Commercial Court Construes One Trip Time Charter

Ispat Industries Ltd v Western Bulk Pte. Ltd (Sabrina 1) [2010] EWHC 93 (Comm)

Ince & Co represented the successful Owners in this dispute arising under a one time charter trip. The majority of the LMAA Tribunal and subsequently the Commercial Court upheld the Owners' claim for repudiatory breach of the charter and awarded them damages in the amount of hire which would have been earned on the estimated duration of the charterparty.

Background Facts

Owners chartered the Sabrina 1 to Charterers under an NYPE charter for one time charter trip containing the usual Clause 16 exceptions ("the act of ...enemies always mutually excepted"). The charter provided among other things that "the vessel shall be employed for one time charter trip from Vizag to Mumbai lawfully trading between safe port(s), safe berth(s) and safe anchorages ..."

On 24 December 2007, Charterers sent voyage instructions to the Master detailing the load port as Vizag. On 26 December 2007, after subjects were lifted but prior to the laycan, Charterers informed Owners that they would have to cancel the fixture due to civil unrest and insurgency preventing the cargo arriving at the loadport. Owners accepted Charterers' repudiatory breach of the fixture and stated that they were looking for alternative employment for the vessel.

The vessel was not refixed until 15 January 2008. Owners commenced arbitration to claim damages in the sum of the hire which would have been earned on the 12 day time charter trip.

Prior to the commencement of arbitration proceedings, Owners obtained two Rule B attachments in New York to secure their claim. Both attachments were subsequently vacated and Charterers counterclaimed in the arbitration a sum in excess of US$1m equivalent to the attached sums.

The Tribunal's decision

A majority of the arbitrators held that Owners' claim succeeded and dismissed Charterers' counterclaim.

The Tribunal found primarily as follows:

under a time charter, although the intended cargo was not available at Vizag because of "enemy activity" within clause 16 of the NYPE form, the Charterers were nonetheless obliged to find an alternative lawful cargo. The Charterers had made no attempt to do so and had simply cancelled the charter. there had been no failure to mitigate on the part of Owners. the Charterers' counterclaim would be dismissed on the grounds that neither the first nor second attachment proceedings in New York were a breach of the arbitration clause in the...