个人介绍
商法学 郭萍
提供学校: 大连海事大学
院系: 海商法系
专业大类: 法学
专业: 法学理论
学分: 2
课程介绍
The course is featured by bilingual education and it can be applied in practice to students who major in maritime law, logistic management and Traffic transportation management. The teaching targets are to improve the students' English level and legal qulification and core competitive power in employment. This course will cover the concept of Tramp Shipping,Charter Party,Voyage Charter Party Preliminary voyage,Loading/Discharging clause,Laytime/Demurrage/Depatcha ,deviation clause, lien clause,law and arbitration clause,Time Charter Party,Hire/Delivery/Redelivery、Payment of hire,withdrawal of vessel,Offhire,employment and indemnity clause,trading limits clause,lawful merchandise clause,sublet clause,Bareboat charter party,delivery clause,surveys and inspection clause, maintenance and operation clause, redelivery clause、Bareboat charter with hire purchas,Bill of lading under charter party,incorporation clause. The purpose of the course is to give students a conceptual introduction to the field of charter party and its many applications, which can be helpful in real operation of student’s future career. Emphasis is liad on helping students understand the wide range of charter party applications by updating and expanding the examples and exercises based on typical charter party like GENCON、BALTIME, BARECON. This course is compromised by various community including students, teachers, experts and practical operators. The course is self complied, filling the blank of the textbook application. The course is fit for the characteristics of Chinese students. The reference materials covers 5 five Chinese textbooks and 5 foreign language textbooks.
教师团队

















本课程团队包含两名博士,两名博士生在读,知识结构具有丰富的国际法学专业背景,尤其是具有坚实的海商法专业基础。团队负责人郭萍教授现为大连海事大学海商法系副主任、海商法专业负责人。长期从事海商法学以及环境与资源保护法学的教学和研究。年龄结构优势突出,均未中青年教师,年富力强,均具有一线教学的经验和经历。3人具有海外留学经历,1人获得中国大连海事大学法学博士学位,2人获得英国及比利时博士、硕士学位,,1人获得上海海事大学法学硕士学位因此学缘结构非常合理。体现了较好的年龄梯队架构。

学习内容

Chapter one General introduction of tramp shipping

1.Concept of tramp shipping
A contract by charter party differs from a contract by b/l, although both are normally contracts of carriage, in that in the tramp shipping a vessel is used for the carriage of full cargoes or less frequently of part cargoes, while b/l are used as the document of a contract of carriage in the liner trade, where ships carry general cargoes and call at ports which are previously advertised. On the contrary, in the tramp shipping the vessel loads and delivers the cargo at the port or place indicated by the charterer.

2.The difference between tramp shipping and liner shipping

(1)the contracts are different
A contract by charter party differs from a contract by b/l, although both are normally contracts of carriage, in that in the tramp shipping a vessel is used for the carriage of full cargoes or less frequently of part cargoes while b/l are used as the document of a contract of carriage in the liner trade, where ships carry general cargoes and call at ports which are previously advertised. On the contrary, in the tramp shipping the vessel loads and delivers the cargo at the port or place indicated by the charterer. 

(2)the calculation of the freight or hire differs
In the liner shipping the freight is calculated on the basis of the weight or volume of the goods delivered for shipment by a shipper;
In the tramp shipping freight (or hire) is calculated on the basis of the carrying capacity of the vessel, or of part thereof in the case of part cargoes, and is payable in full irrespective of the quantity loaded being equal to or lower than the full carrying capacity.

(3)the allocation of costs and risks differs 
In the liner shipping the carrier must have full control of loading and unloading operations in order to ensure that his ship operates on schedule and therefore normally pays for such operations, the cost of which is included in the freight, and takes upon himself the risk of delays during loading/discharging, delivery and redelivery of the cargo taking place ashore, normally in the warehouses of the carrier or of the port authority. Conversely, the carrier does not wait for the goods at the loading port and if they are not placed at his disposal on time the vessel will sail without them, the shipper paying the freight.
In the tramp shipping, the charterer has a varying degree or control over the operation of the vessel and consequently a part of the related risks and expenses are allocated to him. This allocation varies according to the type of C/P

3.The characteristics of tramp shipping
-no fixed schedule, no fixed route, arrange carriage as agreed
-specially for bulk cargo ( not general cargo)
-costs and risks depend on the clauses
-contract of affreightment (COA) or charter party entered into

4.Kinds of tramp shipping
basically include the followings:
(1) voyage charter
(2 )time charter
(3 )bare boat charter

new type :
- TCT (time charter on trip basis or trip time charter)
-Bare boat charter by purchase


案例

CASE 1

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BARNA CONSHIPPING, S.L. v.8,000 METRIC TONS, MORE OR LESS OF ABANDONED STEEL, IN REM,ET AL.

ARBITRATION -- 111. Agreement to Arbitrate Future Disputes -- 113. Parties -- 12. Submission, Stay -- BILLS OF LADING -- 1972. Jurisdiction or Arbitration of Controversies -- CHARTER -- 24. Actions and Arbitrations.
Consignee as a party to a Congen B/L incorporating a charter and specifically referencing the C/P law and London arbitration clause is bound to arbitrate its cargo damage claim. It does not matter that the parties to the charter described by date in the B/L may have made a new charter as only one charter bore that date. In accordance with Sky Reefer and in the exercise of its discretion, S.D. Texas will stay rather than dismiss the action. Suit will also by stayed as to other non-signatory parties so as not to undermine the arbitration process.
Frederick William Mahley (Strasburger & Price LLP)for Barna Conshipping

George H. Bowles, Williams Mullen, and David S. Toy (Spagnoletti and Company), Jacob G. Hodges, and Phillip B. Philbin (Haynes and Boone LLP), William A. Durham (Eastham Watson et al.) and Jeffrey James Putnam (Cohen Gorman et al.)for Defendants
Ewing Werlein, Jr., D.J.:
Pending are Defendant Oldendorff Carriers GmbH & Co., KG's 12(b) (3) Motion to Dismiss in Favor of Arbitration (Document No. 82) and Claimant S-Bulk, KS's Motion to Dismiss in Favor of Arbitration (Document No. 124). Also pending are Claimant S-Bulk, KS's Motion to Vacate Order (Document No. 115) and Objections to Magistrate Judge's Recommendation (Document No. 119), as well as Defendants S-Bulk, KS and Seven Seas Carriers AS's Motion for Summary Judgment (Document No. 123). After carefully considering the motions, responses, replies, oral arguments of counsel, and the applicable law, the Court concludes as follows.

I.BACKGROUND
This consolidated case involves the shipment of steel beams (the “cargo” or “steel”) from Spain to various ports in the United States and Mexico.The pending motions arise out of the case initiated by Commercial Metals Company (“CMC”) against the M/V Saturnus, her engines, tackle, apparel, etc. (the “Vessel”),in rem, and against S-Bulk KS (“S-Bulk”), Seven Seas Carriers AS (“Seven Seas”), and Oldendorff Carriers GmbH & Co., KG (“Oldendorff”),in personam(collectively, the “Vessel Interests”), for alleged damage to the cargo before and during transit.
In October 2008, CMC contracted to purchase from Compania Espanola de Laminacion, S.L. (“Celsa”) 19,826 metric tons of steel, to be delivered by vessel in four separate lots to: (1) Norfolk, Virginia; (2) Mobile, Alabama; (3) Houston, Texas; and (4) Altamira, Mexico. Celsa hired Barna Conshipping, S.L. (“Barna”) to handle the overseas transportation of the steel. Barna voyage-chartered the Vessel from its disponent owner, Oldendorff, to carry the cargo.The Master of the Vessel, upon loading the steel beams in Spain, allegedly noted pre-loading damage to the beams, and directed Oldendorff's local dock agent in Barcelona to issue claused bills of lading for the cargo.However, the Letter of Credit that CMC had established with its bank required clean bills of lading for payment to Celsa to be authorized.Barna requested Oldendorff to direct the issuance of clean bills of lading instead of the claused bills in exchange for a Letter of Indemnity issued to “Oldendorff Carriers GmbH & Co KG as disponent owners and Master of the MV?Saturnus.”

The clean bills were issued, CMC's bank honored the Letter of Credit, and the Vessel sailed on to Norfolk. Upon its arrival, CMC refused to accept the cargo or otherwise make arrangements for discharge, as allegedly required under its contract with Celsa. Barna, upon allegedly incurring demurrage charges to Oldendorff as a result of the delay, filed suit in the Eastern District of Virginia on December 22, 2008 against the cargo to be discharged there,in rem, and against CMC,in personam.The court ordered arrest of the cargo, CMC filed a claim of interest to it, and the cargo was ordered to be discharged and placed in the care of a substitute custodian. After having discharged the beams due to be unloaded in Virginia, the Vessel continued on to Mobile, Alabama, whereupon a similar course of events played out, leading to another suit in the Southern District of Alabama, with more cargo unloaded and placed in the care of a substitute custodian in January 2009. 

The Vessel then sailed to Houston, where, yet again, Barna brought this similar suit, and the cargo was arrested and placed in the care of a substitute custodian.The cargo bound for Mexico was also arrested, and CMC brought its separate suit (now consolidated with Barna's action) against the Vessel, S-Bulk, Seven Seas, and Oldendorff for the alleged damage to the cargo. The Vessel was arrested, whereupon its insurer, Assuranceforeningen GARD-gjensidig (“GARD”), posted a Letter of Undertaking in the amount of $2.5 million as security to effect the Vessel's release.

II.ARBITRATION
Oldendorff seeks dismissal under Federal Rule of Civil Procedure 12(b)(3)(improper venue) of CMC's claims, asserting that they are subject to a valid arbitration clause requiring arbitration in London. The relevant clause appears in the sub-voyage charter party, dated October 21, 2008, between Oldendorff and Barna (the “Oldendorff/Barna Charter Party”) under the header “Law and Arbitration”:
(a) This Charter Party shall be governed by and construed in accordance with English law and any dispute arising out of this Charter Party shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or reenactment thereof for the time being in force.
(c) Any dispute arising out of this Charter Party shall be referred to arbitration at the place indicated in Box 25, subject to the procedures applicable there. The laws of the place indicated in Box 25 shall govern this Charter Party. 

Box 25, located on the first page of the charter party, indicates: “English law to apply. Arbitration in London.”
Oldendorff asserts that the charter party was properly incorporated into the bills of lading to which CMC, as consignee, is a party. CMC responds that it cannot be bound by the clause, as it was not a party to the underlying Oldendorff/Barna Charter Party and confusion?*2507?exists as to which document was incorporated into the bills of lading.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), implemented at 9 U.S.C. s s 201-208, governs the agreement, if any, that Oldendorff asserts mandates arbitration. See 9 U.S.C. s s 2, (arbitration agreements, including those in maritime contracts, subject to Convention). The Convention further incorporates the provisions of the Federal Arbitration Act (the “FAA”), 9 U.S.C. s 1 et seq., to the extent such provisions are “not in conflict” with the Convention.Id.s 208. Whether the Convention requires compelling arbitration is a “limited inquiry” that should be answered in the affirmative if four conditions are fulfilled: (1) there is a written agreement to arbitrate the matter; (2) the agreement provides for arbitration in a Convention signatory nation; (3) the agreement arises out of a commercial legal relationship; and (4) a party to the agreement is not an American citizen.Freudensprung v. Offshore Technical Servs., Inc., 2004 AMC 2059, 2069, 379 F.3d 327, 339 (5 Cir. 2004). Only if the court “finds that the said agreement is null and void, inoperative or incapable of being performed” should it not compel arbitration upon fulfillment of these conditions.Id. (quoting Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co., 1986 AMC 706, 710-11, 767 F.2d 1140, 1146 (5 Cir. 1985)).As to CMC and Oldendorff, the latter three requirements are readily fulfilled. The only question is whether, as between CMC and Oldendorff, there is actually a “written agreement to arbitrate the matter.”“In order to be subject to arbitral jurisdiction, a party must generally be a signatory to a contract containing an arbitration clause.” Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 353 (5 Cir. 2003)(citations omitted). A bill of lading, while not always a contract, serves as the contract of carriage when, as here, it is issued under a charter party and negotiated to a third party not involved in the charter party, such as a consignee.Cargill Ferrous Int'l v. Sea Phoenix MV, 2008 AMC 1027, 1031, 325 F.3d 695, 699 (5 Cir. 2003);see also 2 Thomas J. Schoenbaum,Admiralty and Maritime Law s 11-6 (2004).Thus, CMC, as consignee to the bills of lading, could be bound by an arbitration agreement that is included or effectively incorporated in the bills so as to give sufficient notice of the arbitration provisions. See The Rice Co. (Suisse), S.A. v. Precious Flowers Ltd., 2008 AMC 1152, 1161, 523 F.3d 528, 537 (5 Cir. 2008) (“Bills of lading commonly incorporate charters and bind the signatories to the charter terms.”); Associated Metals & Minerals Corp. v. M/V Venture, 554 F. Supp. 281, 283 (E.D.La. 1983)(“[N]otice is effectively given where the terms of the charter party are expressly incorporated into the bill of lading.”); see also Steel Warehouse Co., Inc. v. Abalone Shipping Ltd. of Nicosai, 1998 AMC 2054, 2057, 141 F.3d 234, 237 (5 Cir. 1998)(“Whether one styles this as an issue of constructive notice or incorporation alone, the analysis basically turns on incorporation.”).
FN17. Bills of lading serve multiple functions in admiralty law.
A bill of lading is, in the first instance and most simply, an acknowledgment by a carrier that it has received goods for shipment. Secondly, the bill is a contract of carriage. Thirdly, if the bill is negotiated .. it controls possession of the goods and is one of the indispensable documents in financing the movement of commodities and merchandise throughout the world.

Sea Phoenix, 325 F.3d at 702 (Quoting Grant Gilmore & Charles L. Black, The Law of Admiralty 93 (2d ed.1975)).

To incorporate a charter party effectively, the bill of lading must “specifically refer to the charter party.” Cargill Inc. v. Golden Chariot MV, 1995 AMC 1077, 1082, 31 F.3d 316, 319 (5 Cir. 1994). “[P]recedent allows for quite a bit of leeway in the drafting of such clauses, and does not require a punctilious degree of specificity.”Steel Warehouse, 1998 AMC at 2058, 141 F.3d at 237.Although a strong federal policy favors arbitration, the policy does not apply to the initial question of whether there is a valid agreement to arbitrate. See Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5 Cir. 2004)(discussing the FAA). Once a court determines that an arbitration agreement exists, however, the court “must pay careful attention to the strong federal policy favoring arbitration and must resolve all ambiguities in favor of arbitration.”Id.
B.Whether CMC and Oldendorff Agreed to Arbitrate
Because CMC is the named consignee in the bills of lading for the steel, and is a party to them by its own admission,if the bills effectively incorporate the Oldendorff/Barna Charter Party, then CMC is a party to a valid arbitration agreement covering its claims against the Vessel Interests.

The bills of lading for the steel are “Congen Bills,” an internationally recognized form of bill of lading.The face of each bill states: “Freight payable as per CHARTER-PARTY dated 21-10-2008,” and “FOR CONDITIONS OF CARRIAGE SEE OVERLEAF.”The reverse side of each bill, under the label “Conditions of Carriage,” states: “(1) All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the law and arbitration clause, are herewith incorporated.”

This terminology is nearly identical to the language in another Congen bill of lading found sufficient to identify a charter party for incorporation in?Steel Warehouse. Under the facts of that case, the language held to incorporate a charter party into the bills at issue read: “Freight Payable as per CHARTER-PARTY dated 21 OCTOBER 1994 ALL TERMS AND CONDITIONS OF WHICH AREINCORPORATED IN THIS B/L.” 141 F.3d at 237. The facts in this case are even stronger, because here each bill of lading also specifies the existence of a “law and arbitration clause,” giving CMC direct notice that an arbitration clause is present in the refer enced charter party. See also Cont'l?Ins. Co. v. Polish S.S. Co., 346 F.3d 281, 283-84 (2 Cir. 2003) (holding sufficient a date-only identification of charter party on Congen bill of lading, and collecting cases holding same regarding various bills of lading).CMC argues, however, that the facts present an ambiguity as to which document actually constitutes the “CHARTER-PARTY dated 21-10-2008.” CMC argues that in Barna's and Oldendorff's arguments in this and other proceedingsFN22 regarding the governing terms of their relationship, they have alternately contended that the charter party dated October 21, 2008 governs their relationship, and that an October 22, 2008 email containing a “fixture recap” and an attached June 20, 2008 charter party, is controlling. CMC argues that this is evidence of two or more charter parties between Barna and Oldendorff, one dated October 21, 2008, and the other dated either October 22, 2008 or June 20, 2008, and that “the parties to the alleged charterparty cannot agree which one controls, which creates confusion.” 
CMC thus asserts that this case is like Volgotanker Joint Stock Co. v. Vinmar Int'l Ltd., No. 01 CV 5064, 2003 WL 23018798 (S.D.N.Y. Dec.22, 2003). The bill of lading at issue in Volgotanker stated that “freight was payable as per charter-party dated January 12, 1998.” Id. at *5. There, however, the ambiguity arose from the existence of?two different voyage charter parties for one voyage, one with the head charter and the other with the sub-charter, and?both dated?January 12, 1998.Id. at *1-*2. One charter party called for arbitration in London, and the other in New York. Id. at *2. Thus, the bare reference to a “charter party dated January 12, 1998” in the bill of lading “fail[ed] to adequately identify which of the two existing charter parties it is referencing so as to warrant incorporation of that charter party.” Id. at *6.Such an ambiguity is not present here. Only one charter party bears the date of October 21, 2008, and each bill of lading refers to that one “CHARTER-PARTY dated 21-10-2008.” Even if, as CMC argues, Oldendorff and Barna later argued [sic] between themselves about the meaning of a fixture recap on October 22, 2008, with its attached charter party template dated June 20, 2008, the “plain language reading” of the bills of lading refers only to the October 21, 2008 charter party, which requires arbitration in London. See Steel Warehouse, 1998 AMC at 2058, 141 F.3d at 237. The bills' incorporation of the Oldendorff/Barna Charter Party therefore binds CMC as the consignee of the bills to the arbitration provision.
Section 3 of the FAA, however, provides that “a stay is mandatory upon a showing that the opposing party has commenced suit “upon any issue referable to arbitration under an agreement in writing for such arbitration...'.” Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5 Cir. 1992) (quoting?Campeau Corp. v. May Dep't Stores Co., 723 F. Supp. 224, 227 (S.D.N.Y. 1989) (emphasis added). Nonetheless, this rule “was not intended to limit dismissal of a case in the proper circumstances.” Id. “If all of the issues raised before the district court are arbitrable, dismissal of the case is not inappropriate.” Fedmet Corp. v. M/V Buyalyk, 2000 AMC 337, 341, 194 F.3d 674, 678 (5 Cir. 1999) (citing?Alford, 975 F.2d at 1164) (emphasis added). Moreover, the Supreme Court in?Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer noted the propriety of a district court's retention of jurisdiction over a maritime dispute made subject to arbitration in Japan by bills of lading. 515 U.S. 528, 539-40, 1995 AMC 1817, 1825-26 (1995). This is consistent with the approach of the Convention, which “reserves to each signatory country the right to refuse enforcement of an award where the “recognition or enforcement of the award would be contrary to the public policy of that country.'.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 3359-60 (1985) (citing Art. V(2)(b) of the Convention). Thus, the Convention also contemplates courts retaining jurisdiction over cases to be arbitrated elsewhere in order to ensure that the judgment comports with local public policy. 
Section 3 of the FAA states:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. s 3. The Convention incorporates all provisions of the FAA not “in conflict” with it.?9 U.S.C. s 208. Nothing in the Convention conflicts with the mandatory stay provision of s 3, and it is therefore not a bar to issuance of a stay. See Citgo Petrol. Corp. v. M/T Bow Fighter, No. H-07-2950, 2009 WL 960080, at *3 (S.D.Tex. Apr.7, 2009) (Miller, D.J.) (holding same).

Oldendorff does not seek dismissal of?all?claims before the Court, and does not contend that all pending claims are subject to arbitration. Apart from CMC's claims against the Vessel Interests, there is also a claim for indemnity against Barna brought by S-Bulk as claimant to the Vessel, the arbitrability of which has not been established. Under these circumstances, where it appears that arbitration cannot be compelled as to all claims, dismissal of the case is inappropriate. Moreover, even if all issues were shown to be arbitrable, dismissal, while “not inappropriate,” Fedmet, 2000 AMC at 341-42, 194 F.3d at 678, still would not be required. Such a determination rests within the discretion of the Court.Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 311 n. 9 (5 Cir. 2003). Given these circumstances, and considering the Convention's policy favoring retention of jurisdiction over disputes subject to foreign arbitration, the Court concludes that a stay, rather than dismissal, is appropriate here. See Citgo Petrol. Corp. v. M/T Bow Fighter, No. H-07-2950, 2009 WL 960080, at *3-*4 (S.D.Tex. Apr.7, 2009) (Miller, J.) (holding that stay rather than dismissal in favor of arbitration was appropriate where arbitration did not cover all claims before the court, and would not be inappropriate even if all claims were covered).Accordingly, and because the foundation for Oldendorff's motion is its insistence that CMC's claims must be arbitrated in London, the Court will construe the motion as one to compel arbitration and to stay further proceedings in this Court.?See Sam Reisfeld & Son Import Co. v. S.A. Eteco, 530 F.2d 679 (5 Cir. 1976) (affirming district court, which treated a motion to dismiss “as one seeking a stay pending arbitration,” and granted a stay of proceedings in favor of arbitration to be commenced in Belgium); see also Westervelt v. Bayou Mgmt., L.L.C., No. Civ.A. 03-0860, 2003 WL 22533672, at *4 (E.D.La. Nov.4, 2003) (“Although the defendants have facially moved this Court to “dismiss' the present suit, this Court interprets this request as containing an implicit “motion to compel' arbitration.”). Thus, CMC and Oldendorff will be required to arbitra te their dispute in London in accordance with the Oldendorff/Barna Charter Party incorporated into the bills of lading. See 9 U.S.C. s 206 (“A court .. may direct that arbitration be held in accordance withthe agreement at any place therein provided for, whether that place is within or without the United States.”) Moreover, because not all claims have been shown to be subject to arbitration, the motion to dismiss -- construed as a motion to stay these proceedings and to compel arbitration -- will be granted, a stay will be entered pending conclusion of the London arbitration, and the motion to dismiss will otherwise be denied.S-Bulk filed its Motion to Dismiss in Favor of Arbitration (Document No. 124) solely as claimant to the Vessel.FN30?S-Bulk and Seven Seas represent that they will join in the motion in personam only if their Motion for Summary Judgment (Document No. 123) is denied. For the reasons discussed above, the Court construes Claimant S-Bulk's Motion to Dismiss in Favor of Arbitration (Document No. 124) as a motion to compel arbitration.

During oral arguments, counsel for S-Bulk represented that the result S-Bulk seeks to achieve by its Motion to Dismiss in Favor of Arbitration will be equally achieved by the Court granting Oldendorff's motion and compelling arbitration in London. Accordingly, S-Bulk's motion in a practical sense is redundant and will be denied as moot.CMC's claims against the Vessel, S-Bulk, and Seven Seas should all be stayed because of CMC's agreement to arbitrate with Oldendorff. As stated by the Fifth Circuit:
We have long held that if a suit against a nonsignatory is based upon the same operative facts and is inherently inseparable from the claims against a signatory, the trial court has discretion to grant a stay if the suit would undermine the arbitration proceedings and thwart the federal policy in favor of arbitration.
Hill v. G E Power Sys., Inc., 282 F.3d 343, 347 (5 Cir. 2002) (citing Sam Reisfeld, 530 F.2d at 681). This principle was also the basis for stays in cases with nonsignatories in Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324 (5 Cir. 1999)and in Harvey v. Joyce, 199 F.3d 790 (5 Cir. 2000). See Hill, 282 F.3d at 347-48(“Taking into account the strong federal policy in favor of arbitration, our application of s 3 to nonsignatories in Subway and Harvey only prefers the preservation of the arbitration rights of the signatory defendant over the speedy resolution of claims against nonsignatories.”).Here, CMC's claims against all the Vessel Interests are “based upon the same operative facts” and are “inherently inseparable from the claims” against Oldendorff. See Hill, 282 F.3d at 347. CMC's “complaint makes identical claims against” all the Vessel Interests, all of which claims relate to the same damage allegedly caused to the same cargo during the same voyage. See?Hill, 282 F.3d at 348; cf. Waste Mgmt., 372 F.3d at 345 (finding even separate legal theories of recovery to be “inseparable” when plaintiff sought recovery for the “same violation”).
Verified Complaint (Document No. 1), Commercial Metals Co., No. 09-cv-272, at 1 (companion case).

Additionally, because all of CMC's claims will be stayed pending arbitration, S-Bulk's and Seven Seas's Motion for Summary Judgment (Document No. 123) will be denied without prejudice to its being refiled, if appropriate, after the Stay is lifted following the completion of arbitration.

III. CLAIMANT'S OBJECTIONS TO MAGISTRATE JUDGE'S RECOMMENDATION
Also pending is Claimant S-Bulk KS's Motion to Compel Specific Performance (Document No. 64), to which Plaintiff Barna Conshipping S.L. has filed its response in opposition. The matter was referred to Magistrate Judge Frances H. Stacy, who issued an Order entered October 20, 2009 (Document No. 112), which she subsequently recharacterized as a Memorandum and Recommendation by Order entered January 19, 2010 (Document No. 127). Claimant S-Bulk KS filed objections to the Magistrate Judge's Memorandum and Recommendation (Document No. 129).The Court has made a de novo determination of Claimant S-Bulk's Motion, the Magistrate Judge's analysis in her Orders, and the Objections filed by S-Bulk. The Court concurs with the Magistrate Judge's analysis in that S-Bulk's premise for compelling Barna to post bond requires a determination that S-Bulk is entitled to indemnification from Barna as a third party beneficiary of a letter of indemnity issued by Barna to Oldendorff. This determination would concomitantly determine S-Bulk's entitlement to the ultimate relief it seeks in its Third Party Complaint, namely, that a judgment be entered in favor of S-Bulk against Barna “for full indemnity of any claim herein.” Judge Stacy's Order dated October 20, 2009 (Document No. 112) recharacterized as a Recommendation, is therefore ADOPTED by this Court, S-Bulk's objections to the Magistrate Judge's recommendation are overruled, and S-Bulk's Motion to Compel Specific Performance (Document No. 64) is denied, without prejudice to its being refiled as a motion for summary judgment after the Stay is lifted.

IV. ORDER
For the reasons stated above, it is ordered that Defendant Oldendorff Carriers GmbH & Co., KG's 12(b) (3) Motion to Dismiss in Favor of Arbitration (Document No. 82), construed as a motion to stay these proceedings and to compel arbitration, is granted, and its Motion to Dismiss is denied. Plaintiff Commercial Metals Company and Defendant Oldendorff Carriers GmbH & Co., KG shall proceed to arbitration in London on Plaintiff Commercial Metals Company's claims against Oldendorff Carriers GmbH & Co., KG., in accordance with the Oldendorff/Barna Charter Party as incorporated in the bills of lading of which Commercial Metals Company is a consignee. In light of this impending arbitration, it is further ordered that all proceedings in this consolidated action are stayed pending the outcome of the arbitration. Within thirty (30) days after a final award in arbitration has been rendered in the London arbitration, any party to this action may move to lift this stay by filing a motion accompanied by a copy of this Order and evidence that the London arbitration has been concluded. Any now pending claims that are not resolved in the London arbitration may then proceed in this case. It is further ordered that Claimant's Motion to Dismiss in Favor of Arbitration (Document No. 124) is denied as moot, and S-Bulk, KS's and Seven Seas Carriers AS's Motion for Summary Judgment (Document No. 123) is denied without prejudice to its being refiled, if then appropriate, after the stay is lifted upon conclusion of the London arbitration. It is further ordered that Claimant S-Bulk KS's Motion to Compel Specific Performance (Document No. 64) is denied without prejudice to its being refiled as a motion for summary judgment, if then appropriate, after the stay is lifted, and Claimant S-Bulk KS's Motion to Vacate Order (Document No. 115) is denied as moot.


CASE 2

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TS Lines Ltd v Delphis NV

MR. JUSTICE BURTON:
1. This has been the hearing of an appeal under Section 69 of the Arbitration Act 1996 by permission of Gloster J on a question of a law arising out of an arbitration award dated 25th June 2008, in which Corrected Reasons were given on 10th July 2008.
2. That award was given by agreement between the parties as a consolidated award in two separate arbitrations in respect of two time charters, one the head charter dated 3rd May 2005 between the owners and the charterers, and one a time charter dated 6th June 2005 between the charterers and sub-charterers in respect of the same vessel.
3. The award was a declaratory award, made by Messrs. Bruce Harris and John Schofield as Arbitrators, in relation to disputes under those two identical time charters, both of which were on the NYPE 93 form, together with amendments and additional clauses. The Arbitrators in their reasons referred to the sub-charterers as 'the Charterers', and I shall do the same.
4. The Charterers terminated the Charterparty under clause 81 of each Charterparty, which was one of the additional clauses, and it read as follows:
"Unless caused by Charterers' servants, if the vessel is off-hire× for a period of 20 consecutive days× then the charterers have the option to re-deliver the vessel when next cargo-free".
The Charterers cancelled the Charterparty pursuant to that clause on 28th September 2007, relying on what the Charterers asserted to be a consecutive period of off-hire since 7th September. The Arbitrators found that the Charterers were not entitled to terminate, as there had not been 20 consecutive days.
5. The facts, as found by the Arbitrators, were as follows, and I find it simplest to refer to them by reading out paragraphs 4 to 7 of the Corrected Reasons, and I make a slight alteration to one of the paragraphs to allow for the fact that there was an issue which was dealt with by the Arbitrators relating to discharge at Hong Kong, which is not any longer relevant between the parties on this appeal.
"4. TS Singapore was chartered by the sub-charterers for use in the
very substantial containerised liner service that they operate between Asian ports. At the relevant time she was being employed in anti-clockwise rotation between Japan, three ports in China, Hong Kong (midstream), Vietnam, Thailand (two ports), Hong Kong (midstream and in berth), Xiamen (China) and Japan. At the time of the incident with which we are concerned, a round voyage had just started at Nagoya, Japan, followed by Tokyo and Yokohama. The next intended port was Shanghai, after which she was destined to call at Ningbo, Xiamen, and then Hong Kong.
5. The ship had loaded and discharged containers at Yokohama
overnight 5/6 September 2007. The pilot was aboard and the ship cast off at 02.36 hours on 6th September, the tugs casting off 18 minutes later.
6. However, instead of sailing direct to Shanghai, as ordered by the
charterers, at 04.06 hours the ship anchored outside Yokohama, the master apparently fearing the approach of Typhoon Flitow. The charterers protested at this contending that the typhoon would not arrive for some time, whilst the master maintained that some 20 other ships had already taken the same precaution as had he.
7. In the small hours of 7th September TS Singapore dragged her anchor and hit a nearby breakwater, suffering not insubstantial damage in consequence. As a result, the ship stayed at Yokohama until 22nd September, the owners declaring general average on 12th September. Class imposed a condition on her departure from Yokohama, namely, that she proceed direct to Hong Kong (rather than Shanghai) to discharge the entire cargo, including cargo destined for [Shanghai], after which she was to sail to Guangzhou for repairs. And that was what happened."
8. The Charterers contended that from 7th September the vessel was not complying with their instructions, it was acting on the Owners' behalf and to their account and in accordance with the instructions given to the Owners from Class.
9. The Owners contend that although there was, as they accept, off-hire from 7th September until 22nd September, while the vessel remained in Yokohama, the vessel came on-hire again from leaving Yokohama at 10.48 on 22nd September, because, although it was en route to Hong Kong, the route to Hong Kong and to Shanghai were identical, what Mr. Goldstone QC before me has called a common route; and it was only when the vessel diverted from that common route, which the Arbitrators found to be at 20.16 on 23rd September, that the vessel went off-hire again.
11. Consequently, there was a break in the off-hire of approximately 1 days. The basis for this, that it was on-hire again, is asserted to be that for the period of those 1 days it was travelling in the general direction of Shanghai, or 'towards' Shanghai, and consequently was not yet on its way to Hong Kong to the repair yard.
12. The Arbitrators addressed the rival contentions in paragraphs 24 and 25 of the Corrected Reasons:
"24. Ultimately, it seems to us that the question is whether the ship,
plainly having become inefficient for the charterers' purposes from the moment of the collision with the breakwater, and also being inefficient at least from the time she passed the waypoint×" (this is a reference to the moment when, as the arbitrators found, the route to Shanghai and the route to Hong Kong diverged) "×she was efficient for the purposes required of her by the charterers whilst she was sailing from Yokohama to the waypoint. Was she then performing the service required of her
25. On balance, although not without some hesitation, we have
come to the conclusion that these questions are to be answered in the affirmative. Although the ship was in fact on her way to Hong Kong, for the first part of the voyage she was on the route she would follow for Shanghai, where the charterers wanted her to go. For that part of the voyage she was performing the service required of her, albeit she then deviated. She was for that part of the voyage efficient for the purpose the charterers required of her, even though ultimately it was much later before she fulfilled it entirely".
13. Mr. Goldstone suggests that for that last clause there should be read in the alternative "even though ultimately it would have been much later before she fulfilled it entirely", because, at the very least, of course, it is the case that the Charterparty was in fact terminated. There was no evidence, certainly no finding of fact, as to what would have happened but for the termination, and, as has been made clear, it is the case that the entirety of the cargo, including that which should have been discharged at Shanghai, was discharged in Hong Kong.
14. The Arbitrators continue in paragraph 26 as follows:
"26. We can see that the man in the street when told the facts might say that it was purely coincidental that the ship was sailing over the same ground for the first part of the voyage, but that in truth she was going to Hong Kong to repair and at no stage was she going to Shanghai for cargo operations, as the charterers wanted. But we think he might equally say the opposite, and although our view is in any event as expressed above, we also bear in mind firstly that the provisions relied upon here are purely for the charterers' benefit and so it is for them to bring themselves clearly within such provisions; and secondly that the remedy which clause 81 affor4ds the charterers is a drastic one with possibly very serious consequences (the owners here have estimated their losses at around $7.73 million), which simply underlines the same point."
15. That the man in the street might "equally say the opposite" is not support for the Arbitrators' conclusion and certainly does not indicate what is wrong with the contrary proposition.
16. The dispute arises on this appeal in respect of two clauses of the charterparty, Clause 57 and Clause 17. In the event, it has not been necessary for the parties to address Clause 17, which it is agreed between them does not arise if I am in favour of the Appellants, as I am, in respect of Clause 57. Mr. Goldstone QC accepts that if he loses on Clause 57 he must also lose on Clause 17. I do not therefore need to address in my judgment Clause 17 at all.
17. Clause 57 reads, in material part, as follows:
"Any time lost, either in port or at sea, deviation from the course of the voyage, or putting back whilst on voyage caused by sickness of or any accident to the crew ... or due to an accident or breakdown to the vessel, the hire shall be suspended from the time of inefficiency in port or at sea, deviation or putting back, until the vessel is again efficient in the same or equivalent position, whichever is the shorter distance to the port where the vessel is originally destined, and the voyage resumed therefrom ... In the event of loss of time arising for arrest, government restrictions or boycott ... payment of hire shall cease for the time thereby lost."
18. The question of law was formulated, on permission being given by Gloster J, as follows, although I omit the reference to Clause 17, as to which she also gave permission:
"Whether on the facts found, and on the true construction of the Charterparty the vessel was off-hire for a continuous period of (at least) 20 days between 7th and 28th September 2007, and, in particular, whether, following an accident to the vessel on 7th September 2007, as a result of which the Vessel went off-hire × the vessel is to be treated as having temporarily become "efficient" again for the purposes of Clause 57 .. for the period that its route on her voyage to a repair port, in accordance with the Condition of Class, happened to coincide with the route she would have taken to her next intended port of call in accordance with Charterers' order, and notwithstanding that the Vessel was off-hire immediately before and after such period and was, throughout the period 7th to 28th September 2007, incapable of performing Charterers' orders to proceed directly to her next port of call for cargo operations".
19. There is no dispute between the parties as to the applicable law in relation to the construction and application of such a clause as Clause 57, an off-hire clause. The leading case is a decision of the House of Lords in Hogarth v Miller [1891] AC 48, and, in particular, the following passages of their Lordships' opinions. Lord Halsbury LC at 57 said as follows:
"It appears to me, therefore, that at that period there was a right in the ship owner to demand payment of the hire because at that time his vessel was efficiently working; the working of the vessel was proceeding as efficiently as it could with reference to the particular employment demanded of her at the time".
20. Then at page 61 the words of Lord Watson:
"If charterers keep possession of a vessel which is in a thoroughly efficient state for all the purposes contemplated at the time by the contract, and required by them, they must in terms of the contract pay the stipulated hire".
21. Finally, at page 64, Lord Herschell said:
"The payment of hire was to cease until she was again in an efficient state. I should have said the same if it had been "in a state to resume her service", her service being the carriage of goods as a steamer upon the stipulated voyages".
22. In those circumstances, the question to ask is whether the vessel is in an efficient state to perform its services, Lord Halsbury LC at 56 saying, in another relevant passage:
"She should be 'efficient to do what she was required to do when she was called upon to do it".
23. In the Mareva AS [1977] 1 Lloyd's Rep 368 Kerr J, referring to that line of authority without expressly mentioning it, said (at 382, left hand column):
"If the ship is for any reason not in full working order to render the service then required from her .. then hire is not payable .."
24. There is, as one would expect, a lengthy analysis of off-hire clauses in chapter 25 of Wilford on Time Charters 6th Edition 2008, and one of the relevant passages appears at paragraph 25.9, where the editors say:
"A ship is prevented from working when she is prevented from performing the next operation that the charter service requires of her (see The Berge Sund [1993] 2 Lloyd's Rep 453 per Staughton LJ at p459)".
25. So the question which was before the Arbitrators is whether the vessel, on its way under instructions from Class to a repair yard, and not going to Shanghai to unload and load cargo in accordance with the Charterers' instructions, was tendering services in accordance with the Charterparty to the Charterers. Mr. Siberry QC for the Charterers says plainly not. He served and exchanged a powerfully persuasive skeleton, and I did not call upon him to expand on it.
26. The battleground was thus left to Mr. Goldstone QC to defend the Arbitrators' reasons. He founded a general submission, which of course must be right, on two principles. The first is that the onus is on a charterer to bring itself within a beneficial exemption such as an off-hire clause. That is clear both from Royal Greek Government v Minister of Transport [1948] 82 Lloyd's Law Rep 196 at 199 per Bucknill LJ, and from The Doric Pride [2006] 2 Lloyd's Law Rep 175 at 179 per Rix LJ. The second principle, which of course I accept, is that this court should be slow to interfere with the conclusions of arbitrators and, I must add, particularly such experienced arbitrators as these.
27. Mr. Goldstone QC began his skeleton with a hypothetical scenario, which I set out:
"A vessel is time-chartered. It is ordered by the charterers to Port X for discharge. Port X is 1,000 miles away. Shortly after commencing the voyage, the vessel suffers damage which needs to be repaired before the vessel can discharged the cargo at Port X. The owners arrange for repairs to be carried out at a repair yard 50 miles beyond Port X. The vessel proceeds the 1,000 miles towards Port X and then continues on the last 50 miles to the repair yard. Is the vessel off-hire under a period off-hire clause for the entire time spent proceeding the 1,000 miles to Port X "
He submits that the answer to that hypothetical question is no, and so it ought to be in relation to the similar one being posed by Mr. Siberry QC here.
28. That scenario is different from the facts of this case. The facts of this case were that, even before the voyage commenced, certainly after it should have commenced but before the vessel had left Yokohama, it was going to go to the repair yard and not to Shanghai to discharge cargo in accordance with the Charterers' instructions.
29. In paragraph 10 of his skeleton he referred to Hogarth v Miller. He pointed to the decision in that case, in which the full working of the ship was prevented during the tow to Harburg, even though the vessel did convey the cargo to Harburg, and the low pressure (but not the high pressure) cylinder of its compound engine was operating, such that it was only at 80% efficiency, so that the Charterers were entitled to establish that it was off-hire. Mr Goldstone continued:
"Thus, because the vessel was only able to proceed very slowly, she was not fully efficient for the purposes of the service then required to proceed to the discharge port".
30. That proposition, far from being helpful to him, in my judgment is unfavourable to him, because it presupposes that that is what, in this case, the vessel was required to do, namely to proceed to the discharge port, when at no time after it left Yokohama was it doing so.
31. Then in paragraph 14 of his skeleton he said:
"In order to be able to say that the vessel was off-hire, the Appellants need to find a way of characterising the service required by them of the vessel at the relevant time as being something other than proceeding towards Shanghai, which was something the vessel was fully efficient to do (and did do) during the relevant time".
That, in my judgment, ignores the fact that what the vessel at the relevant time was supposed to be doing was not proceeding towards Shanghai, but proceeding to Shanghai, in order to discharge its cargo there, and indeed no doubt collect other cargo.
32. The final reference I would make to his skeleton is to paragraph 25, where he asks the question: "What about the fact that the voyage is also being carried out for the Owners' purposes?" That assumes that the vessel was voyaging at the stage in question not only for the Owners' purposes but (because of the use of the word 'also'), assertedly for the Charterers' purposes. Mr. Siberry QC submits that at this stage the voyage was not being carried out for the Charterers' purposes, because contrary instructions had already been given, and the conclusion already reached by the Owners was that the vessel must, complying with Class' instructions, go to Hong Kong, and not to Shanghai.
33. Mr. Goldstone's submissions were threefold. First, he submitted that the reality of the Charterparty is that the vessel is chartered from day to day. If it is voyaging in the right direction today then it does not matter what will happen tomorrow: tomorrow can look after itself. When tomorrow comes, that is when the test will be operated as to whether the vessel is off-hire. But, in this case, it was known from the start of the voyage, from the start of departure from Yokohama, that it was not going to Shanghai to discharge the Charterers' cargo. This falls, of course, to be contrasted with the words of Wilford, which I have already read. Mr. Goldstone was driven to disagree with Wilford, and to suggest that the words "performing the next operation" in that passage are wrong; all that matters is that the vessel is performing an operation today which is consistent with the possibility that tomorrow there would be either off-hire or on-hire.
34. In my judgment, the important question is to ask under what instructions the vessel was operating today. The instructions were that it was not voyaging to the discharge port, and, in my judgment, in those circumstances when it was voyaging on 22nd and 23rd September, when it left Yokohama, it was not carrying out Charterers' instructions, not providing them with the service that it was supposed to supply, partly because of the damage, but, more significantly, because the existence of that damage had led to instructions from Class that it should not go to Shanghai, and that it should discharge the entirety of the cargo somewhere else, namely in Hong Kong.
35. The second submission that Mr. Goldstone made was by reference to construction of Clause 57 to accord, as he submits, with its commercial purpose. He submits that the best way of analysing its commercial purpose, and indeed operating it fairly and sensibly, and without uncertainty, is, in the case of a vessel that is voyaging, on the face of it, in accordance with the Charterparty, that the issue, properly addressed by the arbitrators, is whether it was on what he has called a common route, and that it was better and clearer to address the question of the common route in this case, so as to be able to observe that until 23rd September it was on the route which it would have taken if it had been going to Shanghai, albeit that on 23rd September the vessel then diverged from it, rather than to consider questions such as intention, or instructions.
36. The first problem with that is that it will in many circumstances be as difficult, if not more difficult, to analyse whether there is such a common route than it would be to analyse or find out under what instructions the vessel was travelling and what was the intention of the owners. It may be that in this case, and certainly from the use by the Arbitrators of the word 'waypoint', it would so appear, that there was a very well marked out route from Yokohama which would always be taken by every vessel, whether it was going to Shanghai or to Hong Kong, effectively until what Mr. Siberry called a 'signpost in the sea' coming half away along, or some way along, that route.
37. That will not always be the case. There will be many occasions when to go to point A or point B could involve a choice of routes dependent upon all kinds of matters such as time of year or climatic and trading conditions. So it is far from my view that an adoption of some such concept as factual geographical reference to which direction the vessel was voyaging would create certainty; it may well create the reverse.
38. The second problem, and it is a big one for Mr. Goldstone, is the consequence of this argument, this reference to a common route, this suggestion that a vessel is complying with charterers' instructions if it is going in the general direction of where the charterer would like it to go, even though in fact it is going to a completely different destination, or is about to reveal itself as so doing.
39. Whereas in this case it would seem that the 'common route' up to the 'waypoint' lasted for 1? days, I put to Mr. Goldstone QC in argument the scenario of a vessel leaving Yokohama and simply coming out of the harbour perhaps for a few hundred yards, before then either turning left, to go to the port which the charterer has required it to go to, or right, to go to a repair yard pursuant to the owners' instructions, such that there would be a common route but only for a very short distance indeed. Mr. Goldstone QC accepted that the inevitable logic of his argument was that for the period of that common route, however short, the vessel would be on-hire. That would mean that the vessel could have been 19 days off-hire, hanging around in Yokohama, such that there would have been, within one more day, the opportunity for the charterer to cancel under Clause 81, that the vessel, once it travelled any distance, would in fact be going in the completely opposite direction from that which the charterer intended and had directed, but that, because there was some measure of common route, it would go back on-hire during it, thus depriving the charterer of the opportunity to terminate until another 20 days had clocked up under Clause 57. That cannot be right.
40. The reality, in my judgment, is that the commercial purpose of the Charterparty is better directed towards looking not at a vessel neutrally travelling along a route, whether a common route or otherwise, but by reference to the commercial purpose of the Charterparty, which in this case was to comply with the Charterers' instructions, and give the Charterers the trading opportunity to travel to a port where the cargo could be loaded and discharged; and the vessel was not complying with that commercial purpose when it set off from Yokohama, such that, in my judgment, it was therefore, on a proper construction of Clause 57, off-hire during that period, albeit travelling in the general direction of Shanghai, but not intending to go there.
41. The third submission that Mr. Goldstone made at least had the benefit of giving me pause for thought, because it had a certain element of attraction to it, and that was what he called commercial injustice. If, says Mr. Goldstone QC, the position is that the vessel goes off-hire the minute that it sets out on a voyage which does not comply with the charterers' instructions, even if going in the general direction of where the charterer would have liked it to go, then if the Charterparty is not cancelled, and if the vessel goes to a yard and is repaired, and is then either reloaded, or never discharges, and carries on with the Charterparty, and with the voyage which had been so substantially interrupted, then different consequences would ensue, depending upon where the yard is.
42. If, he submits, the yard is further away, such that the journey from the yard once the vessel goes back on hire to the original destination is further than it otherwise would have been, then Clause 57 limits the charterers' obligation to no greater distance than the charterers would have paid for to start with, if there had been no diversion. If, however, the yard happens to be nearer to the ultimate destination, then, unless the charterer has had to pay something for that part of the journey which had been interrupted by the voyage to the yard, then the charterers will get the benefit of that voyage being shorter. This, of course, only arises if the charterparty is not cancelled in such a scenario, and that is unlikely, in my judgment, to be the majority of cases.
43. Mr. Siberry's answer was a straightforward one, and that is that an off-hire clause is a blunt instrument, and does not necessarily always do justice. See, for example, the very case of Hogarth, to which such a degree of reference has been made, where the owner did not recover any hire, even though the cargo limped its way to the correct port of discharge and discharged. But the fact that in unusual cases an off-hire clause may not do entire justice does not, in my judgment, mean that I should conclude that a vessel is on-hire when it is plainly not. The answer might well have been different if the vessel had already set out from Yokohama before a decision was made to change its destination, en route. It could well have been said in those circumstances that, until that decision was made, it was still carrying out the charterers' instructions, and the vessel remained on hire until that time. Thus Mr. Goldstone's fairness would trigger in. But that was not the case. There was here a change of route from one compliant with the Charterers' instructions to one non-compliant, and compliant rather with the instructions of Class, from the beginning.
44. In those circumstances, from the very beginning of the voyage from Yokohama the vessel was not intending to comply with the Charterers' instructions, and was not going to Shanghai, even though it might have been going towards Shanghai for the first day and a half. Going towards Shanghai was not sufficient to comply with the Charterers' instructions, not sufficient to put it into the position in which it was efficiently carrying out the service required by the Charterers.
45. In those circumstances, I am satisfied that the Arbitrators erred in law in their application of the authorities, to which I have referred, to Clause 57. As a result of the accident in the breakwater this vessel was, first of all, unable to voyage anywhere, and then it was only able, because of Class' instructions, to go straight to a repair yard, discharging on the way, in Hong Kong, what it should have discharged at Shanghai. It remained off-hire throughout that period. In those circumstances, this appeal is allowed.


CASE 3

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FORTIS CORPORATE INSURANCE, SA

v.
VIKEN SHIP MANAGEMENT AS

AGENTS AND BROKERS -- 118. Liability and Rights of Agents -- 12. Ship's Agent -- 128. Liability -- BILLS OF LADING -- 112. Parties to B/L -- 1953. Time to Sue -- 1975. Himalaya Clause -- NEGLIGENCE -- 12. Breach of Duty.

A ship manager that provides officers and crew and other ship-management tasks for a vessel is not a COGSA carrier to which the one-year statute of limitations applies. Despite manager's attempts to distinguish it, Robert C. Herd v. Krawill Machinery, 1959 AMC 879, forecloses the argument that those who perform a carrier's duties should have the carrier benefits of COGSA. The manager's liability here was based on the common law tort of negligence of the crew as to a crack in the ship's hull. If the carrier wishes to extend its benefits to others, it may do so by using a Himalaya clause in the contract of carriage.

PRACTICE -- 272. Law of the Case.

Although the contacts with Ohio of a shipowner and its manager were treated as “in essence” of the same company for personal jurisdiction, that ruling is not law of the case to establish that the manager was a *610 COGSA carrier, which the shipowner was. That question was not previously decided.

EVIDENCE -- 131. Log Book as Evidence -- PRACTICE -- 319. Scope of Appellate Review, Clearly Erroneous Doctrine.

A log book entry shown to be materially untrue cannot be given any greater weight than the testimony of a witness that is considered unworthy of belief by the trier of fact. The district court did not clearly err in finding the ship's crew negligent by failing to prevent rust damage to a cargo of steel due to seawater rising in the hold through a crack in the hull despite entries in the bilge log mentioning satisfactory hold inspections.

David T. Maloof (Maloof Browne & Eagan LLC) for Fortis Corporate Insurance

Irene C. Keyse-Walker, Susan M. Audey, and Henry E. Billingsley, II, (Tucker Ellis & West LLP) for Viken Ship Management

Appeal from the United States District Court for the Northern District of Ohio at Toledo, Jack Zouhary, D.J., affirmed.

Previous proceedings reported at 2006 AMC 1521, 2007 AMC 1583 and 2008 AMC 2328.

Sandra Day O'Connor, Associate Justice (Retired):

This is a maritime shipping case involving a claim for rust damage to steel coils caused by exposure to seawater during a journey from Szczecin, Poland to Toledo, Ohio. The central issue in this appeal is whether a ship manager charged with providing a Master, officers and crew, and performing various other ship-management tasks for the shipping vessel qualifies as a “carrier” under the Carriage of Goods by Sea Act (COGSA). We agree with the district court's finding that such a manager is not a COGSA carrier, and therefore COGSA's one-year statute of limitations does not bar the underlying suit. We also reject Appellant's argument that the district court's judgment rested on clearly erroneous factual findings, and we affirm.

I.

Fortis Corporate Insurance insured a cargo of 176 steel coils belonging to Metallia LLC. The coils were carried from Szczecin, Poland to Toledo, Ohio aboard the M/V Inviken, a 17,313 gross ton bulk carrier. During the journey, seawater entered the cargo hold containing the steel coils and caused significant rust damage to 99 *611 of them. Fortis, as underwriter, paid Metallia $375,000 for the damage to the steel coils. Fortis then brought a lawsuit as Metallia's subrogee, alleging negligence and breach of bailment against the Inviken's owner, Viken Lakers, along with the ship's manager, Viken Ship Management (VSM).

Fortis I

This dispute has previously come before this court. See Fortis Corporate Ins. v. Viken Ship Mgmt., 2006 AMC 1521, 450 F.3d 214 (6 Cir. 2006). We provide a brief account of the facts giving rise to the earlier appeal because they are relevant to some of the issues presented here.

In 1998, FedNav International (a Canadian company) chartered the Inviken from Viken Lakers for a period of several years. This arrangement is referred to as a time charter; it basically allowed FedNav to use the Inviken to transport cargo on an as-needed basis for the duration of the charter period. In the time-charter agreement, Viken Lakers provided FedNav with assurances that the Inviken was fit to traverse the Great Lakes and, more specifically, that she was a suitable vessel for use in the Toledo port. In 2002, Metallia subchartered the Inviken from FedNav for the Toledo-bound voyage transporting the cargo of steel coils at issue in this case. When the steel coils were damaged during that voyage, Fortis (as Metallia's subrogee) brought suit against Viken Lakers and VSM alleging negligence and breach of bailment.

The United States District Court for the Northern District of Ohio initially dismissed Fortis's lawsuit, finding that it lacked personal jurisdiction over Viken Lakers and VSM (Norwegian companies). The district court noted that the touchstone of personal jurisdiction is whether the defendant purposefully established “minimum contacts” in the forum state, such that it could anticipate being haled into court there. See Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 108-09 (1987) (plurality opinion); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). In evaluating the jurisdictional arguments, the district court found that Viken Lakers and VSM were “in essence, the same company,” and con *612 cluded that there was no jurisdiction because Viken Lakers and VSM had not established the necessary minimum contacts in Ohio. It reasoned that Viken Lakers derives its income from providing its ships to time-charterers, none of whom were American; it was FedNav, not Viken Lakers or VSM, that chose to use theInviken to ship through the Toledo port. The court concluded that providing a ship to a Canadian company did not establish the necessary contacts with Ohio, even though the Canadian company made clear its intent to use the ship to carry cargo to Ohio.

Fortis appealed that judgment, and this court reversed. In finding that there was jurisdiction over Viken Lakers and VSM, a panel of this court explained:
[D]efendants outfitted and rigged their ships to sail into the Great Lakes. Defendants confirmed in the Charter Agreement that “the vessel is suitable for Toledo.” Defendants' officers testified that the vessels were rigged to travel to the Great Lakes. They entered into a long-term agreement with a charterer that made its money shipping into the Great Lakes. Not counting travel time, they earned $558,000 for the number of days spent in Ohio ports over five years. Defendants had more than sufficient notice that they might be subject to jurisdiction here...

Fortis, 2006 AMC at 1529-30, 450 F.3d at 221. The case was remanded to the district court for further proceedings.

Fortis II

On remand, Viken Lakers and VSM moved for summary judgment on the basis that the suit was filed beyond the one-year statute of limitations provided for in COGSA, 49 Stat. 1207 (1936), (codified at 46 U.S.C. s 30701 (Notes)). COGSA generally applies “to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade.” 46 U.S.C. s 30701 (Notes s 13). COGSA provides that “carriers” are subject to certain statutory “responsibilities and liabilities,” and in turn they are provided with certain “rights and immunities,” such as the one-year statute of limitations invoked by Viken Lakers and VSM. Fortis did not dispute that the suit was brought outside of the one-year statutory period provided *613 for in COGSA, but instead argued that COGSA did not apply to this dispute because neither Viken Lakers nor VSM were “carriers” covered by the terms of that Act.

The district court agreed with Viken Lakers that it was a “carrier” and that the suit against it was barred by the one-year statute of limitations. However, it found that VSM was not a COGSA carrier and therefore could not invoke the one-year statute of limitations. COGSA provides that “[t]he term “carrier' includes the owner or the charterer who enters into a contract of carriage with a shipper,” 46 U.S.C. s 30701 (Notes s 1(a)), and the district court found that VSM could not qualify as a carrier because it was not an owner or charterer party to the contract of carriage. Summary judgment was granted in favor of Viken Lakers, and the claims against VSM proceeded to a bench trial.

At the bench trial, the parties stipulated that the amount of damages to the steel coils was $375,000, that it was caused by seawater entering the cargo hold where the coils were stored during the voyage, and that the seawater entered through a crack in the ship's hull. The question at trial was whether the crew should have noticed and repaired the leak before the seawater damaged the steel coils. Critical to answering that question, and a subject of dispute between the parties, is when the crack in the ship's hull occurred.

Immediately prior to the voyage at issue, the Inviken was used to transport cargo to Antwerp, Belgium. She remained in Antwerp for several days until October 10, 2002, when she departed for Szczecin. After theInviken arrived in Szczecin, the steel coils at issue in this case were loaded onto the ship in cargo hold number two, and the Inviken departed Szczecin for Toledo on October 17. Immediately after the departure, the crew performed bilge soundings to check the amount of water in the ship's bilges. The depth of the bilges for hold number two was .65 meters. The initial bilge sounding in hold number two was documented in the ship's log as empty, indicating that there was no water in the bilges just after departure. Bilge soundings were then taken each morning of the voyage. The daily soundings for the number two hold during the following three days steadily increased. On October 18, the sounding indicated that *614 the bilges were filled to .12/.35 meters (the two readings represent the port and starboard side, respectively); on October 19, it was .29/.35 meters; on October 20, it was .56/.54 meters. These readings were considerably higher than those recorded for the other cargo holds on the ship.

It was not until after the October 19 sounding of .29/.35 that the crew made a visual inspection of the number two hold. The Inviken's October 19 logbook entry indicated that crew entered the hold and conducted a visual inspection. While noting an excess of humidity in the number two hold, the logbook entry did not note any cracks or leaks and indicated that the steel coils were “still in good stowed.” The next day, when the soundings indicated that the bilges were nearing their total capacity of .65 meters, the ship's logbook indicated that the crew conducted a “thorough” inspection of the number two hold and once again noted no damage and concluded that the cargo was “still in good stowed.” The ship's Master ordered the bilges pumped to remove the water.

On October 21, the day after the bilges were emptied, the sounding indicated that the bilges were yet again nearing their total capacity, with a reading of .57/.53. The chief mate reported that the ship was taking on water from the starboard side. The ship's Master then inspected the number two hold and observed a crack in the hull that was causing water to leak into the ship. The crew temporarily repaired the crack and the vessel arrived safely in Toledo on October 30. Ninety-nine steel coils sustained substantial rust damage caused by seawater entering the number two hold.

During the two-day bench trial, each side presented expert testimony. Fortis's expert opined that the crack in the hull occurred prior to October 18 and was most likely caused by a collision with a tug in Antwerp. He further testified that the high bilge soundings taken on October 18 should have put the crew on notice that something was amiss. In his view, the crew should have immediately pumped the bilges and monitored their levels closely. Had the crew properly monitored the bilges and responded sooner to the high bilge readings, he concluded that the seawater would not have reached and damaged the steel coils. *615

The expert for Viken Lakers and VSM posited that the hull crack did not occur until October 21 and that the crew reacted to the hull breach in a timely fashion. He theorized that the crack was probably caused while en route to Toledo by debris or especially rough waters striking the Inviken.To explain the bilge readings during the first three days of the voyage, the expert posited various other causes for the high bilge soundings. He argued that the coils had been exposed to rainwater as they were being transported and loaded onto the Inviken, and that when the rainwater escaped the coils it caused the bilge soundings to rise. He also testified that cargo sweat could have played a significant role in raising the water level in the bilges.

The district court concluded that the hull breach occurred before October 18 and that the initial bilge sounding on that day was indicative of such a breach. The court found that the only realistic explanation for the ship taking on increasingly more seawater over the first three days of the voyage was that the ship's hull was cracked at the outset of the voyage to Toledo. The court discredited the theory that cargo sweat and rainwater seeping out of the coils could have been the sources for such a large amount of water (roughly 600 gallons) nearly filling the bilges during the first few days of the journey. The court also found that the nature and location of the hull crack supported Fortis's theory that it was caused by a collision with a tug and undermined the explanation that the crack was caused by debris or rough seas during the voyage. The court concluded that VSM's negligence in investigating and tending to the seawater flowing into cargo hold number two was the direct cause of the rust damage to the steel coils:
The crew should have entered and inspected the hold on October 18 or, at the latest, October 19, when the water levels in the No. 2 port and starboard bilges were .29 and .35 respectively, almost three times as much as any other hold. The failure of the crew to properly and timely investigate the rising water levels was a breach of VSM's duty of reasonable care.

Fortis Corporate Ins. SA v. M/V Inviken, 2008 AMC 2328, 2535, 579 F.Supp.2d 974, 981 (N.D.Ohio 2008).*616

II.

VSM raises two principal arguments on appeal. It first argues that, contrary to the district court's ruling, it is a COGSA carrier and is therefore entitled to invoke COGSA's one-year statute of limitations as a defense, effectively barring the suit below. Second, it argues that the district court's finding of negligence was based on clearly erroneous factual findings. We address both of these arguments in turn.

A. Is VSM a COGSA “Carrier”?

COGSA “imposes particularized duties and obligations upon, and grants stated immunities to, the “carrier.'.” Robert C. Herd & Co. v. Krawill Mach. Corp., 359 U.S. 297, 301, 1959 AMC 879, 882 (1959). It was drafted to address the belief that carriers used their superior bargaining power against shippers when contracting for the carriage of goods, and could often dictate the terms of bills of lading to exempt themselves from any liability. 2 Thomas J. Schoenbaum, Admiralty And Maritime Law s 10-15 (3d ed.2001). To counteract this inequality, COGSA sets baseline liabilities for carriers. It allows parties to contract out of its terms, but only in the direction of increasing liability for carriers; parties cannot contractually limit a carrier's liability. 46 U.S.C. s 30701 (Notes s 3(8)).

COGSA defines “carrier” as follows: “The term “carrier' includes the owner or the charterer who enters into a contract of carriage with a shipper.” 46 U.S.C. s 30701 (Notes s 1(a)). VSM argues that the district court took an unduly formalistic approach to interpreting COGSA's provisions when it determined that VSM did not qualify as a carrier because it was not an owner or charterer party to the contract of carriage. Rather than focusing on that question, VSM asks this court to endorse a practical or functional approach in determining what entities qualify as COGSA carriers. Under this approach, the critical question is whether the entity in question performed a function traditionally carried out by a carrier even if, due to the advances in the shipping industry in the seventy-plus years since COGSA was enacted, it does not meet the traditional view of what qualifies as a carrier under the Act. This view, VSM *617 argues, best accords with the language of COGSA, which defines “carrier” in an open-ended fashion to include owners and charterers who enter into contracts of carriage, but does not expressly exclude any actor in particular. Moreover, VSM argues the approach best effectuates COGSA's purposes in the modern-day shipping world where ship managers and owners operate “hand-in-glove,” with managers often carrying out the duties traditionally belonging to ship owners. While no circuit has endorsed this functional test, it has its supporters. See, e.g., Daniel H. Charest, A Fresh Look at the Treatment of Vessel Managers Under COGSA, 78 Tul. L.Rev. 885, 910 (2004) (“To exclude those that perform the duties of the carrier from the operation of the very statute designed to regulate exactly those actions is a flawed approach on its face.”).

The United States Supreme Court considered and rejected an argument similar to VSM's in Herd, so we begin our analysis there. In Herd, a shipper arranged to have certain goods transported from Baltimore, Maryland to Valencia, Spain. 359 U.S. at 298, 1959 AMC at 880. The owner of the ship engaged an independent stevedoring company to load the goods onto the ship. Ibid. While loading in Baltimore, the stevedores dropped a 19-ton press into the harbor, causing it extensive damage. Ibid. When the shipper brought suit, the stevedoring company argued that it was covered by the limitation-of-liability provisions in COGSA (limiting compensable damages to $500 per package) and the bill of lading's parallel clause limiting the “carrier's” liability to $500 per package. The stevedoring company argued that its activities furthered the carrier's non-delegable obligation to load and unload goods, and that COGSA's limitation-of-liability provisions should extend to any such agent discharging a carrier's obligations. 359 U.S. at 300-01, 1959 AMC at 382;see also Brief for Petitioner at 11 (No. 276), 1958 WL 91704 (“.“The limitation on liability of the carrier under the Carriage of Goods by Sea Act is not intended to be personal, but, unless otherwise agreed, extends to any agency by means of which the carrier performs its contract of transportation and delivery'.” (quotingA.M. Collins & Co. v. Panama R.R. Co., 1952 AMC 2054, 2058-59, 197 F.2d 893, 897 (5 Cir. 1952))).*618

The Supreme Court unanimously rejected this argument. It found that COGSA's plain terms applied only to carriers, and not agents thereof. Herd, 359 U.S. at 301, 1959 AMC at 883. “Respecting limitation of the amount of liability for loss of or damage to goods, [COGSA] says that “neither the carrier nor the ship' shall be liable for more than $500 per package. It makes no reference whatever to stevedores or agents.” Ibid. Here, the district court relied on Herd and a more recent case from the Fifth Circuit, Steel Coils, Inc. v. M/V Lake Marion, 2003 AMC 1408, 1424-28, 331 F.3d 422, 436-38 (5 Cir. 2003), in rejecting VSM's argument that ship managers who carry out the duties of carriage qualify as COGSA carriers.

While Herd seems to foreclose the functional approach to determining who qualifies as a COGSA carrier, VSM tries to distinguish the case on two grounds. First, it argues that the “Supreme Court held in Herd that because the stevedoring services occurred prior to the inception of the tackle-to-tackle period covered by COGSA, COGSA had no application.” Brief for Appellant at 29; see46 U.S.C. s 30701 (Notes s 1(e) (“The term “carriage of goods' covers the period from the time when the goods are loaded on to the time when they are discharged from the ship.”)). For this proposition -- that Herd rested on the fact that the stevedores acted prior to the inception of COGSA's tackle-to-tackle coverage -- VSM cites footnote three of the opinion. Brief for Appellant at 29 (citingHerd, 359 U.S. at 299, 1959 AMC at 881 n. 3). This is a clear misreading of Herd.Footnote three states only that “[t]he district judge was of the view that the casualty occurred before the press had been “loaded on' the ship, and that therefore [COGSA] was not applicable because its effective period had not begun.” Beyond describing the district court's ruling, the Supreme Court said absolutely nothing about the timing of the stevedores' activities as falling outside the tackle-to-tackle coverage of COGSA. Whether they actually did occur outside of COGSA's tackle-to-tackle coverage was a hotly contested issue by the litigants. See Brief for Petitioner at 19 (No. 276), 1958 WL 91704; Brief for Respondent at 5-6 (No. 276), 1958 WL 91705. The Supreme Court ruled on the broader basis that a carrier's agents simply are not covered by COGSA's terms even when they carry out the carrier's obligations. *619

Second, VSM attempts to distinguish Herd on the basis that the stevedoring company in that case did not argue that it was a COGSA carrier, as VSM does here, but instead argued that COGSA should be extended to cover the agents of carriers. That is, the rejected argument in Herd was that a ship-owner's agents should be treated as carriers when performing the functions of a carrier, whereas VSM now argues that such agents simplyare carriers. See Brief for Appellant at 29 (“The stevedore [in Herd] did not argue that it was a “carrier' under the Act. Rather, it argued that COGSA should apply to it “as well as' the carrier or, alternatively, it could benefit from COGSA limitations of liability as an “agent' of the carrier.” (citation omitted)). Insofar as these two arguments can even be described as distinct, any distinction is meaningless. The Supreme Court in Herd rejected the argument that agents of a carrier who perform the tasks of carriage are covered by COGSA. For us to conclude that those same agents performing the same tasks of carriage are in fact carriers would be a clear circumvention of Herd and render it meaningless. The other circuits to have considered this issue are in agreement on this point. See Steel Coils, 2003 AMC at 1425-26, 331 F.3d at 436-37;Citrus Mktg. Bd. of Israel v. J. Lauritzen A/S, 1991 AMC 2705, 2709-10, 943 F.2d 220, 222-23 (2 Cir. 1991).

VSM complains that, unless it is covered as a COGSA carrier, it will be subjected to all of the liabilities of a carrier with none of the protections. This is not true; VSM is subjected to neither the liabilities nor the protections of a COGSA carrier. For instance, COGSA utilizes a complicated burden-shifting mechanism that effectively leaves carriers liable for any damage to cargo unless they meet the affirmative burden of proving that they exercised due diligence to prevent the damage. See Steel Coils, 2003 AMC at 1411, 331 F.3d at 426 (explaining COGSA's burden-shifting mechanisms). VSM was not subjected to that burden, or any other burden COGSA imposes upon carriers, in the district court. Instead, it was held liable for common-law negligence in managing the Inviken and, in that capacity, it was treated as a simple tortfeasor. See Citrus Mktg. Bd., 1991 AMC at 2708-09, 943 F.2d at 222 (COGSA does not preclude claims against ship managers as tortfeasors); *620Associated Metals and Minerals Corp. v. Alexander's Unity MV, 1995 AMC 1006, 1021, 41 F.3d 1007, 1016 (5 Cir. 1995) (“In the more than half century that COGSA has existed, no circuit has indicated that, through COGSA, Congress intended to eliminate the tort cause of action for damage to cargo. Nor does the legislative history of COGSA manifest such an intent.”).

It is important to note that shipping parties are free to extend COGSA's coverage by adding provisions to bills of lading extending the COGSA regime to any and all agents or independent contractors who participate in the shipment of goods under a particular contract. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 30-31, 2004 AMC 2705, 2715-17 (2004). These contractual provisions are known as “Himalaya clauses.” See generally, Marie Healey, Carriage of Goods by Sea: Application of the Himalaya Clause to Subdelegees of the Carrier, 2 Mar. Law 91 (1977). If the parties in this case wanted VSM to be covered by COGSA's terms, they could have provided for that contractually, but they chose not to do so. This is especially telling when the parties were contracting against the backdrop of nearly-uniform case law refusing to extend COGSA's liabilities and immunities to ship managers absent such a Himalaya clause. The value of maintaining uniformity with our sister circuits is at a premium in cases involving the interpretation of maritime contracts, especially when the parties can easily alter the terms of their contracts to react to prevailing case law. Cf. Kirby, 543 U.S. at 28, 2004 AMC at 2714 (stressing need for uniformity in maritime law).

Finally, VSM argues that it is already established as the law of the case that it is a carrier, because this court and the district court treated VSM and Viken Lakers as “in essence, the same company” when evaluating the initial jurisdictional question. See United States v. Moored, 38 F.3d 1419, 1421 (6 Cir. 1994) (“Under the doctrine of law of the case, findings made at one point in the litigation become the law of the case for subsequent stages of that same litigation.”). Viken Lakers was found to be a carrier, and VSM argues that if it is in essence the same company as Viken Lakers, it must also be a carrier under the law of the case. This argument falters because *621 treating two entities as equivalent for jurisdictional purposes does not somehow mean they are the same in all other ways. There are many instances where courts treat companies as the same for jurisdictional purposes, such as joint venturers, but that fact alone does not mean the companies are the same in all respects. Here, finding that VSM and Viken Lakers similarly availed themselves of the Ohio forum for jurisdictional purposes in no way precludes a finding that one is a COGSA carrier while the other is not. The law of the case doctrine “has no application where the issue in question was not previously decided.”Niemi v. NHK Spring Co., 543 F.3d 294, 308 (6 Cir. 2008). We find no error in the district court's conclusion that VSM was not a COGSA carrier.

B. Was the District Court's Negligence Finding Clearly Erroneous?

The district court found that VSM was negligent when it failed to promptly pump the bilges or thoroughly investigate what was causing the influx of water in the bilges for cargo hold number two. The court found that, based on the bilge soundings, “[t]he crew should have entered and inspected the hold on October 18 or, at the latest, October 19, when the water levels in the No. 2 port and starboard bilges were .29 and .35 respectively, almost three times as much as any other hold.” 2008 AMC at 2335, 579 F.Supp.2d at 981. VSM asserts that this holding rested on clearly erroneous factual findings. In particular, VSM points out that the Inviken's logbook indicates that the crew did enter and inspect the number two hold on October 19; the logbook further indicates the crew performed a “thorough” inspection on October 20, contrary to the district court's finding that no thorough inspection occurred until October 21. VSM concludes that the district court's findings were clearly erroneous because they conflict with the ship's logbook. We disagree.

The district court did not misunderstand the logbook entries in any way. In fact, it acknowledged the entries and quoted each in its entirety. The court accurately noted that neither logbook entry described the precise nature of the inspection in any detail; one indicated a “visual” inspection and the other noted a “thorough” *622 inspection. The crux of the district court's ruling was that the inspections, whatever their precise nature, were clearly inadequate if they failed to reveal a crack in the hull that was in plain view and leaking a substantial amount of water. The district court rejected VSM's theory that the crack did not occur until October 21 because it found its alternative explanation for the water buildup untenable. The court credited Fortis's expert (a captain with 34-years of seagoing experience) when he concluded that cargo sweat and rainwater could not account for cargo hold number two's high bilge soundings from October 18 to October 20, especially in light of the fact that none of the other holds had such high readings. These findings -- that the crack in the hull occurred before October 18 and that any competent search would have revealed the crack -- were completely reasonable and adequately supported by the evidence.

VSM's counterargument seems to be that a district court is required to credit anything that appears in a ship's logbook absent overwhelming evidence to the contrary. Reply Brief for Appellant at 22 (“[L]ogbook entries are the best evidence of what happened during a voyage and “must be accepted' as the truth unless sufficiently challenged.” (citing 70 Am.Jur.2d Shipping s 75 (2009)). The only source cited for this proposition does not support it. See70 Am.Jur.2d Shipping s 75 (2009) (“An entry made with full knowledge and opportunity of ascertaining the truth must be accepted as true if it is against the party making it... On the other hand, the entries in the logbook shown to be materially untrue cannot be given any greater weight as evidence than the witness' statement under oath that the court considered unworthy to believe.”) (emphasis added).

The district court's finding that VSM acted negligently in failing to prevent the rust damage to the steel coils was not based on clearly erroneous factual findings.

III.

We affirm the district court's judgment. Fortis affirmatively waived its cross-appeal in case number 08-4479 “in the event [this court] affirms the District Court's decision.” Brief for Appellee at *623 51. Accordingly, we have no occasion to address the issues raised on cross-appeal.

 

CASE 4

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Buyuk Camlica Shipping Trading and Industry Co Inc v Progress Bulk Carriers Limited

Introduction
1 This is the hearing of a number of applications by the Claimant under the Arbitration Act 1996 including applications in two arbitration references under Sections 68 and 69 and, as those applications were made out of time, for an extension of time in order to make them pursuant to CPR 62.9 . Since the issues that are raised by these applications are of some complexity, it is necessary to set out the background in a little detail. 
2 The Claimant (to whom I shall refer as the Owners) chartered their vessel “Hilal I”, a bulk carrier built in Japan in 1977, flying the Turkish flag, to the Defendant (to whom I shall refer as the Charterers) under two separate time charterparties for two consecutive charter periods. The first charterparty (“the 2004 charterparty”) was dated 8th September 2004 and lasted from 1st October 2004 until 30th March 2005. The second charterparty (“the 2005 charterparty”) was dated 15th February 2005 and, in direct continuation from the 2004 charterparty, lasted from 30th March 2005 until 24th August 2005. Each of the charterparties was on an amended NYPE (1946) form and the terms of each were substantially the same although the hire rates were different.
The arbitrations
3 A number of disputes arose between the Owners and the Charterers out of the performance of the two charterparties. Those disputes were referred to arbitration in two separate arbitration references, one in respect of each charterparty. Both arbitration references were conducted pursuant to the LMAA Terms 2002. The Arbitral Tribunal was the same in both references and comprised Mr Michael Baker-Harber, Mr Charles Measter and Mr Brian Williamson. The Arbitral Tribunal issued two Awards each dated 26th March 2009, one under each arbitral reference, and one set of Reasons common to both Awards.
4 The two major disputes between the parties in the arbitrations related to the refusal by the Owners under the 2004 charterparty to carry a cargo of HBI (hot moulded briquettes of direct reduced iron) from Misurata in Libya; and the refusal by the Owners under the 2005 charterparty to carry a cargo of DRI (direct reduced iron) from Point Lisas, Trinidad to New Orleans, USA. The Charterers claimed, and the Arbitral Tribunal found, that there were orally agreed variations of both charterparties that entitled the Charterers to carry cargoes of HBI and DRI notwithstanding the terms of Rider Clause 38 of each of the charterparties which had specifically excluded from the categories of permitted cargoes to be loaded any cargoes of Direct Reduced Iron in any form. The Owners do not challenge the Arbitral Tribunal's findings that oral variations were made to the two charterparties but, in a variety of ways, now seek to challenge the Arbitral Tribunal's conclusions that the Owners' refusals to implement the orally agreed variations constituted breaches of contract by the Owners entitling the Charterers to damages under each of the charterparties.
5 The Arbitral Tribunal dealt with all of the legal submissions on the basis of written arguments but heard oral evidence concerning the orally agreed variations of the charterparties and the HBI and DRI disputes over three days between 9th and 11th July 2008. On 23rd September 2008, the Arbitral Tribunal received detailed written Closing Submissions from both parties, which covered not only the oral evidence but also the parties' legal arguments. The written Closing Submissions submitted on behalf of the Owners extended to some 305 paragraphs and occupied 81 pages of print. As for the Charterers, they produced 481 paragraphs of written submissions over 115 pages of print. The Owners then served a short set of Reply Submissions on 24th October 2008.
6 It appears that the arguments raised by the parties were not, at least initially, found by the Arbitral Tribunal to be easy to resolve. By an email dated 4th March 2009, Mr Baker-Harber informed the parties that the delay in producing an award was attributable to the Arbitral Tribunal's “inability to agree a really rather fundamental point on the two largest claims relating to the HBI / DRI cargoes.” Having said that, by another email dated 10th March 2009, Mr Baker-Harber informed the parties that the Arbitral Tribunal was now “ad idem on the point that was troubling us and we are proceeding at full ahead.” 
7 Shortly thereafter, on 26th March 2009, the Arbitral Tribunal produced its Final Award in each of the arbitration references and a common set of Reasons for both. In the 2004 charterparty Award, the Arbitral Tribunal concluded at paragraph B (c) that “[t]here was a legally binding agreement between Owners and Charterers that an HBI cargo would be carried and Owner's subsequent refusal to undertake a voyage carrying such a cargo was a breach of that agreement, entitling Charterers to damages”. At paragraph B (b) of the 2005 charterparty Award the Arbitral Tribunal concluded that “[t]here was a legally binding agreement between Owners and Charterers that a DRI cargo would be carried to the USA and the Owners' subsequent refusal to undertake a voyage carrying such a cargo was a breach of that agreement, entitling Charterers to damages”. In both Awards, the Arbitral Tribunal expressly reserved to itself jurisdiction to deal with all outstanding matters in the references including “quantum issues”. 
8 The one set of Reasons supporting both Awards has to be read and understood against the background of the terms of the two charterparties in issue, the adduced oral evidence, and the detailed written submissions served by the parties.
9 So far as is relevant to the Owners' applications, each of the charterparties provided: that the vessel's moulded depth was 14.05 metres (Rider Clause 53 — Description Clause); that the employment of the vessel was to be in the carriage of lawful merchandise in lawful trades between safe port and/or ports and always via safe berths, safe anchorages and always safely afloat (lines 24 – 32); and that the permitted cargo or cargoes should be laden and/or discharged in any dock, wharf or place in port or elsewhere where the Charterers may direct, provided that the vessel can safely lie always afloat at any time of tide (Clause 6).
10 It was common ground between the parties, at latest by the time when they came to serve their written Closing Submissions, that the vessel's actual moulded depth, described in Rider Clause 53 of the charterparties as 14.05 metres, was in fact 16.10 metres. The relevance of this misdescription is that a vessel's air draft (i.e. the distance between the waterline and the vessel's hatch coamings) is a product of her moulded depth: the latter is one of the principal factors used to calculate the former, which is done by subtracting the vessel's actual draft from the sum of the vessel's moulded depth, hatch coaming height and the rise in the deck.
11 The air draft restrictions for vessels loading at Misurata in Libya (to which the Charterers ordered the vessel to load a cargo of HBI under the 2004 charterparty as varied) and at Point Lisas in Trinidad (to which the Charterers ordered the vessel to load a cargo of DRI under the 2005 charterparty as varied) were respectively 10.5 and 11.0 metres. If the vessel's actual moulded depth had complied with her described moulded depth as set out in Rider Clause 53 of each of the charterparties, her air draft would have come within the applicable restrictions at both of those ports. As it was, however, the vessel's actual moulded depth meant that the vessel's actual air draft inevitably exceeded the air draft restrictions at Misurata and Point Lisas by some margin.
12 The most substantial parts of the parties' written Closing submissions were devoted to the issue whether the parties had orally agreed variations under each of the charterparties permitting the Charterers to load what would otherwise have been forbidden cargoes: HDI and DRI. It is apparent from paragraphs 249, 254, 365, 370, 387 and 447 of the Charterers' written Closing Submissions, that the Charterers were claiming that the two orally agreed variations were: in respect of the 2004 charterparty that the vessel should load a cargo of HBI at Misurata in Libya; and in respect of the 2005 charterparty that the vessel should load a cargo of DRI at Point Lisas in Trinidad. The Charterers alleged that they relied on those orally agreed variations of the two charterparties by entering into two sub-charterparties of the vessel for the loading and carriage of HBI and DRI out of Misurata and Point Lisas respectively; so that, when the Owners refused to go to those ports to load those cargoes, they suffered substantial loss and damage.
13 The Owners' primary defence in relation to the Charterers' allegations concerning HBI and DRI was that no oral variations to the two charterparties were ever agreed or, if they were agreed, that they were unsupported by consideration and/or were too uncertain to be enforceable. The Owners' secondary defence was that, even if the two charterparties were subject to binding oral variations permitting the loading and carriage of respectively HBI and DRI, nevertheless there was no actionable breach of the charterparties by the Owners because the Charterers could not validly have ordered the vessel to load the cargoes at Misurata or Point Lisas either because, given her actual moulded depth and air draft, the vessel could not physically load those cargoes or because it would have been unsafe for the vessel to have done so; or, put another way, because the Owners can never be obliged under a charterparty to load cargo which it is physically impossible or unsafe for a vessel to do or attempt: see paragraphs 99 – 109, 126, 192 – 197 and 201 — 205 of the Owners' written Closing Submissions. The Owners relied upon the safe berth / port warranties in the charterparties to support their arguments.
14 In this context, it is to be noted that apparently the inability of the vessel to meet the air draft restrictions at the proposed load ports was not, and has never been said to have been, at the time the reason why the Owners refused to permit the vessel to load the cargoes of HBI and DRI at the ports in question. The air draft restrictions and consequential physical impossibility or unsafety issues were not originally advanced by the Owners in their pleadings; they were only formally introduced in the Re-Amendment Defence on 23rd June 2008, shortly before the oral hearing took place.
15 In response to the Owners' case that, even if orally agreed variations had been made, nevertheless there could be no actionable breach because the vessel could not physically or safely have loaded at either load port (paragraph 99 of the Owners' written Closing Submissions), the Charterers' first argument was that, since the Owners agreed to load the vessel with HBI out of Misurata and DRI out of Point Lisas, they accepted the risks of the vessel not being able to do so (paragraphs 254 and 447 of the Charterers' written Closing Submissions). Their second answer was divided into a variety of alternative formulations each of which ultimately depended on the fact that, in breach of warranty, the vessel's moulded depth of which the calculation of the vessel's air draft was a product was significantly in excess of that described (paragraphs 254 ff of the Charterers' written Closing Submissions). The net effect of Charterers' arguments was that, if it was impossible or unsafe for the vessel to have loaded the cargoes of HBI and DRI at respectively Misurata and Point Lisas, that would not have been the case if the vessel's moulded depth had been as described in the charterparties and it was only the case because of the Owners' original breach of charterparty. Therefore, one way or another (and the Charterers relied variously on estoppel, on the principle that a party should not be entitled to avoid liability for one breach of contract by reliance on his own breach of another contractual obligation, and finally on a claim for damages for misdescription) Charterers maintained that the Owners were liable in damages for (adopting the language of the Arbitral Tribunal) having reneged upon binding agreements to load those cargoes.
16 The reply of the Owners in their written Closing Submissions was in three parts: first, in answer to the Charterers' case that the Owners were estopped from denying the vessel's moulded depth of 14.05 metres, the Owners argued that there was no reliance by the Charterers on the charterparty description in their calculations of the vessels' air draft. The Owners said that the Charterers' operations manager, Captain Prasad, relied on the vessel's master to calculate the vessel's air draft and that, if the Charterers did not actually know the vessel's true moulded depth, they (i.e. Captain Prasad) had the information “at [their] fingertips” – even before they entered into the sub-charterparties: paragraphs 132 — 140. Secondly, in answer to the case that they could not rely on their own breach of contract to avoid liability for another, the Owners argued that this was a principle of construction and inapplicable to the case before the arbitrators: paragraphs 141 — 154. Included in this answer was the Owners' contention that the breach of contract was known to and waived by the Charterers when Captain Prasad received a deadweight scale from the Owners and/or when they received air draft calculations from the Owners of the vessel's air draft: paragraph 153. 
17 Thirdly, in answer to the Charterers' claim for damages for misdescription, the Owners set out their case in five short paragraphs in their written Closing Submissions, which they repeated with only slight variations in relation to the similar claim under the varied 2005 charterparty at paragraph 201 of their written Closing Submissions: 
“155. The short answer to this claim is that the Charterers cannot establish that they suffered any loss or damage by reason of any breach of contract.
156. The Charterers did not rely on the charterparty description of the moulded depth in fixing the vessel for sub-charter to Shams Marine. There is no reference to the moulded depth in the sub-fixture. Captain Prasad says in terms that he relied on the master to calculate the air draft; he does not say that he relied on the charterparty description.
157. Even if the Charterers could mount the hurdle and prove causation, which they cannot, the Charterers have clearly failed to mitigate their loss and/or acted unreasonably by sub-chartering the vessel in circumstances where the master had been giving information to the Charterers indicating that the vessel could not load the cargo at Misurata.
158. Further the Charterers waived any breach by reason of their being in possession or information concerning the real moulded depth in December 2004 and/or having received air draft calculations from the master in February 2005 which demonstrated that the vessel would not be able to load at Misurata.
159. Accordingly, the claim for damages for breach of charterparty description of the moulded depth should be dismissed.”
18 The Arbitral Tribunal began its Reasons with an introductory paragraph which, since the basis of the Owners' section 68 application is that the Arbitral Tribunal failed to deal with all the issues put to it, assumes some significance. In paragraph 1 of its Reasons, the Tribunal stated: 
“We add, by way of introduction, that [the HBI and DRI disputes] involved substantially greater sums than the remainder and we heard oral evidence relating to them in London in July 2008. The remaining disputes were addressed by way of written submissions, running in total to some 200 pages. This was clearly a case where the matter of principle between the parties was as or more important than the sums at stake. For us to address every point made by counsel, whose thoroughness and painstaking attention to detail was to be admired, would we feel be disproportionate. We trust we will be forgiven for not reciting every point made, although we have, we hope, taken them all on board.”
19 In relation to the Charterers' case that there were orally agreed variations of both charterparties, the Arbitral Tribunal clearly preferred the Charterers' evidence. As to the 2004 charterparty, it is clear from paragraphs 11 and 16 of their Reasons that the Tribunal concluded (as the Charterers had submitted at paragraphs 175 – 177 of their written Closing Submissions) that in December 2004 the Owners agreed to a variation of the charterparty and to load an HBI cargo probably out of Misurata in Libya on which the Owners subsequently reneged. It is also in my judgment clear from paragraphs 14 and 17 of the Reasons that the Tribunal accepted the Charterers' submissions at paragraphs 235 and 236 of their written Closing Submissions and found that, in reliance on the Owners' agreement, the Charterers committed themselves and the vessel to sub-charterers, Sham Marine, specifically to load an HBI cargo out of Misurata. As for the 2005 charterparty, it is apparent from the two paragraphs numbered 24 in the Reasons that the Tribunal accepted the Charterers' case at paragraphs 365, 370, 379, 380 and 387 of their written Closing Submissions that the Owners agreed to a variation of the charterparty and to load a cargo of DRI from Trinidad (probably or possibly, it would appear, Point Lisas) for carriage to New Orleans, in reliance on which the Charterers sub-chartered the vessel to an important client of theirs, Mittal, specifically for such a voyage.
20 The Owners do not challenge the Tribunal's findings as to the oral agreements. As Mr. Peter MacDonald Eggers, who appears on their behalf, explains at paragraph 38 of his Skeleton Argument, the Owners' complaint is with the Tribunal's “decision that the Charterers were entitled to damages for the Owners' failure to load HBI and DRI cargoes in accordance with the oral agreements found to exist” , not with the oral agreements themselves. The Owners limit “their challenge to the arguments based on the fact that the vessel would not have been able to load the cargoes in any event, because of an excessive air draft” . 
21 In the light of the Owners' complaint, both parties' counsel accepted that the critical analysis in the Arbitral Tribunal's Reasons was to be found in paragraph 17 which, while it dealt with the HBI cargo under the 2004 charterparty as varied, was said by the Tribunal at paragraph 28 of the Reasons to apply also to the DRI cargo under the 2005 charterparty as varied (although the facts as to draft restrictions at Point Lisas were “less clear cut”). Paragraph 17 was as follows: 
“Our conclusion that there was a binding agreement which Owners had reneged on, lead us to an inquiry as to what damages Charterers might recover. Mr Mazman said, and we accept, that he offered the vessel to Sham's on 25th February (and indeed fixed Hilal I or sub on 1st March for this quantity) to load a basic 20,000mt cargo and would have been able to secure a ‘top up’ 10,000mt for Indian buyers which would have made the voyage hugely profitable, essentially because the 10,000mt went more or less straight to the bottom line. In the event he was obliged to insert a smaller vessel to lift his basic commitment of 20,000mt and thereby lost that bonus. However, the story does not stop or indeed start there: the vessel could not have loaded any cargo at Misurata. It could not meet the air draft restriction, even juggling with ballast or part loading some holds and completing them later. It transpired that the main reason for this was that the vessel's moulded depth was 16.1 metres and not the 14.05 meters as appears in the charterparty description. This caused us some difficulty. Was it open to Charterers to base their claim for damages for reneging on the agreement to load HBI on a voyage that the vessel could not physically perform? After some considerable debate, between the members of the tribunal, we concluded that the two breaches, namely refusal to perform the voyage plus the misdescription rendering performance physically impossible, when combined, entitled the Charterers to damages based upon the difference between the notional voyage the vessel should have performed and what business she did instead…”
The applications
22 The Owners' primary application, Mr. MacDonald Eggers explained in the course of his written and oral arguments, is under section 68 of the Arbitration Act 1996 . The Owners only apply for permission to appeal under section 69 of the same Act by way of secondary case. Furthermore, in the light of Mr. MacDonald Eggers' further explanation in his written Skeleton, it is apparent that, notwithstanding the way in which the Claim Form has been formulated, the Owners do not now ask under section 68 for orders setting aside those parts of the two Awards that conclude that there were legally binding agreements between the Owners and the Charterers that HBI and DRI cargoes would be carried. The Owners' position is set out at paragraph 39 of Mr. MacDonald Eggers' Skeleton argument where it is argued that, in making its Awards: 

(a) The Tribunal was responsible for a serious irregularity within the meaning of section 68(2)(d) of the Arbitration Act 1996 in that it did not deal with all of the critical issues put to it by the parties, in particular the Owners' submissions that the Charterers were not entitled to damages even if there were [a] breach of an oral agreement to carry the HBI/DRI cargoes.
(b) The Tribunal erred as a matter of law in concluding that the Charterers were entitled to damages.
23 Mr. Mark Jones, who appears on behalf of the Charterers, meets these arguments in a variety of ways to which I shall come later in the course of this judgment. He has, however, two anterior arguments under the Arbitration Act 1996 which, if accepted, he suggests deny the Owners in the first instance an entitlement to mount any application at all under sections 68 and 69 . First, he reminds the court that the Tribunal decided that the Owners committed two breaches of contract under each charterparty (a breach of the oral agreement and a breach of the contractual warranty as to the vessel's moulded depth in Rider clause 53) and that it was a combination of those two breaches that entitled the Charterers to damages. He points out that, before the Tribunal, the Charterers had advanced two arguments based on the breach of Rider clause 53: namely, (i) that the Owners were precluded from relying on the vessel's actual moulded depth of 16.1 metres as a justified reason for not loading the vessel with the permitted cargoes at the two ports in question, on the basis that a party may not take advantage of his own wrong: see Alghussein Establishment v Eton College [1988] 1 WLR 587 ; and (ii) that the Charterers are entitled as damages to the sum that they would have earned from the vessel but for the fact that the vessel's actual moulded depth was 16.1 metres and not 14.05 metres as warranted: see paragraphs 248 — 269 and 441 — 448 of the Charterers' written Closing Submissions. Mr. Jones suggests that it is likely that the Tribunal accepted the simpler of the two arguments: that based simply on damages for breach, as to which he referred me to Coghlin & Others on Time Charters, 6th edition, paragraph 3.17. As he puts it in his Skeleton Argument at paragraphs 26–29: 
“In this case, the inability to load, and for that matter any related lack of safety of port and/or berth at Misurata or Point Lisas, were a quite obvious result of the Vessel not being as warranted in Clause 53.
However Owners try to dress it up, the simple fact remains: 
a. had she been as warranted, then she could have been loaded (and safely loaded), and so Charterers could have performed the lucrative sub-fixtures (and so Owners would have no defence to the claim for reneging on the relevant oral agreements)
b. however, she was not as warranted and so – as a direct result — loading was impossible (and hence unsafe), and so Charterers could not have performed the lucrative sub-fixtures.
Hence, the conclusion that “the two breaches, namely refusal to perform the voyage plus the misdescription rendering performance physically impossible, when combined, entitled the Charterers to damages based upon the difference between the notional voyage the vessel should have performed and what business she did instead…”
It was the combination of the two breaches of contract that lead to the entitlement to damages for the lost sub-fixtures. It is not a case where the Tribunal was considering a measure of loss attributable to one sort of breach, as opposed to that attributable to another sort of breach..”
24 As to the Owners' proposed answers to this case as put to the Tribunal, set out at paragraphs 156 – 158 of the Owners' written Closing Submissions, Mr. Jones remarks that they were all based on the factual allegations that the Charterers knew or should have known about the vessel's actual moulded depth and/or knew or should have known or been able to work out that the vessel's air draft meant that the vessel would not be able to meet the air draft restrictions at Misurata and Point Lisas before they entered into the sub-charterparties. Mr. Jones acknowledges that the Reasons do not expressly cover these answers but submits that it is to be inferred and is more likely that the Arbitral Tribunal concluded that they simply did not impinge on its decision and so omitted to include its precise reasoning on the points in its Reasons.
25 Therefore, if the Owners have anything about which to complain in relation to the Reasons, Mr. Jones says that it is that they are ambiguous or could be clearer — in which case section 57 of the Arbitration Act 1996 provides the Owners with appropriate means of recourse. Mr. Jones concludes that, since by virtue of section 70 of the Act no application under sections 68 or 69 may be brought if the applicant has not first exhausted any available recourse under section 57 and since the Owners have not availed themselves of the recourse available to them under that section, they are precluded from making any such application. 
26 The second argument that Mr. Jones advances to defeat the possibility of any application being made by the Owners under sections 68 and 69 of the Arbitration Act 1996 is that the Owners failed to make their applications within the 28 day period stipulated in section 70(3) of the Arbitration Act 1996 and should now be denied an extension of time under section 80(5) of the Act and CPR 62.9 . Since, however, one of the factors to be considered in connection with an application for an extension of time is the strength of the substantive application (whether under section 68 and/or 69 ), it may be sensible to consider the substantive applications in this case first, and also the impact (if any) of section 57 , before turning to what some others might consider to be the logically anterior question of whether the Owners should be permitted to mount any substantive application in the first instance. 
Sections 68 and 57
27 The Owners' application under section 68 is based on sub-section (2)(d) : the Owners have to show (i) a failure by the Tribunal to deal with all the issues that were put to it, (ii) which the court considers has caused or will cause the Owners substantial injustice. 
28 It is clear that, contrary to the assertion made on behalf of the Owners at paragraph 39(1) of Mr. MacDonald Eggers' Skeleton Argument, the Arbitral Tribunal dealt specifically with the issue whether or not the Charterers were entitled to damages. That paragraph in Mr. MacDonald Eggers' Skeleton Argument conflates issues with submissions: he says there that the Tribunal did not deal with all the critical issues, “in particular the Owners' submissions that the Charterers were not entitled to damages …” It may be that the Tribunal did not deal explicitly with all of the Owners' submissions but that does not mean that it did not deal with the issues, let alone the critical issues. A failure to deal with an argument is not the necessary equivalent of a failure to deal with an issue under the section: Margulead Ltd. v Exide Technologies [2004] EWHC 1019 . As Griffiths L.J. said in Egil Trust Co. Ltd. v Pigott-Brown [1985] 3 All ER 119 , 122, there is no duty on a judge, in giving reasons, to deal with every argument presented by counsel in support of his case. The same applies to arbitral tribunals: Checkpoint Ltd. v Strathclyde Pension Fund [2003] EWCA Civ 84 . 
29 However, the principal issue (i.e. the very dispute that the Tribunal had to decide), whether or not the Charterers were entitled to damages, could not be decided fairly in this case unless the Tribunal also dealt with such issues as had been raised by the parties that were essential to be dealt with for the Tribunal to come fairly to its decision on that principal issue. Section 68(2)(d) of the Arbitration Act 1996 is designed to cover only those essential issues which were put to the Tribunal and were necessary to be dealt with by the Tribunal for a fair decision on the claims or the specific defences raised in the course of a reference: World Trade Corporation v Czarnikow Sugar Ltd. [2005] 1 Lloyds Rep. 422 , paragraphs 16 – 20. 
30 The requirement in section 68(2)(d) does not mean that the tribunal has to decide all issues raised by the parties one way or another. It may be that the tribunal will deal with certain of the issues in such a way that other issues which might have appeared at least on the pleadings or in submission or on a particular view of the case to be relevant issues arising for resolution, will fall away and not require ultimate determination ( Checkpoint Ltd. v Strathclyde Pension Fund [2003] EWCA Civ 84 para. 49) — although a tribunal might wish in the course of its reasons to articulate what it might have decided on those other issues, had it proved necessary to do so. Provided that the tribunal decides all those issues put to it that were essential to be dealt with for the tribunal to come fairly to its decision on the dispute or disputes between the parties, it should, in my view, have complied with the requirements of section 68(2)(d) . Therefore if, because of the tribunal's reasoning and decision on some issues, certain other issues fall away and are not decided, that does not mean that the tribunal will not have dealt with all essential issues in accordance with section 68(2)(d) although it may be that for separate reasons, whether of analysis or clarity, its decision will be open to criticism or deserving of an application for clarification. 
31 In this case, it seems to me that, in order to decide the principal issue, whether or not the Charterers were entitled to damages in respect of the refusals to load the cargoes of HBI and DRI, the issues that, on the basis of the written Submissions presented to it, the Arbitral Tribunal was bound to consider and, if critical to a fair decision on that principal issue, to deal with were: 
(i) Were the charterparties orally varied, as the Charterers alleged? 
(ii) If so, was the refusal by the Owners to load the respective cargoes a breach of the orally agreed variations? 
(iii) If the refusal by the Owners to load the respective cargoes was a breach of contract, was it causative of any loss to the Charterers? 
(iv) Were the Owners entitled to refuse to load the cargo of HBI at Misurata and/or DRI at Point Lisas having regard to the safe port/berth warranties and the impossibility of loading the cargoes at those ports? 
(v) Was there a breach of the description warranties in clause 53 of each of the charterparties? 
(vi) If there was a breach of the description warranties in clause 53 of each of the charterparties, did the Charterers waive it by reason of their being in possession of information concerning the real moulded depth in December 2004 and/or having received air draft calculations from the master in February 2005 which demonstrated that the vessel would not be able to load at Misurata / Point Lisas? 
(vii) If the Charterers did not waive any breach of the description warranties, was the breach causative of any loss to the Charterers? 
(viii) Did the Charterers rely on the charterparty description of the moulded depth in fixing the vessel to sub-charterers? 
(ix) Are the Owners estopped from denying that the vessel's moulded depth was 14.05 metres? 
(x) Are the Owners precluded from relying on the vessel's actual depth of 16.10 metres pursuant to the principle in Alghussein v Eton College ? 
(xi) Did the Charterers fail to mitigate their loss or damage and/or did the Charterers act unreasonably by sub-chartering the vessel in circumstances where the vessel's master had been giving information to the Charterers' operations manager, Captain Prasad, indicating that the vessel could not load at Misurata and from which Captain Prasad would have been able to work out that the vessel could not load at Point Lisas?
32 Reading the Awards and Reasons in a reasonable and commercial way (the normal approach to be adopted towards arbitration awards: Zermalt Holdings v Nu-Life Upholstery Repairs [1985] 2 EGLR 14 ) in the context of the submissions made to it, it is clear in my judgment that the Arbitral Tribunal decided in favour of the Charterers that: 
(i) The 2004 charterparty was orally varied and the Owners agreed to load an HBI cargo probably out of Misurata in Libya. 
(ii) The 2005 charterparty was orally varied and, whilst the Reasons might possibly have been clearer, I am satisfied that the Arbitral Tribunal decided that the Owners agreed not only to load a cargo of DRI but also to load it probably or possibly out of Point Lisas in Trinidad. 
(iii) In reliance on the Owners' agreements, the Charterers committed themselves and the vessel to sub-charterers, Sham Marine, specifically to load an HBI cargo out of Misurata during the currency of the 2004 charterparty, and to sub-charterers, Mitttal, specifically to load a DRI cargo out of Point Lisas during the currency of the 2005 charterparty. 
(iv) The refusals by the Owners to load the cargoes of HBI and DRI were respectively breaches of the 2004 and 2005 charterparties, as varied. 
(v) The Owners were in breach of the description warranties in clause 53 of each of the charterparties. 
(vi) The breaches by the Owners in refusing to load the respective cargoes at Misurata and Point Lisas in combination with the breaches of the description warranties entitled the Charterers to damages based on the difference between the voyages that the vessel should have performed and the voyages that, in the event, the vessel did perform.
33 It is clear, in my judgment, therefore, that the Arbitral Tribunal decided Issues (i), (ii), (iii), (iv), (v) and (vii). The combination of the Owners' two breaches under each charterparty caused loss to the Charterers: it was a breach of contract under each of the charterparties as varied for the Owners to refuse to load the cargoes, and in so far as it was impossible (and, as Mr. MacDonald Eggers submitted, therefore, unsafe) for the vessel to load the cargoes at the two ports in question, that was attributable to the breach by the Owners under each of the charterparties of the vessel's warranted description. Given the basis of the Arbitral Tribunal's decision, Issues (ix) and (x) fell away and, to that extent, can be seen to have been disposed of by the Arbitral Tribunal even if not explicitly.
34 As for Issue (viii), it seems to me clear that, on the basis of the Arbitral Tribunal's approach and conclusions, this argument also fell away: the relevant reliance by the Charterers, as found by the Tribunal, was the entering into the sub-charterparties on the basis of the agreements by the Owners to load the formerly prohibited cargoes onto the vessel at (probably or possibly) the specified load ports. Even if it had been the case that the Charterers did not rely on the vessel's warranted moulded depth when fixing the sub-charters or when ordering the vessel to Misurata and Point Lisas, on the basis of the Arbitral Tribunal's approach and reasoning that was irrelevant. The Owners might criticise the correctness of that approach and reasoning but, given the manner in which the Tribunal analysed the matter, the question of reliance (or absence of reliance) on the vessel's warranted moulded depth was neither essential to its conclusion nor, in the event, necessary for a fair determination of the principal issue between the parties.
35 Issue (xi) was also not explicitly addressed by the Arbitral Tribunal in its Reasons but, in my judgment, this is largely for the same reasons as apply to Issue (viii). After having heard the oral evidence from the two main protagonists, Mr. Mazman of the Charterers and Mr. Topal formerly of the Owners, the Tribunal found that Mr. Mazman committed the Charterers to the two sub-charterparties in reliance on Mr. Topal's agreement on behalf of the Owners to load the specific cargoes onto the vessel at (probably or possibly) Misurata and Point Lisas. There was never apparently any suggestion on behalf of the Owners that Mr. Mazman's reliance on those agreements in fixing the sub-charterparties was unreasonable, or that Mr. Mazman should have known or learned about any impediment as to the vessel's ability to load the specific cargoes at those specific ports. If Mr. Mazman's entering into the two sub-charterparties in reliance on the Owners' specific agreements was not unreasonable, then the contention that the Charterers failed to mitigate their loss, based as it was on an allegation that the Charterers' operations manager might have been or was aware, or was able to calculate, that the vessel would not be able to load at the two ports, falls away.
36 I have to add that the Owners' complaint about the Arbitral Tribunal's Reasons in this context (Issue xi) is surprisingly unfair. It would appear that, until their written Closing Submissions, all that the Owners had chosen to say in relation to mitigation, notwithstanding that the burden of proof lay squarely on them, was to not admit that the Charterers had mitigated their loss. It was only in their written Closing Submissions that the Owners made what might be described as a positive case of failure by the Charterers to mitigate by entering into the sub-charterparties. Even then, it was a brief mention (see paragraphs 157 and 205) and the Owners appear – no doubt for good reason — to have made no attempt (at least not in any direct sense) to criticize the reasonableness of Mr. Mazman's reliance on what had been specifically promised to him by Mr. Topal or to allege that Captain Prasad should have passed on to Mr. Mazman what he had learned from the vessel's master. It comes as no surprise, in those circumstances, that in their very detailed written Closing Submissions which were exchanged with those of the Owners, the Charterers did not contemplate or address any allegation that the sub-charterparties had been entered into unreasonably. (The Charterers did, however, predict the possibility that an entirely different case of failure to mitigate might be advanced against them by the Owners in respect of the 2005 charterparty, and this was addressed in detail both by the Charterers in their Closing Submissions (paragraphs 412 ff ) and also by the Tribunal in its Reasons (paragraphs 24 – 27).) 
37 This leaves Issue (vi): if there was a breach of the description warranties in clause 53 of each of the charterparties, did the Charterers waive it by reason of their being in possession of information concerning the real moulded depth in December 2004 and/or having received air draft calculations from the master in February 2005 which demonstrated that the vessel would not be able to load at Misurata / Point Lisas? There is no explicit sign in the Awards or Reasons that this issue was addressed by the Arbitral Tribunal. I am not at all surprised. The argument of waiver (other than in respect of the Charterers' alleged state of knowledge) was nowhere properly advanced or developed by the Owners in their written Closing Submissions (all that they said substantively on the subject, other than in relation to knowledge, was confined to the short assertion occupying paragraph 158), was not apparently predicted or dealt with by the Charterers in their written Closing Submissions, and can in any event be seen to have been bad. As the Owners explained in another context in their own written Closing Submissions (paragraph 118), there are only two types of waiver: waiver by election and waiver by estoppel. Assuming (because they did not explain anywhere) that the Owners were referring in paragraph 158 to the latter (there being no relevant election to which Charterers were put), they made no attempt in their written Closing Submissions (or, so far as I am aware, anywhere else) before the Arbitral Tribunal to identify any of the necessary elements of estoppel, whether by representation or otherwise. In the course of his oral submissions to me, Mr. MacDonald Eggers suggested that the Owners' case entailed an allegation that “the Charterers unequivocally represented or promised to the Owners that they would not rely on the charterparty description of the vessel in clause(s) 53” and “and that they would not insist on their strict legal rights to claim damages for misdescription” . However, even before me, the Owners did not satisfactorily identify any statement or conduct amounting to such an unequivocal representation by the Charterers to the Owners or any reliance by the Owners to their detriment sufficient to begin any sustainable argument of waiver. Moreover, there is no sign or hint of any such representations or detrimental reliance having been alleged before in the arbitration references. 
38 It is against this somewhat unpromising background that the Owners suggest that a serious injustice has been done to them by the Arbitral Tribunal in that, it is said, the Tribunal failed to deal with an essential issue in the references, namely Issue (vi). Nevertheless, it seems to me that the question whether or not the Tribunal failed to deal with an essential issue, viz. an issue that was crucial to the Tribunal's decision, cannot be decided on the basis of whether or not the issue has any merit: the presence or absence of merit might be relevant to whether or not a substantial injustice might have been done to one or other of the parties but it cannot resolve the question whether or not the issue was dealt with in the first instance. Having said that, what if the issue is one that is so devoid of merit that one might be able to contemplate the possibility that it was dismissed by the Tribunal which, given the quality of the issue in relation to the complexity of the case overall, did not then think it necessary to articulate as much in its Reasons? In my judgment, the answer to this question is that it should not be left to the parties, or the task of the court, to engage in speculation of that kind. If the determination of an issue is crucial to the result, as in these references waiver was crucial to the question whether there was an actionable breach of contractual warranty, then however unmeritorious the arguments might be in favour of that issue the Arbitral Tribunal is bound to deal with it and, in my view, to do so in such a way, normally by reference in the Award or Reasons, as to make it evident to the parties that the Tribunal has indeed dealt with it: as His Honour Judge Humphrey Lloyd Q.C. observed in Weldon Plant v Commission for New Towns [2001] 1 All ER 264 , 279: “.. where the decision cannot be justified as a particular key issue has not been decided which is crucial to the result … the tribunal has not done what it was asked to do, namely to give the parties a decision on all issues necessary to resolve the dispute or disputes..” In similar vein was the observation of Toulson J. in Ascot Commodities N.V. v Olam International Ltd. [2002] 2 Lloyd's Rep. 277 , 284: “Nor is it incumbent on arbitrators to deal with every argument on every point raised. But an Award should deal, however, concisely, with all essential issues.” As those observations recognise, there should be some form of communication, normally in the form of a decision, by an arbitral tribunal to the parties from which the latter can ascertain whether or not an essential issue has dealt with. It is not sufficient for an arbitral tribunal to deal with crucial issues in pectore , such that the parties are left to guess at whether a crucial issue has been dealt with or has been overlooked: the legislative purpose of section 68(2)(b) is to ensure that all those issues the determination of which are crucial to the tribunal's decision are dealt with and, in my judgment, this can only be achieved in practice if it is made apparent to the parties (normally, as I say, from the Award or Reasons) that those crucial issues have indeed been determined. 
39 I cannot see from the Reasons or Award that Issue (vi) was dealt with by the Arbitral Tribunal and I do not consider that paragraph 1 of the Reasons cures this deficiency. In my judgment, therefore, out of all the relevant issues with which the Owners complain that the Arbitral Tribunal did not deal, only Issue (vi) appears to qualify. Despite this, Mr. Jones on behalf of the Charterers submits that the Owners are not entitled to bring any application under section 68 of the Arbitration Act 1996 because they have not exhausted the recourse available to them under section 57 , and he relies on section 70 of the Act which provides:

“(1) The following provisions apply to an application or appeal under section 67, 68 or 69.
(2) An application or appeal may not be brought if the applicant or appellant has not first exhausted
(a) any available arbitral process of appeal or review, and
(b) any available recourse under section 57 (correction of award or additional award).”
40 So far as relevant to this argument, section 57 of the Arbitration Act provides:

“(1) The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.
(2) If or to the extent there is no such agreement, the following provisions apply.
(3) The tribunal may on its own initiative or on the application of a party—
(a) correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or
….
These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.
(4) Any application for the exercise of those powers must be made within 28 days of the date of the award or such longer period as the parties may agree.
…”
41 Mr. Jones also points out that the references were conducted under the LMAA Rules (2002) which, he says, comprise an agreement within the meaning of section 57(1) of the Act. Those Rules state, so far as material to the present matter, as follows:

(a) In addition to the powers set out in Section 57 of the Act, the tribunal shall have the following powers to correct an award or to make an additional award:
(i) The tribunal may on its own initiative or on the application of a party correct any accidental mistake, omission or error of calculation in its award.
(ii) The tribunal may on the application of a party give an interpretation of a specific point or part of the award.
(b) An application for the exercise of the powers set out above and in Section 57 of the Act must be made within 28 days of the award unless the tribunal shall think fit to extend the time.
(c) The powers set out above shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.
(d) Any correction or interpretation of an award may be effected in writing on the original award or in a separate memorandum which shall become part of the award. It shall be effected within 90 days of the date of the original award unless all parties shall agree a longer period.”
42 I do not consider that section 57(3)(a) of the Act applies in this case in relation to Issue (vi), which in my judgment has not been dealt with by the Arbitral Tribunal within the meaning of section 68(2)(d) . It does not appear to me in relation to Issue (vi) that there is an ambiguity in the Reasons (and thus in the Awards) that requires clarification or removal: the Arbitral Tribunal did not, in this case, address the Owners' waiver defence to the Charterers' claim for damages for misdescription and thus did not deal with an essential issue: see, by parity of reasoning, the judgment of Christopher Clarke J. in Van der Giessen-de-Noord Shipbuilding Division BV v Imtech Marine & Offshore BV [2009] 1 Lloyd's Rep. 273 para. 43. 
43 There might be some cases where there is an element of real doubt as to whether or not an issue has been dealt with by an arbitral tribunal in its Reasons and/or Award, in which case section 57(3)(a) might apply. However this, I hazard, would normally arise in cases where there is doubt as to whether a tribunal has left over for future determination some issue or claim in the reference (in which case section 57(3)(b) might also be applicable), or where a tribunal has come to a decision but there is some inadequacy or absence of analysis in its reasoning that leaves it unclear whether and, if so, how it has dealt with certain issues in order to arrive at its decision. An example of the former arose in the case of these references: upon receipt by the parties of the Awards, there was doubt as to whether the Arbitral Tribunal had dealt with the Owners' claim for unpaid hire. This was clarified by an exchange among the parties and the Arbitral Tribunal on and after 28th May 2009. An example of the latter arose in Torch Offshore LLC v Cable Shipping Inc. [2004] 2 Lloyd's Rep. 446 where an arbitration tribunal had decided that Torch was not entitled to rescind a charterparty on the basis of two misrepresentations, and it was argued that it was unclear from the tribunal's reasoning whether or not the tribunal had decided against Torch on inducement by the second of the two misrepresentations. Cooke J. said as follows: 
“28. If however Torch had reverted to him, applying for clarification as to whether he had decided against it on inducement by the second representation, it would have been clear in this court whether or not he had determined the issue. It seems to me that s. 57(3)(a) can be used to request further reasons from the arbitrator or reasons where none exist. The policy which underlies the Act is one of enabling the arbitral process to correct itself where possible, without the intervention of the Court. Torch contended that it was clear that the arbitrator had not decided the issue and that therefore: there was no ambiguity in the award which required clarification, but the very existence of a genuine dispute on this question militates against that argument. If there was unarguably a clear failure to deal with an issue, it could be said that there was no ambiguity in the award, but as set out in AI Hadha at par. 70, an award which contains inadequate rationale or incomplete reasons for a decision is likely to be ambiguous or need clarification. There was therefore room for an application by Torch under s. 57, as an exchange of letters with the owners in relation to this part of the Award would have revealed, so that the time limit of 28 days (for which s. 57(4) provides) applied. In these circumstances Torch had available recourse under s. 57, which had not been exhausted and s. 70(2) therefore presents an insurmountable bar to Torch's s. 68 application. …”
44 The problem in relation to Issue (vi) is not an inadequacy or absence of analysis in reasoning such as was argued to exist in Torch Offshore LLC v Cable Shipping Inc. . Whilst I accept that there is a fine line sometimes between an issue, on the one hand, and a line of reasoning, on the other, it seems to me that what happened in relation to Issue (vi) was a failure to deal with an issue rather than a breakdown or ambiguity in reasoning in relation to it in respect of which the Owners were bound by virtue of sections 70(2)(b) and 57(3)(a) of the Arbitration Act first to have recourse to the Arbitral Tribunal. 
45 Having said that, it seems to me, having regard to the applicable principles and the explanation of their application in Torch Offshore LLC v Cable Shipping Inc. that, if I am wrong in my interpretation of the Reasons with regard to any of the other Issues identified above (in particular, Issues (viii), (ix), (x) and (xi)), there is in the Arbitral Tribunal's reasoning in connection with those other Issues precisely that quality and degree of ambiguity or lack of clarity as to engage the powers of the Arbitral Tribunal under section 57(3)(a) , whether on its own initiative or on the application of a party, to provide the clarification required and dispel any doubts as to whether those Issues have been dealt with or have fallen away in the manner analysed above. There was, therefore, available recourse to the Owners in respect of those other Issues under section 57 of the Arbitration Act 1996 and, in my judgment, Clause 25(a)(ii) of the LMAA Rules (2002) which has not been exhausted. In those circumstances, section 70(2) bars the Owners from bringing any application under section 68 in relation to those Issues. 
46 It is also too late for the Owners to make an application, as they seek to do, under section 79 of the Arbitration Act 1996 for an extension of time within which to apply to the Arbitral Tribunal under section 57 in relation to these issues. Section 57(4) provides that an application under that section must be made within 28 days of the award or such longer period as the parties may agree. The Owners' application, in their arbitration Claim Form, was outside the 28 day period. Section 79 gives the court jurisdiction to extend that 28 day time limit but only if it is satisfied that any available recourse to the arbitral tribunal in that regard has been exhausted. In this case such available recourse has not been exhausted: clause 25 of the LMAA Rules (2002) gives the Arbitral Tribunal the jurisdiction to extend the 28 day period for the making of an application to it for an interpretation of a specific point or part of an award which, in my view, would cover the ambiguity and lack of clarity discussed above. However, the Owners have never made any such application to the Tribunal. Their failure to do so, in circumstances where they could have done so in order to secure similar relief to that which might have been provided in this case under section 57 , bars them now from applying to the court for an extension of time under section 79 . This is entirely consistent with the philosophy underpinning the Act which, as Cooke J. said in Torch Offshore LLC v Cable Shipping Inc. paragraph 28, is one of “enabling the arbitral process to correct itself where possible, without the intervention of the court” . 
47 Returning to Issue (vi), it should already be apparent from what I have said that I consider the fact that it was not dealt with has not caused and will not cause substantial injustice to the Owners. I have well in mind that, in determining whether there has been substantial injustice, it is sufficient for it to be shown that, if the issue had been dealt with, the tribunal might well have reached a different view in favour of the applicant: Vee Networks Ltd. v Econet Wireless International Limited [2005] 1 Lloyd's Rep. 192 , ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd's Rep. 1 . I do not consider that it was reasonably arguable that the Charterers waived the breach of the description warranties in clause 53 of each of the charterparties by reason of their being in possession of information concerning the real moulded depth in December 2004 and/or having received air draft calculations from the master in February 2005 which demonstrated that the vessel would not be able to load at Misurata / Point Lisas. Quite apart from the manner in which the waiver defence was made but never properly explained or developed, and irrespective of the fact that no case of detrimental reliance was ever apparently advanced by the Owners, the possession of such information and calculations is, in and of itself, wholly inadequate and insufficient to make it even respectably arguable that the Charterers made some unequivocal representation to the Owners that, in the submission of Mr. MacDonald Eggers, “they would not rely on the charterparty description of the vessel in clause(s) 53” and “and would not insist on their strict legal rights to claim damages for misdescription” . I have no hesitation in deciding that, even if there was an irregularity in relation to Issue (vi), it was not a serious irregularity within the meaning of section 68(2) of the Arbitration Act 1996 . I am fortified in this conclusion by the explanation at paragraph 280 of the Departmental Advisory Committee Report: 
“The test of ‘substantial injustice’ is intended to be applied by way of support of the arbitral process, not by way of interference with that process. Thus it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened simply cannot on any view be defended as an acceptable consequence of that choice. In short, clause 68 [now section 68] is really designed as a longstop, only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected.”
This is not such a case. 
48 It follows from all the above that I reject the Owners' application under sections 68 and 79 of the Arbitration Act 1996 . 
Section 69
49 The Owners' application for permission to appeal under section 69 of the Arbitration Act 1996 is, explicitly, their secondary case. Mr. MacDonald Eggers submits that it is obvious that the Arbitral Tribunal made an error of law in concluding that the Charterers are entitled to damages for breach of the oral agreements to carry HBI and/or DRI. 
50 The Tribunal found, as I have described, that the Owners orally agreed with the Charterers under the 2004 charterparty to load an HBI cargo probably out of Misurata in Libya, and under the 2005 charterparty to load a cargo of DRI from Trinidad (probably or possibly Point Lisas) for carriage to New Orleans. The Tribunal also found that the Charterers relied on those agreements by concluding sub-fixtures providing for the vessel to load those cargoes at those load ports. The Owners having breached those agreements by refusing to implement them, it is not, in my view, obviously wrong as a matter of law to conclude that, if the vessel was in fact not able to load those cargoes at those ports because of a yet further breach of contract by the Owners, the Charterers are entitled to damages. The Arbitral Tribunal concluded that the Charterers' entitlement to damages arose as a result of a combination of both these breaches. Its reasoning stopped there, and so its legal analysis is not immediately apparent although it may safely be inferred. It is not obviously wrong to conclude that, where in a charterparty a charterer charters a vessel with a specific description and promises to employ that vessel only at and between safe ports and/or berths, his promise applies to that vessel as described: the charterer has not made any promises to the owner in respect of a ship with materially different physical characteristics. Even putting that to one side, if it is not safe for the vessel to load at a particular port because, in breach by the Owners of their contractual warranties, the vessel is not as they had described, it is not obviously wrong to conclude in circumstances where the Owners have agreed to load the vessel at that port that the subsequent refusal by the Owners to do so on the ground that no such agreement was ever made is a breach of that specific agreement entitling the Charterers to damages which cannot be avoided because the accrual of the alleged entitlement of the owners to refuse to load was itself the result of yet another breach by the Owners. It is moreover not obviously wrong to conclude, when considering the entitlement of the Charterers to damages in such circumstances, that the fact that owners of ships should not be obliged to expose their vessels to conditions of unsafety has no bearing on a charterer's entitlement to damages in circumstances where that unsafety has been brought by the Owners upon themselves by their own commission of a further breach of contract. Once again, if it is right as the Owners suggest that they could not have been obliged to load the cargoes on board the vessel at the ports in question because, as a matter of fact, the vessel could not physically or safely do so, the correllative diminution in the Charterers' rights was the result of the Owners' breaches of warranty: therefore, whichever way one looks at it, the Owners' breach or breaches of contract caused the Charterers loss to the recovery of which they are entitled as against the Owners.
51 The Owners complain that there can have been no breach to load the HBI/DRI cargoes if it was unsafe or impossible to do so, and that the only relevant breach, if there was one, was the misdescription of the vessel. I disagree. The Owners agreed to load those cargoes on board a vessel that was warranted to have the described characteristics of clause 53. If the vessel had been as warranted, there could be no basis on which the Owners could have contended (after the event) that the Charterers could not recover damages because the vessel could not physically or safely have loaded those cargoes. It was only because of the Owners' own breach of warranty that the Owners felt able to advance that contention. Therefore, there was under each charterparty, as varied, both a breach of that agreement (the Owners refused to load those cargoes on board the vessel as described) and a breach of warranty. It is perfectly understandable, in those circumstances, why the Arbitral Tribunal concluded that the combination of those breaches caused, and entitled the Charterers to recover, damages of the nature claimed, and that conclusion was, in the circumstances, not obviously wrong.
52 The Owners also complain that the Charterers did not, they say, rely on the contractual description of the vessel in deciding to sub-charter the vessel to load at Misurata and Point Lisas, and therefore it would be wrong that they should be entitled to damages. Where Mr. Mazman of the Charterers, as the Arbitral Tribunal found, entered into the sub-charters in reliance on the Owners' oral agreements to load the cargoes on board the vessel probably or possibly at those ports, and there was no evidence that he was aware of the contractual misdescription of the vessel or any physical impediment to the ability of the vessel to perform the operation that the Owners had promised, the issue of reliance on the charterparty description is not, in my judgment, relevant. The Owners, the Tribunal found, reneged on their oral agreements and tried unsuccessfully to contend that no such oral agreements had been made or, if they had been made, that they were unsupported by consideration, or that they lacked certainty or contractual intent. They did not apparently renege on the agreements because of any physical or safety issues attributable to the vessel's moulded depth or air draft. These issues have only apparently arisen because they are seen by the Owners as a defence to the Charterers' claims for damages. I do not consider, on the facts found by the Tribunal and in the light of the Tribunal's findings as to the specific oral agreements and Charterers' reliance, that it was obviously wrong for the Tribunal not to take account of the fact (if correct) that the Charterers did not rely on the contractual description of the vessel in deciding to sub-charter the vessel to load at Misurata and Point Lisas. On the contrary, it seems to me to be right. (I add that, if there is any doubt as to how the Tribunal analysed the issue, the correct course for the Owners to have taken would have been to seek clarification under section 57 of the Arbitration Act . They did not do so. However, I prefer to base my decision in relation to the Owners' application under section 69 on the fact that the Tribunal's decision on the relevant question of law is not obviously wrong.) 
53 The Owners also suggest that the question of law raises “a question of public importance in that [it] concern[s] how charterparty descriptions of a vessel interact with a charterer's obligation to nominate safe ports or berths” . I do not agree. This is a one-off case where, under each charterparty, the Owners made a specific promise to load a specific cargo at (or probably at) a specific port on board a vessel having specifically warranted characteristics. The Owners then broke that promise and seek to avoid a liability for damages for that broken promise on the basis of the vessel's physical characteristics notwithstanding or ignoring that, in further breach of contract, those physical characteristics materially differed from those warranted. The question and answer that arise are confined to the coincidence of those specific facts and whether one or a combination of those breaches was causative of loss and damage which the Charterers are entitled to recover. There is no question of public importance. Moreover, it seems to me that, one way or another, the Owners were liable to the Charterers in damages for their refusals to load the respective cargoes at the ports in the question and/or breaches of warranty. I do not consider that the decision of the Arbitral Tribunal is at least open to serious doubt. 
54 Therefore, I have no hesitation in rejecting the Owners' application under section 69 of the Arbitration Act 1996 . 
Extension of time
55 I now turn back to the fact that Owners failed to make their applications under sections 68 and 69 within the 28 day period stipulated in section 70(3) of the Arbitration Act 1996 . They have accordingly applied for an extension of time under section 80(5) of the Act and CPR 62.9 . Since I have rejected both applications under sections 68 and 69 , the question of an extension of time might be thought academic. However, since it was argued fully before me, I shall deal with it. 
56 The time limit is set out in Section 70(3) : 
“Any application or appeal must be brought within 28 days of the date of the Award … ”
The Commercial Court Guide states at O9.2: 
“The court has power to vary the period of 28 days fixed by section 70(3) of the 1996 Act: rule 62.9(1). However, it is important that any challenge to an award be pursued without delay and the court will require cogent reasons for extending time.”
57 The factors to be considered in relation to an application for an extension of time were set out by Colman J. at paragraph 59 of his judgment in Aoot Kalmneft v Glencore International AG [2002] 1 Lloyd's Rep. 128 in the following terms: 
59. Accordingly, although each case turns on its own facts, the following considerations are, in my judgment, likely to be material:
(i) the length of the delay;
(ii) whether, in permitting the time limit to expire and the subsequent delay to occur, the party was acting reasonably in all the circumstances;
(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;
(iv) whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration or the costs incurred in respect of the determination of the application by the Court might now have;
(vi) the strength of the application;
(vii) whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.”
The primary factors are the first three: see per Mance L.J. in Nagusina Naviera v Allied Maritime Inc. (The Maria K) [2002] EWCA Civ 1147 . 
58 In this case, the Awards were made on 26th March 2009. Therefore the 28 day period within which to make an application under sections 68 and/or 69 of the Act expired on 23rd April 2009. The Owners made their applications and applied for an extension of time five weeks after the expiry of the time limit, on 28th May 2009. 
59 The factual background against which the Owners' application has to be considered is set out in considerable detail, and accurately, by Mr. Jones in Appendix A to his Skeleton Argument. I shall only set out here the more significant facts. 
(a) On 4th March 2009, the Tribunal wrote to the parties saying that, having spent a considerable amount of time producing the Awards, “we would welcome an assurance from one or other or both parties that our Award will be taken up promptly after it has been published” . 
(b) On 16th March 2009, the Tribunal provided details of each Tribunal member's fees. Perhaps in anticipation of a possible objection to the level of fees proposed to be charged, the Tribunal also drew specific attention to the provisions of the Arbitration Act 1996 which cover issues that might arise in connection with the level of an arbitral tribunal's or arbitrator's fees. In response, the Owners' solicitors, Elborne Mitchell (“EM”), objected to the reasonableness of one of the arbitrators' fees, reserved the Owners' rights generally and proposed a fee-sharing arrangement as between the Owners and the Charterers. On receipt of EM's objection and proposal, the Charterers' solicitors, Marine Law (“ML”), forwarded that objection to their clients informing them also that they needed to decide whether they wanted to pick up the awards, when published, within the 28 day period for making an applications in relation to it. Mr. Young of ML offered his personal view that “we want to draw a line underneath this entire arbitration … it would be better to end this once and for all.” This was said in the context of an arbitration that had proved extremely expensive to litigate and about which the Tribunal would later say, “This was clearly a case where the matter of principle between the parties was as or more important than the sums at stake.” 
(c) On 20th March 2009, EM suggested, in an email to one of the arbitrators, that each party pay the fees of their respective appointed arbitrator and pay 50% of the fees of the chairman. ML responded on 23rd March saying that they were taking their clients' instructions but indicating that the issue should not delay the publication of the awards. They also advised the Charterers in the following terms: 
“..even if we do agree.. to split the costs – the next point is WHEN to make payment. We discussed the situation with appealing an award. A party is only allowed 28 days from the date of publication it's not the date when they pick up the award. That means that if an award is not collected within the 28 days it automatically becomes unappealable. It's always a tough call to make. However, you have seen how this man deals with files. The chances are that he will appeal anything he absolutely can – and waste yet more time and money. Practically speaking, this arbitration dealt mainly with points of fact. While there is always a legal debate on how important a principle might be – we really don't think it is worth keeping this matter alive any further if we can help it.”
(d) On 25th March 2009, the Tribunal chairman spoke to both EM and ML and it was agreed, but always expressly subject to clients' instructions, that each party would pay 100% of the fees of its appointed arbitrator and 50% of the chairman's fees. That provisional agreement said nothing about the timing of any payment of the Tribunal's fees. It was solely concerned, as EM made clear in their email to one of the arbitrators dated 27th March 2009, with overcoming the problems caused by the Owners' concerns as to the level of fees charged by one of the arbitrators. 
(e) On 26th March 2009, the Arbitral Tribunal made its two Awards and notified the parties that they were published and would be released on payment of the Tribunal's fees. On the same day, EM informed the Tribunal that they had asked the Owners to put them in funds in order to pay the Owners' appointed arbitrator in full and 50% of the chairman's fees, and stated that they would notify the Tribunal when those funds had been received. 
(f) Nothing thereafter crossed the line either between the parties and their respective legal advisers, or between either of the parties and any member of the Arbitral Tribunal, until 27th April 2009: four days after the 28 day time limit for the making of any section 68 and/or 69 application had expired (23rd April 2009). On 27th April, the Tribunal chairman sent a polite chaser in respect of the Tribunal's fees and stated, as was the fact, that there was still no indication from the Charterers on what their position was towards payment of the Tribunal's fees. The chairman also asked EM to confirm that they were in funds from the Owners. EM responded on 28th April to inform the Tribunal that they had been advised that day that the Owners expected to be able to put EM in funds for that part of the Tribunal's fees that the Owners were prepared to pay by 15th May 2009. It is apparent, as Mr. Jones pointed out, that it was only the chairman's communication that had prompted EM to take any steps to find out from their clients what the position was in relation to the advancement of funds. On the same day, ML also responded to the chairman's communication to say that they had overlooked the matter and hoped to be able to revert very shortly. On 29th April 2009, ML reverted to say that they had in fact overlooked their clients' reply and that they were already in funds to pay 50% of the chairman's fees. They asked their clients' appointed arbitrator whether he wished to be paid by the Charterers direct or via ML. The Charterers paid their appointed arbitrator 100% of his fees on 4th May and paid the chairman 50% of his fees on 6th May. Also on 6th May, EM notified the Tribunal that the Owners had put them in funds. On 7th May, EM on behalf of the Owners paid the outstanding balance of the Tribunal's fees. The Awards were released by post and email later that day, 7th May 2009. 
(g) One week later, on 14th May 2009, EM sent an email giving the first indication that the Owners were considering an appeal. ML immediately objected, pointing out, correctly, that the time limit had expired “quite some time ago” . A number of emails were exchanged between EM and ML over the two days of 19th and 20th May during the course of which EM again stated that they were still “discussing a possible appeal with clients” . On Friday 22nd May, EM wrote to ML saying that they had been instructed to seek permission to appeal the Awards out of time and that they intended to issue the application early in the following week. 
(h) The Owners finally issued their Arbitration Claim Form on Thursday 28th May 2009, some 5 weeks after the expiry of the 28 day time limit and some 9 weeks after the publication of the Awards.
60 Length of the delay . The length of the delay was not excessive. 
61 Reasonableness of the Owners' conduct . In my judgment, the Owners have produced no satisfactory explanation or reasonable excuse as to why they allowed the time limit to expire or why, having received the Awards and the Reasons after the time limit had expired, it then took them three weeks to produce an Arbitration Claim Form. Throughout the arbitration references, the Owners have been represented by highly experienced solicitors and counsel. It is obvious that, from the day in early March 2009 when the Arbitral Tribunal indicated to the parties that they were in the final stages of producing their Awards, the Owners were in close communication with their solicitors. There is no doubt in my mind that, throughout the relevant period, the Owners (like the Charterers) will have been well aware of the existence of the 28 day time limit running from the date of publication of an award for the purposes of making any application challenging the Tribunal's Awards for serious irregularity and/or error of law, and equally aware of the consequences of not making an application within that time: a competent solicitor in the position of EM would or should have made sure that the Owners were aware, there is no doubt in my mind that EM were more than competent solicitors in the handling of these references, there has been no suggestion by EM that they were not throughout fully alive to the existence of the time limit and the possible consequences of not complying with it, there has been no suggestion whatsoever by the Owners that they were ignorant of these matters, and there has been no suggestion by EM that they did not make the Owners aware of these matters if they were not already aware. I am of the view, in these circumstances, that the Owners were aware of the consequences of what they were doing when they allowed the time limit to expire without taking steps (by the payment of the Tribunal's fees) to collect the Awards. It seems to me that they were taking a risk that the Awards would be in their favour, in which event the expiry of the time limit would of course suit their interests. I add that I draw this conclusion without taking into account the facts that the Charterers were behaving in exactly the same way and that the Owners have foreborne from responding to precisely this suggestion in the Witness Statement dated 18th June 2009 of Mr. Young of ML at paragraph 33: “It could well be that [Mr. Miles of EM] advised his own clients, the Owners, in similar terms to ourselves. He may have taken a risk … that the Award would be favourable to his clients. Now that the Award has gone against him – he now wishes to overcome the issue of finality.” 
62 In his first Witness Statement on behalf of the Owners dated 28th May 2009, Mr. Miles of EM said that it “was only natural and reasonable for the Owners not to pay all of the Arbitral Tribunal's fees in circumstances where a tentative payment arrangement had been agreed.. and where the Owners had objected to the fees of one of the arbitrators.” In his second Witness Statement dated 25th June 2009, Mr. Miles states that, pending the delivery of the Awards, the Owners were awaiting the Charterers' confirmation as to the payment arrangements. I do not regard these statements as offering a reasonable excuse for permitting the time limit to expire ( “reasonable excuse” is the phrase used by Colman J. in Aoot Kalmneft v Glencore International AG [2002] 1 Lloyd's Rep. 128 paras. 62 and 65 among others, and I respectfully adopt it). There is no suggestion anywhere that the Owners were incapable of paying all the arbitrators' fees if they had wished. There is no suggestion that EM and the Owners were not aware of section 28 of the Arbitration Act 1996 which makes provision for an adjustment and, if payment has already been made, for the possibility of reimbursement of arbitrators' fees. There is no suggestion anywhere that the decision not to pay all the fees was made other than in the full knowledge that, by not doing so, the Owners ran the risk of allowing the time limit for challenging any award to expire. It might have been natural and reasonable not to pay all the Arbitral Tribunal's fees in circumstances where a tentative payment arrangement had been agreed but it was not, in my judgment, natural or reasonable to permit the time limit to expire on the basis of a mere tentative arrangement in circumstances where, one infers, the Owners could have paid all those fees as and when they wished before the expiry of 28 days after publication of the Awards in order to preserve the possibility of challenging the Awards within time. I repeat that in my judgment it is clear that the Owners knowingly allowed the time limit to expire, no doubt in the hope that the Awards would be favourable to them and, because of the expiry of the time limit, would be unchallengeable by the Charterers. The Owners are the conscious authors of their own predicament. 
63 I note, in this context, the observations in Ambrose, London Maritime Arbitration (3rd ed.) at p.364: 
“This means that when the arbitrator notifies the parties that the award is ready for collection on payment of his fees they have to decide whether to pay the arbitrator's fees and to take up the award. This is a tactical decision: by waiting more than 28 days before taking up the award a claimant (or respondent) may obtain an award in its favour against which a challenge is out of time; however, it also risks losing its own right of challenge. The courts have regarded a failure by a party to take up an award within the time limit as a conscious decision to confer additional finality on the award and to lose the right to challenge the award in court.”
64 It seems to me that, in this case, the Owners had taken precisely the tactical decision adverted to in this passage. Having done so, there was moreover no excuse for the Owners then permitting 3 weeks to elapse between receiving the Awards and mounting their challenge to the Awards. The facts that they indicated to the Charterers that they were considering a challenge, and that Easter intervened, are not, in my view, good enough. Given the nature of the Owners' primary case, viz. that the Arbitral Tribunal failed on the face of the Awards to deal with a number of allegedly essential issues, that was an argument that was not hard to recognise. According to the Owners, it is patently clear. The Owners have not offered any satisfactory explanation in any Witness Statement for this further delay. I am satisfied that, in the circumstances, it was unreasonable.
65 Any contribution to the delay. I do not consider that either the Charterers or the Arbitral Tribunal contributed to the delays. ML might have been more forthcoming about the Charterers' own tactics but, if they had been, that would have defeated the object of those tactics. And, from what I infer, the Owners had adopted exactly the same tactics. The Owners always possessed the power and wherewithal to procure delivery of the Awards within the time limit for challenging them. The Charterers neither induced them to delay taking delivery of the Awards nor deprived them of their ability to pay for them and thereby secure their collection within time. In any event, the Owners never chased the Charterers regarding payment of the Tribunal's fees and, themselves, did not bother to put EM in funds until after the 28 day time limit had expired. As for the period after the Owners' receipt of the Awards, there can be no argument other than the Owners have only themselves to blame. 
66 Irremediable prejudice to the respondent. In my view there is none, although I accept that, if an extension of time is permitted, the Charterers' tactic that was designed to ensure, so far as possible, the finality of the Awards will be defeated. 
67 Progress in the arbitration. I do not regard this as a significant factor in this case. 
68 The strength of the application. For the reasons that I have already expressed, I am of the view that the sections 68 and 69 applications are, at best, weak. I have had no hesitation in rejecting them. 
69 Unfairness to the applicant. There is, in my view, no unfairness to the Owners by the denial of the application for an extension of time in circumstances where (i) as I infer and conclude the Owners knowingly allowed to the time limit to expire and (ii) the substantive applications are weak at best. Moreover, general considerations of fairness should always be viewed in the context that Parliament and the courts have repeatedly emphasised the importance of finality and time limits for any court intervention in the arbitral process ( Nagusina Naviera v Allied Maritime Inc. [2002] EWCA Civ 1147 , para. 42 per Mance L.J.). In circumstances where, it would appear, both Owners and Charterers knowingly permitted the time limit to expire, the latter in order to achieve finality and the former probably doing likewise so long as the result was in their favour, it would not, in my judgment, be unfair to enforce that time limit. Moreover, on the evidence, these references have already proved disproportionately expensive and time consuming. It does not seem to me to be sensible or fair to extend this arbitral adventure any longer than is necessary. 
70 Every case depends on its own peculiar facts. I am satisfied that, on the facts of this case, taking into account all the relevant factors above and according to each of them the weight that it deserves, it would be contrary to the principles underlying the Arbitration Act 1996 to permit the Owners the extension of time that they seek for the making of their section 68 and 69 applications, even in a case of not excessive delay. The policy of finality should, in the circumstances of these references, prevail. In this regard, I pay attention to the words of Hobhouse J. in The Faith [1993] 2 Lloyd's Rep. 408 , 411–12 which (although the length of the delay was significantly greater and the arbitration regime was different), I consider apposite in the circumstances of the instant case: 
“…Different legal systems strike a different balance between the Courts and the arbitral tribunals. Some allow appeals on questions of law; some allow no appeals whatsoever. Some allow Courts to review the conduct of the arbitrations and some do not except on very restricted grounds. In England we have a relatively liberal system which allows appeals on questions of law within carefully controlled limits and we entertain a range of grounds for saying that arbitrators have misconducted themselves including what we describe as technical misconduct or procedural mishap. But all this was to be viewed against the fundamental principle that the parties have chosen their tribunal, that is to say, the arbitral tribunal, and have agreed to be bound by the decision of that tribunal. They have agreed that the award is to be final, subject always to any question of jurisdiction.
Courts will only interfere with the decision of arbitrators within very carefully controlled limits. One of those limits is the time within which the matter may be brought before the Court. If it is not brought before the Court within the 21 days then an award made with jurisdiction becomes effectively final for all purposes. This applies both ways, it applies to both parties. So, following the publication of an award, each party has to make up its mind whether it wishes to take up the award within 21 days. In making that choice they no doubt have regard to both their own position and that of the opposite party. It must be always borne in mind that the purpose of an application to the Court is that the party so applying may obtain at the end of the exercise a different award from that which has originally been made by the arbitrators.
Here it is the charterers that are trying to get the award altered but it could equally well have been the owners. The parties when they exercised their choice not to take up the award within 21 days were achieving that additional finality for both parties. It is not open to a party to argue, as have the charterers here, that they were waiting for the other party to take up the award; that they did not know that there was any point they wanted to raise on the award. They have to take that decision for themselves. The position is, in a sense, a stark one: a party who wishes to reserve his right to take the matter to the Court either by way of appeal or under s. 22 of the 1950 Act must ensure that the award is taken up in time to enable the application to be made.
The present case is a clear example where, despite the small sum of costs involved, that is to say, some £6000, each party preferred not to take up the award in 21 days or indeed at all until about 12 months had elapsed.
There are cases where within the spirit of the 21 day rule a party has done its best to comply with that timetable though in some way it has reasonably but unintentionally allowed the time limit to expire. The Court has a discretion to extend time and can do so wherever in the interests of justice it is appropriate to do so. The power is clearly stated in O. 3, r. 5. It enables the Court to do justice in that way and in appropriate cases the Court will extend the time.
But I consider, and I consider it must be clearly stated, that where parties voluntarily allow the time limit to expire, not marginally but by a very substantial factor, a party should not be allowed later, save in exceptional circumstances, to challenge the finality of the award. The parties have by their agreement to arbitrate agreed that the award should be final; they have agreed to be bound by the award and they have agreed to pay the award.
It is true that this agreement is subject to the powers of the Court in relation to arbitration agreements and the conduct of arbitrations. But the powers of the Court should only be exercised taking into account what is the agreement of the parties. The fundamental agreement of the parties is the same as the policy of the law, that is, that an award made with jurisdiction should be final.
The charterers' application for an extension of time in the present matter is therefore fundamentally flawed. It overlooks the basic principle of finality and should not be entertained. There are no exceptional circumstances in this case except the enormity of the lapse of time that has occurred and the total inadequacy of the reasons that are given for it…”
71 Therefore, I reject the Owners' applications under section 80(5) of the Act and CPR 62.9 . 
Conclusion
72 In conclusion, I reject the Owners' applications for extensions of time to make their applications under sections 68 and 69 of the Arbitration Act 1996 in both references and, furthermore, if extensions of time were to have been granted, I reject the Owners' applications to challenge the Arbitral Tribunal's Awards under either and both of those sections. The Owners' applications in the Arbitration Claim Form are dismissed.


CASE 5

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SEATRANS ERMEFER TANKERS

v.
E.I. DUPONT DE NEMOURS & CO.

CHARTER -- 139. Dead Freight -- CONTRACTS -- 162. Frustration, Impossibility, Force Majeure.

Charterer's failure to ship an entire 5,000 metric ton cargo of acrylonitrile (ACN) that it had booked is not excused by force majeure pursuant to the definition of force majeure in the charter party. Charterer failed to show that it made diligent efforts to obtain ACN from other sources after its supplier's reactor shut down and failed to produce the expected quantity of ACN. Charterer also failed to explain the terms and conditions of the contracts with its supplier and with its purchaser of the cargo by producing those contracts. Owner is awarded dead freight for the 2,500 m/t of booked cargo not shipped plus arbitration expenses and a partial payment of attorney fees.

Dissent: Charterer exercised due diligence by taking every reasonable and timely step within its control to obtain ACN to ship after the supplier's reactor shut down.

Susan E. Clark (Nordisk Legal Services) for Seatrans Ermefer Tankers

Karyn A. Booth (Thompson Hine LLP) for E.I. DuPont de Nemours & Co.

INTRODUCTION

This dispute has arisen under a Charter Party (on the ASBATANKVOY form as amended 1977) dated March 30, 2007 between Seatrans Ermefer Tankers (“Seatrans” or “Owners”), as Disponent Owners of the Trans Iberia (“Vessel”) and E.I. DuPont de Nemours & Company (“DuPont” or “Charterers”), as Charterers.

The Vessel was fixed to load a part cargo of “1 Grade 5,000 MT, 2% more or less in Charterer's option -- ACRYLONITRILE (“ACN”) in bulk” from one safe berth Houston, Texas to one safe berth Yalova, Turkey with laycan of April 28, 2007/May 12, 2007 at a freight rate of US$70.00 per metric ton (m/t). Demurrage was *2887 agreed at US$22,500.00 per day and pro-rata. The Charter Party provides that Special Provision Clauses “M.6 thru [sic] M.26 on the attached Rider are to be fully incorporated in this Charter and deemed a part thereof.”

The fixture was arranged through the offices of International Tanker Chartering Inc. (“ITC”), as brokers.

LAW AND JURISDICTION

Clause K of Part I of the Charter Party provides that, “The place of General Average and arbitration proceedings to be in New York U.S. Law.”

Seatrans notified DuPont of their intention to proceed in arbitration, and on November 17, 2008, appointed Manfred W. Arnold as arbitrator. Since DuPont failed to appoint an arbitrator within 20 days of receipt of that notice, Owners, pursuant to Clause 24 of the ASBATANKVOY, appointed David W. Martowski as the second arbitrator. Messrs. Arnold and Martowski subsequently appointed James N. Hood as Chair on September 19, 2009, on which date the Panel was fully constituted and both parties were notified accordingly.

The parties accepted the Panel and agreed that the Rules of the Society of Maritime Arbitrators should apply to this proceeding.

The parties subsequently submitted comprehensive main and reply briefs in support of their respective positions.

BACKGROUND

On April 23, 2007, while the vessel was en route to the loading port, ITC advised Owners that:
Dupont requests that you have the “Trans Iberia” arrive at Baytank as late in her your [sic] berth rotation as possible. They continue to have problems shuttling barges back & forth from Beaumont to Baytank to get all the material they need there on time. Right now they tell me “the later the better” as far as your vsl's arrvl is concerned.
Thanks in advance for your cooperation.FN11

FN1. Owners' Exhibit CD R-1.

On April 26, Owner was advised that DuPont were having production problems and might have difficulty supplying the full 5,000 m/ *2888 t of ACN required under this Charter Party. On behalf of Charterers, the brokers further advised that they would not definitely know what the quantity situation would be until April 27, but that Charterers had advised that Owners could begin to tentatively look at chartering out 2,500 m/t space to others in the hopes of mitigating a potential deadfreight claim.FN2

FN2. DuPont Exhibit 5.

On April 27, ITC relayed a message they had received from Charterers stating that they have or would have 2,500 m/t in the tank by April 28 and that they should “let the other 2,500 m/t go.” To this end, the broker added that Owners now had the green light to try and mitigate 2,500 m/t of the booked cargo.FN3Consequently, as provided for in Clauses 15FN4 and 17, FN5 Seatrans endeavored to secure cargoes in mitigation.

FN3. Owners' Exhibit CD R-5.

FN4.Rider Clause 15. Cargo Mitigation Clause: In the event DuPont fails to supply any of the quantity of cargo as firmly nominated, Owner shall make every effort to obtain substitute cargo so as to mitigate any deadfreight to Charterer. DuPont shall not be liable for any deadfreight should Owner fail to provide sufficient tankage to stow DuPont's nominated cargo...

FN5. Rider Clause 17 par. C states, i.a.: .. In the event DuPont fails to supply any of the quantity of cargo nominated hereunder, Owner shall make every effort to obtain substitute cargo for the quantity of cargo nominated by DuPont so as to mitigate deadfreight to DuPont...

On April 27, Seatrans fixed two cargoes on subjects, but since neither cargo was confirmed, Seatrans continued their efforts, however, without success, until May 3, one day after the Vessel had arrived at Houston.FN6

FN6. DuPont Exhibit 9.

In the meantime, on April 30, DuPont also advised that Charterers actually had 2,511 m/t of product in the tank for the Trans Iberia.FN7

FN7. DuPont Exhibit 7.

The Vessel arrived at Houston on May 2 and tendered her Notice of Readiness to load 5,000 m/t 2% molco of ACN in bulk.FN8

FN8. The NOR was accepted on May 4 at 1805 hours.

On May 4, DuPont declared force majeure and so notified Owners office in Norway.FN9

FN9. Owners' Exhibit CD 30.

Loading commenced on May 4 at 2325 hours and completed on May 5. The Master issued a Letter of Protest for the deadfreight claim.FN10A *2889 Bill of Lading was issued for 2,499.323 m/t of ACN for discharge at Yalova, Turkey. The Vessel sailed on May 7 with empty tanks of sufficient capacity to accommodate the “short-loaded” cargo.FN11

FN10. Owners' Exhibit CD 17.

FN11. Owners Exhibit CD 29.

On May 11, Owners sent a freight invoice in the total amount of US$344,500.00, which included freight for the 2,499.323 m/t ACN actually loaded and US $168,047.39 in deadfreight. Charterers made timely payment for the cargo loaded, but rejected Owners' claim for deadfreight.

In the absence of any record to the contrary, it would appear that the voyage was performed and the cargo delivered to receivers at Yalova without complaints.

CLAIMS

Owners' claim is for deadfreight in the amount of $168,047.39 together with interest and the cost of this arbitration.

DuPont reject Owners' claims, invoking the Force Majeure Clause, and in turn seek an award for the legal costs incurred in defending Seatrans' claim.

DISCUSSION AND DECISION

Central to this dispute are the Special Provision Clauses 17 (Deadfreight) FN12 and 18 (Force Majeure)FN13 and the panel's determination *2890 whether or not the Force Majeure clause exculpates DuPont from liability for the deadfreight claimed by Seatrans under Clause 17.

FN12. Deadfreight. Should DuPont fail to supply the quantity of cargo as nominated hereunder, the vessel may at the Master's option and shall, upon request of DuPont, proceed on her voyage, provided that the tanks in which the cargo is loaded are sufficiently filled to put her in a seaworthy condition. In that event, however, deadfreight shall be paid Owner at the rate specified in item 4 hereof on the difference between the cargo quantities shown on DuPont's appointedSurveyor's Certificate and the quantity of cargo nominated by DuPont. In the event DuPont fails to supply any of the quantity of cargo nominated hereunder, Owner shall make every effortto obtain substitute cargo for the quantity of cargo nominated so as to mitigate any deadfreight to DuPont. No deadfreight shall be allowed if Owner fails to provide sufficient tankage to stow DuPont's nominated cargo.

FN13. Force Majeure. Except to the extent otherwise provided herein, no liability shall result to either party from delay in performance or from nonperformance caused by circumstances beyond the control of the party affected, including but not limited to Act of God, fire, flood, explosion, war, action or request of governmental authority, accident, labor trouble or shortage, inability to obtain material, but each of the parties hereto shall be diligent in attempting to remove such cause or causes and shall promptly notify the other party of its extent and probable duration.

The panel has carefully considered the arguments advanced by the parties and unanimously finds that the language of the Force Majeure clause, as contained in this contract, does override the provisions of the Deadfreight clause. Each side has cited precedents which, in their view, support their respective positions. The problem with drafting clauses is that, by trying to achieve a maximum coverage, matters become less specific. By adding exclusionary language beyond the original text referencing the Act of God, fire, flood, etc., the authors of this specific clause diluted its impact. Thus, when trying to reconcile Clauses 17 and 18, we find that, because of its expansive language, Clause 18 must prevail.

Having reached this conclusion, DuPont must now prove that the prerequisites for Force Majeure defense have been met. It is at this point that the panel disagrees. The panel majority, Mr. Martowski dissenting,FN14 finds that DuPont have not met this burden.

FN14. As per Appendix A.

Before addressing the merits of DuPont's position on the Force Majeure defense, we find it appropriate to comment on the standard of proof required. The underlying document for this arbitration is the charter party between DuPont and Seatrans, which includes the Force Majeure ClauseFN15 setting forth the applicable circumstances and the actions required by the party invoking the Force Majeure defense. DuPont have introduced into this proceeding the Force Majeure notices from its supplier Lucite InternationalFN16 and to its customer AKSAFN17 for its protection in this charter party dispute. *2891 What DuPont have failed to do is to produce the contracts setting forth the terms and conditions of their dealings with Lucite and AKSA. As Owners have pointed out, the AKSA agreement did not form any part of the transportation contract and, therefore, cannot by itself impose conditions or modifications upon DuPont's duty to provide a complete cargo for the Trans Iberia. On the other hand, since Charterers elected to bring into play their contract terms with AKSA and Lucite, it would have been helpful if Charterers had furnished the purchase contracts from Lucite and the sale contract to AKSA so that Owners could have had an opportunity to satisfy themselves with respect to the existing obligations, costs, timing, quantities, etc., for the underlying transactions. It would also have further explained the contents of footnote 2 in Charterers' reply brief,FN18 which states:

FN15. At

FN16. Lucite International has been identified by DuPont as the company to which it sold its ACN business in early 2007 and entered into a contract with Lucite to market its excess ACN production.

FN17. DuPont identified AKSA as its customer located in Yalova (Turkey); the Bill of Lading identifies AKSA as consignee as well as the party to be notified (Owners' Exhibit CD16).

FN18. At p.4.

It is important to note that DuPont not only had a financial incentive to honor its contractual commitment with Seatrans but that it also had a fundamental business interest in meeting its contractual obligation to supply 5000 MT of acrylonitrile to its customer AKSA, and a vested interest in preserving the revenue to be gained from the sale of the product. DuPont's inability to obtain the full quantity of product resulted in a significant loss of revenue from AKSA.

The introductory sentence that DuPont had a financial incentive to honor their contractual commitment to Seatrans is cryptic at best. Since Charterers refused to pay the freight for the short-loaded cargo under the Force Majeure argument, where is the incentive to honor the contractual commitment?

The Lucite notice stated that the Force Majeure condition was “caused by the significant loss of product supplied from the AN Unit B reactor shutdown at the Beaumont, Texas site .. on April 27, 2007”.FN19 Ms. Titzer has explained that as part of the Sale of the ACN operation to Lucite, DuPont contracted to market the Lucite *2892 excess proctuction.FN20This statement was repeated in Ms. Titzer's reply affidavitFN21 and followed by the statement:

FN19. DuPont Exhibit 1.

FN20. DuPont Exhibit 4 (Affidavit of Melissa Titzer, DuPont's Supply Chain Manager).

FN21. March 19, 2010 Exhibit 1 to DuPont's Reply Memorandum to Seatrans' Response of February 19, 2010.

.. it is my understanding that acrylonitrile is primarily produced in quantities that are determined by supply contracts. Purchasers of the commodity typically provide forecasted volume requirements to the manufacturer and issue purchase orders for specific amounts of acrylonitrile. Producers of acrylonitrile generally do not manufacture an excess supply to be used to fill unplanned orders. Rather, the commodity is typically manufactured to meet the specific demand.FN2222

FN22. Item 4.

Based upon these two statements, it would appear that the Trans Iberia was supplied out of Lucite's excess production. But if producers generally do not manufacture excess quantities of ACN, how would the Trans Iberia cargo be covered? No doubt the contents of the DuPont/Lucite contract, if produced, could readily have supplied the answer.

We now turn to DuPont's “efforts to perform it contractual duties despite the occurrence of the event that it claims constituted force majeure,”FN23 which, together with the Gulf Oil Corp. v. Federal Energy Regulatory Commission,FN2424 are the leading cases setting forth the standards to be met by the non-performing party.

FN23.Philips Puerto Rico Core, Inc. v. Tradax Petroleum Ltd., 1986 AMC 184, 186, 782 F.2d 314, 319 (2 Cir. 1985).

FN24.706 F.2d 444 (3 Cir. 1983)We conclude that in order to use force majeure events to excuse nonperformance, [the party relying on force majeure l must show that it tried to overcome the result of the events occurrences by doing everything within its control to prevent or minimize the event's occurrences and its effects.(at 454-455).

In principle, DuPont relied on the affidavit of Ms. TitzerFN25 to demonstrate their efforts to find ACN from different sources. She *2893 listed inquiries on April 24 with Cytec Industries Solutia, Inc. and Inecos. According to her statement, none of the suppliers had excess ACN for sale. On April 26, she contacted Solutia again by email to check on product available for sale or trade, which they did not have. The three-line dialogue FN26 speaks for itself and there is little point to belabor it with the benefit of hindsight. However, the panel majority notes that DuPont limited their search “to those cargoes which “could reasonably supply the commodity to meet the Trans Iberia sailing schedule in Houston.FN27The charter party contains no reference to any particular sailing schedule and based on the foregoing it is clear that DuPont did not expand their efforts to secure additional material on later dates. Instead, upon learning on April 26 that Seatrans “may be able to mitigate the shortfall by obtaining 3000 metric tons of alternative cargo”FN28 they relied almost exclusively on Seatrans' efforts to locate additional cargo for the last seven days prior to its formal notice of force majeure and to commencement of loading and did not assist Seatrans in these efforts.

FN25.Supra. at footnote 20.

FN26. Attachment A to the Affidavit reflects the following email exchanges on April 26 between Ms. Titzer and Ms. Woods at Solutia: 10:47 Titzer to Woods Might you have any acrylo to spare?Woods to Titzer at 10:33 No. We're moving everything out on schedule (amazing). Titzer to Woods at 8:32 Any chance you're [sic] tanks are overflowing because of ship delays?

FN27. Titzer Affidavit supra (footnote 22).

FN28. DuPont Exhibit 4 (Titzer Affidavit)

What the affidavit makes abundantly clear is that as of April 26, DuPont had no additional ACN for shipment on the Trans Iberia. Why, with the knowledge of the information provided by Ms. Titzer, did DuPont not declare force majeure on April 26th? Irrespective of Clauses 15 or 17, DuPont had an independent duty, under Clause 18 and the cited legal precedent, to look for other cargoes in mitigation. Whether or not other cargoes would have ultimately been available is not decisive. What needed to be shown was that diligent efforts had been made by DuPont on all fronts, including the spot market, which existed, as Owners have shown.FN29This, DuPont has not proven to the. satisfaction of the panel majority. *2894

FN29. Owners' Exhibit CDR3, Quincannon's market report for May 2007.

A further condition to be met by the party invoking force majeure is that it “shall promptly notify the other party of its extent and probable duration.” FN30

FN30.Supra. at p. 6, footnote 13.

The Force Majeure notice to Owners, at their Norway office, was given by DuPont on May 4, 2007 at 15.08 via fax.FN31

FN31. DuPont Exhibit 10.

Pursuant to the terms of our Agreement, DuPont is hereby declaring force majeure with respect to its acrylonitrile tanker voyage charter party with Seatrans Ermefrr Tankers effective March 30, 2007. While our contract was for 5000 MT of product, we will only be able to supply approx. 2500 MT.
This force majeure is due to circumstances beyond DuPont's control, caused by the loss of product supplied from the AN Unit B reactor shutdown at the Lucite Beaumont, Texas site on Wednesday, April 27, 2007. We exhausted several attempts to procure additional product for the voyage but were unsuccessful.

On April 27, 2007, Lucite had sent a fax to DuPont, reading in part:FN32

FN32. DuPont Exhibit 3.

This notice reports a Force Majeure event re Acrylonitrile (AN) Supply at Beaumont beginning April 25, 2007.
Force Majeure -- AN Supply
On Wednesday, April 25, 2007, the AN unit B-reactor was shutdown when a continuous loss of catalyst was experienced that could not be stopped otherwise and catalyst handling equipment could not keep up with the rate of addition required to sustain proper reactor operation.An internal inspection of the reactor will be performed but it is believed that there are process restrictions in the reactor diplegs or mechanical problems inside the reactor. The specific volume of lost production attributable to this event will be defined in a subsequent letter.

It must be obvious that when DuPont was notified on April 27 about an event which took place on April 25, being the cause for the Force Majeure declaration, and then issued a corresponding *2895 notice to Owners on May 4, same certainly cannot be considered as prompt. Also, the Lucite notice, containing the phrase “.. but it is believed ..” lacks definity and specificity to justify a declaration of force majeure.

The record shows that on various dates preceding the Force Majeure notice, Charterers gave the following alerts with respect to cargo readiness/availability.
April 23 -- problems shuttling barges back and forth -- to get all the material they need there on time;
April 26 -- DuPont were having production problems and would not know definitely what the quantity situation would be until Friday, April 27; (Note: since DuPont were not the producer of the ACN, it is somewhat Ingenious to describe it as DuPont's problem)
April 27 -- DuPont had or would have 2,500 m/t in house by April. 28 asking Owners to mitigate damages under the Rider Clauses of the charter party; Seatrans “duly noted that DuPont will load only 2500 mts.”FN33

FN33. DuPont Exhibit 6.

April 28 -- DuPont advised that 2,511 m/t of ACN was available.

It is not for the arbitrators to speculate on why Charterers failed to make a timely and explicit declaration of the event which they now argue to be a case of force majeure.The burden was upon DuPont to prove their case with a preponderance of credible evidence, which, in our opinion, they have failed to do.

The circumstance beyond DuPont's control leading to its inability to obtain material was attributed to the loss of product supplied from the AN Unit B reactor. shutdown at the Lucite Beaumont, Texas site.FN34Whether there are other ACN production facilities at this site has not been made clear and what its total production is under normal circumstances. Was there additional ACN being manufactured or in storage to meet a specific sales demand which could have been *2896 reassigned to Trans Iberia to fulfill Lucite's contractual obligation to DuPont and what efforts did DuPont make to secure additional product from Lucite.

FN34. DuPont Exhibit 1.

As supported by the record, DuPont's Force Majeure notice was neither prompt nor did it provide any information on the extent or duration of the period as required under Clause 18. Similarly, the panel majority does not find that Charterers' efforts of diligence to prevent or minimize the effects of the force majeure measure up to the standards expressed under Philips Puerto RicoFN35and Gulf Oil Corp.FN3636

FN35. Supra.

FN36. Supra.

INTEREST

The panel awards interest at the weighted average Prime Lending Rate as posted by the Federal Reserve for the period due; i.e., 4.8194% per annum for the period from May 11, 2007, to the date of this award.

FEES AND COSTS

Both parties have claimed for attorneys fees and costs of this arbitration, however, without specifying a quantum.

In line with the current practice in New York arbitration that the prevailing party can recover attorneys' fees and costs, the panel majority makes an allowance of $20,000 towards Seatrans' legal expenses and costs.

The arbitrators' fees and expenses are set forth in Appendix B attached hereto, which forms an integral part of this award. Payment is to be made in accordance with the instructions contained in the appendix; the fees and expenses are a joint and several obligation of both parties. *2897

AWARD

DuPont are directed to pay to Seatrans the sum of US$213,054.22, which we arrived at as follows: Deadfreight US$168,047.39 Interest thereon US$ 25,006.83 Allowance towards Seatrans' costs and fees US$ 20,000.00 Total payable to Seatrans US$213,054.22 If payment of this award has not been made with 15 days from the date of this award, interest at the rate of 3.25% p.a. shall continue to accrue from the award date until payment in full has been made or the award has been reduced to judgment, whichever first occurs.

The arbitration clause provides that this award may be made a rule of the court.

Appendix A

David W. Martowski (dissenting in part):

I respectfully disagree with my colleagues and would deny Seatrans' deadfreight claim. After carefully reviewing the documentary evidence and sworn affidavits and declarations of both parties' witnesses, I find that DuPont has carried its burden of proving by a preponderance of credible evidence that it was unable to ship 2,400.677 MT of Acrylonitrile (ACN) due to its “inability to obtain material” -- a force majeure event specifically stated in Special Provision Clause 18 Force Majeure of the Charter Party.

In order to defeat Seatrans' claim in accordance with Special Provision Clause 18, DuPont must establish that 1) because of circumstances constituting a defined force majeure event; 2) which were beyond DuPont's control; 3) it was not possible to ship the agreed contractual quantity; 4) its failure to perform could not have been avoided; 5) it was diligent in attempting to remove such cause; and 6) promptly notified Seatrans of its extent and probable duration.

Section E., Part I of the Charter Party specifically describes the cargo as: *2898 Part
Cargo: 1 Grade 5,000MT * * * -- ACRYLONITRILE (ACN) in bulk

ACN is by no means a run-of-the-mill generic liquid cargo such as crude oil, gasoline or IFO, but rather a sophisticated chemical compound ultimately used in the manufacture of plastics, rubber and nylons. Although apparently somewhat spot-traded, it is not a product readily available in the marketplace that would enable, for instance, a chemical trader to simply make a few calls on short notice, pull its chartered vessel up to a terminal or tank farm, and say, “Fill'er up, please”.

Indeed, Melissa Titzer, DuPont's Supply Chain Manager,FN37 states:

FN37. Responsible for managing the logistics for DuPont's liquid chemicals business, including the scheduling of vessel shipments and cargo surveys and end to end supply chain. Ms. Titzer regularly communicated with DuPont's suppliers and customers to coordinate the scheduling of shipments.

Based on my five years experience with the acrylonitrile business, it is my understanding that acrylonitrile is primarily produced in quantities that are determined by supply contracts. Purchasers of the commodity typically provide forecasted volume requirements to the manufacturer and issue purchase orders for specific amounts of acrylonitrile. Producers of acrylonitrile generally do not manufacture an excess supply to be used to fill unplanned orders. Rather, the commodity is typically manufactured to meet the specific demand.FN38

FN38. DuPont's Second Reply Brief, Ex. 1; Reply Affidavit of Melissa Titzer (March 19, 2010).

This specialized nature of the ACN part cargo was apparently appreciated by both parties and prompted them in negotiating the terms of Special Provision 18 -- which exonerates either party from liability for the occurrence of certain force majeure events -- to specifically include the loosely phrased “inability to obtain material” as an agreed force majeure event. Either party could have defined this event with greater specificity. Neither chose to do so.

In 2007 DuPont sold its ACN business to Lucite International and contracted with Lucite as its sole source supplier to market *2899 Lucite's excess product. DuPont purchased ACN from Lucite to fill its sales contract with AKSA, its Turkish customer, and under its terms of sale, DuPont was responsible for transporting and delivering the 5,000 MT parcel of ACN to AKSA.

DuPont has established by a preponderance of credible evidence that:
be On or about April 24th DuPont was advised that Lucite was experiencing difficulty with the production of ACN at its Beaumont plant.FN39

FN39. DuPont's First Reply Brief, Ex. 4; Affidavit of Melissa Titzer (November 25, 2009).

be Lucite subsequently advised:On Wednesday, April 25, 2007, the AN unit B-reactor was shutdown when a continuous loss of catalyst was experienced that could not be stopped otherwise and catalyst handling equipment could not keep up with the rate of addition required to sustain proper reactor operation. An internal inspection of the reactor will be performed but it is believed that there are process restrictions in the reactor diplegs or mechanical problems inside the reactor. The specific volume of lost production attributable to this event will be defined in a subsequent letter.FN40

FN40.Id., Ex. 3.

be In the meantime, DuPont promptly undertook to procure an alternative supply of ACN of similar quality specifications from known sources that had facilities in reasonable proximity that could meet theTrans Iberia's sailing schedule from her Houston port of loading. On April 24th Melissa Titzer, DuPont's Supply Chain Manager, telephonically contacted three known potential ACN suppliers -- Leslie Woods at Solutia, Inc. (“Solutia”), Melissa Maroney at Ineos (“Ineos”) and Denise Giles at Cytec Industries (“Cytec”). Solutia and Ineos have storage tanks in Houston; Cytec is located in Louisiana and any available product could be barged to Houston. Although “these three companies were the only viable alternative *2900 sources of acrylonitrile”, they advised her that they did not have excess ACN for sale or trade.FN41

FN41.Id.

be On April 26th Ms. Titzer learned that Seatrans might be able to mitigate the shortfall of ACN by obtaining 3,000 MT of alternative cargo.FN42

FN42.ld.

be On April 26th Ms. Titzer again contacted Solutia by email but was advised that no excess product was available for sale or trade.FN43

FN43.Id.

be On April 26th -- one day before Lucite formally declared force majeure and six days before the Trans Iberia issued her Notice of Readiness -- DuPont notified Seatrans via its agents:As per various telcons today, Dupont is having Acrylo production problems & might have difficulty supplying the full 5000 mt of Acrylo required under this C/P. They will not know definitely what the qty situation will be until tomorrow Friday (Apt. [sic.] 27) but they have advised that you can begin to tentatively look at chartering out 2500 mt space to others in the hopes of mitigating a potential deadfreight claim.FN44

FN44.Supra, Ex. 5.

be On April 27th Lucite sent DuPont a formal written notice of its declaration of force majeure under the parties' ACN Supply Agreement which was to be effective as of April 25th.FN45

FN45.Supra, Ex. 3.

be On that same day DuPont again notified Seatrans that it may not be able to supply the entire 5,000 MT of ACN.FN46

FN46.Supra, Ex. 6.

be On that same day and again on May 1st, Seatrans advised DuPont that it may have alternative cargo to mitigate the shortfall.FN47

FN47.Supra, Ex. 7.

be On May 3rd, upon hearing that Seatrans would not be able to obtain alternative cargo, Ms. Titzer once again telephonically contacted Solutia, Ineos and Cytec to determine if their situa *2901 tion had changed with respect to available ACN for sale or swap and was advised that it had not. FN48

FN48.Supra.

be Late on May 4th it became clear that neither DuPont nor Seatrans could obtain alternative cargo and prior to the loading of the Trans Iberia DuPont notified Seatrans that it was declaringforce majeure and would only be able to supply approximately 2500 MT of ACN.FN49

FN49. Supra , Ex. 10.

be On May 25th DuPont provided its Turkish customer, AKSA, with a formal notice of force majeure advising:Pursuant to the terms of our Agreement, DuPont is hereby declaring force majeure with respect to its shipment of acrylonitrile on the tanker Trans Iberia which loaded effectively on May 5, 2007. While our agreement was to ship 5000 MT of product, we were only able to ship 2,499.32 MT. This force majeure is due to circumstances beyond DuPont's control, caused by the significant loss of product supplied from the AN Unit B reactor shutdown at the Lucite Beaumont, Texas site on Wednesday, April 27, 2007. We exhausted numerous attempts to procure additional product for the voyage but were unsuccessful.FN50

FN50.Supra, Ex. I.

In support of its position that alternative sources of ACN were available to DuPont, Seatrans has introduced Quincannon Associates, Inc.'s May 2007 Market Report that generally notes:
Several cargoes of Acrylonitrile, MEG and Acetone were fixed in the 2,000 to 3,000 ton lot size along with at least two Lube oil cargoes in the 3,500 to 4,000 ton size. Smaller sized cargoes and specialty grades were still moving under contract and on the spot market as well.FN51

FN51. Seatrans' Response, Ex. 3.

In addition and more specifically, Seatrans introduced a list of 26 ACN shipments made between April 1 and May 25, 2007 from the U.S. Gulf ports of Point Comfort (10); Houston (13) and New Orleans *2902 (3). The legend “Acct” heads one column and stands for “account” or the party on whose behalf the particular shipment was made.FN52

FN52. Seatrans' Response, CDR Ex. 4; and Seatrans' Reply Memorandum, CDR Ex. 1; Declarations of Jan Remi Litland, Seatrans' Demurrage Manager; (February 15, 2010 and April 9, 2010).

DuPont's Ms. Titzer analyzed the list and noted that all three shipments of ACN listing “DuPont” as the “account” involved Lucite as the actual producer; Ineos was the only account listed that was a known producer of ACN in 15 of the shipments; Vinmar and Mitsubishi International (5) also listed as accounts do not have U.S. production capability of ACN and DuPont did not have any business dealings with these entities. Of the three remaining accounts, Itochu Chemicals was unfamiliar to DuPont, and the shippers of two other parcels were listed as “unknown”. Ms. Titzer concluded:
I do not believe that Seatrans' listing of shipments made in April and May of 2007 fairly represents whether an excess supply of acrylonitrile existed during this time period which could have been purchased by DuPont.This is especially the case since most vessel shipments are booked at least several weeks in advance and the only shipments of acrylonitrile that occurred during the relevant time period were four shipments for the account of Ineos, who had already informed DuPont that it did not have excess acrylonitrile available.”FN5317 [Emphasis Added].

FN53.Supra.

The three shipments listed that were made by DuPont involved Lucite as the actual producer; two were before Lucite's production problems arose on April 24th and the third is the very subject of this dispute. Thirteen of the 26 shipments listed were made before the Lucite production failure on April 24th and eight of the remaining shipments were made after the Trans Iberia sailed on May 5th.

DuPont was not the manufacturer of ACN and the shutdown of Lucite's reactor that significantly curtailed its production was a cause entirely beyond DuPont's control. Upon learning of this problem, DuPont promptly put Seatrans on notice so that Seatrans could explore the possibility of obtaining alternative cargo as it was obli *2903 gated to do, and DuPont promptly contacted no less than three other local suppliers of ACN -- unfortunately, to no avail. The extent and probable duration of DuPont's “inability to obtain material” was well-known to Seatrans based on the parties' daily exchanges between April 26th and May 5th.

The issue of whether a party exercised due diligence is a question of fact and its determination is, of course, case-specific. I am convinced that under the circumstances presented, DuPont exercised due diligence by taking every reasonable and timely step within its control to prevent or minimize the force majeure event and its effects, thereby satisfying the standards set forth in Phillips Puerto Rico Core, Inc. v. Tradax Petroleum Ltd.FN54 and Gulf Oil Corp. v. Federal Energy Regulatory CommissionFN55.

FN54.1986 AMC 184, 782 F.2d 314 (2 Cir. 1985).

FN55.706 F.2d 444 (3 Cir. 1983).

While fully appreciating that force majeure is not a doctrine to be applied lightly in order to relieve a party of its contractual undertakings, it seems to me that Seatrans and DuPont clearly contemplated the possibility of an “inability to obtain material'; expressly allocated the risk of the occurrence of such an event; and that Seatrans must now live with its bargain. Accordingly, I would deny Seatrans' claim for the foregoing reasons and award DuPont a reasonable allowance towards its attorney's fees and the costs of this proceeding.

Copyright (c) 2010 by American Maritime Cases, Inc.

S.M.A.A.S, 2010

IN THE MATTER OF THE ARBITRATION BETWEEN SEATRANS ERMEFER TANKERS, AS DISPONENT OWNERS OF THE TRANS IBERIA E.I. DUPONT DE NEMOURS & COMPANY, AS CHARTERER.



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