'Seagate Shipping Ltd v Glencore International A.G': Commercial Court Decision On Charterparty Dispute

Those not in the coal and iron ore market may not be

familiar with RightShip. This is a ship approval system set up

in 2001 and maintained by BHP Billiton, Rio Tinto Shipping and

Cargill Ocean Transportation. It vets ships by identifying

those suitable for the carriage of iron ore or coal and rates

them into various categories defined by their risk profile.

Many major shippers in the dry cargo shipping market have come

to regard RightShip approval as necessary so that trading

without it is now limited in the iron ore and coal

industries.

The question arises however whether such approval remains a

commercial desirability or necessity, or whether it has become

to all intents and purposes compulsory and akin to a legal

requirement. In the recent case of "Seagate Shipping Ltd v

Glencore International A.G" [2008] EWHC 1904 Comm, Mr.

Justice David Steel heard an appeal arising out of two

arbitration awards relating to disputes under a head- and

sub-charter. The vessel in question was the "Silver

Constellation", originally owned by Orient Brilliance

Inc., who subsequently sold the vessel to Seagate. Seagate took

all Orient's rights and liabilities under a head

charterparty by a novation agreement. Charterers were Glencore,

who sub-chartered to Swissmarine.

The back-to-back charters were on the NYPE form and

contained, inter alia, a condition (clause 31 of the c/p) that

the vessel was and would remain in all respects eligible for

trading to the ports, places or countries specified or not

excluded in the charter and that the vessel / owners would have

all valid certificates records and other documents required for

such trade at all necessary times. It was a further condition

that the vessel would remain throughout the currency of the

charter "in possession of the necessary valid equipment

and all certificates, records and documents necessary to comply

with safety and health regulations, international regulations

and all current requirements at all ports of call".

The charter also provided separately for P and I Club

insurance and classification, compliance with the ISM Code, a

warranty that the vessel complied with IMO regulations and

compliance with Australian Navigation Regulations in the event

the vessel proceeded to any Australian ports.

A dispute arose between the parties as to whether owners

were obliged to provide the vessel with RightShip approval and

maintain it throughout the currency of the charter pursuant to

clause 31. The vessel had...