterparty permitted the Charterers to load another cargo having discharged all its originally loaded cargoes. Once the vessel was free of cargo, could the Charterers load again? Furthermore, was the intended load port within the range of permissible ports?Continue Reading Don’t trip up – a warning for owners

Mitigation and the assessment of damages on early redelivery – “The New Flamenco”[1]

Assessing the level of damages recoverable following the early redelivery of a vessel under a time charter can be a complex area of law to navigate, especially when there is no available market at the date of the termination of the charter. This Blog looks at the impact on owners and charterers of the decision in The New Flamenco[2].

The facts

On 13 February 2004, The New Flamenco was time chartered by the Claimant Owners to the Defendant Charterers. In August 2005, the charterparty was extended to 28 October 2007 by mutual agreement.  On 8 June 2007, the parties reached an oral agreement to extend the charter for another two years, to 2 November 2009.

The Charterers alleged that no such extension had been agreed and indicated an intention to redeliver the vessel at the end of October 2007, refusing to sign an addendum documenting the further extension. The Owners declared the Charterers to be in anticipatory repudiatory breach and accepted this breach as terminating the charterparty on 17 August 2007.

The vessel was redelivered by the Charterers on 28 October 2007. The Owners, having been unable to find an alternative employment for the vessel from October 2007, entered into a Memorandum of Agreement for the sale of the vessel for the sum of US$23,765,000 shortly before redelivery.Continue Reading Mitigation and the assessment of damages on early redelivery – “The New Flamenco”

Mitsui OSK Lines Ltd v Salgaocar Mining Industries Private Ltd (2015) (Unreported)

After extensive negotiations, London brokers fixed a 10-year charterparty on behalf of their principals, the Charterers. The Charterers were named as a nominee with their performance guaranteed by the Defendant.

Three years into performance, Charterers terminated, alleging that the vessel was unsuitable for…

Navig8 Inc v South Vigour Shipping Inc [2015] EWHC 32 (Comm)

The claimant had chartered four vessels, the charterparties for which had been signed by the vessels’ commercial manager. Each charterparty contained the phrase “the disponent owners signatory in contract”, followed by the manager’s name. During the negotiations, the manager had made it apparent that…

London Arbitration 14/14

The vessel in question was chartered by way of a fixture recap. Owners brought a claim for demurrage against Charterers. Charterers argued that the charter did not contain a valid arbitration agreement/clause, and that although they had agreed to pay freight, they had not agreed to be liable for demurrage.

Incorporation of …

Ebola continues to spread in West Africa with the latest reports indicating that over 2,630 people have died since the outbreak began.

Yesterday, Malta turned away a vessel travelling from Guinea to Ukraine over fears that a crew member may have been infected with Ebola. Fears were also raised in New Orleans in connection with…