SEAGATE SHIPPING LTD V GLENCORE INTERNATIONAL AT, THE SILVER CONSTELLATION

[2008] EWHC 1904 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice David Steel, 31 July 2008

Shipping – Charterparty – Obligation on owners to ensure that vessel was efficient and eligible to trade – Whether implied obligation to obtain RightShip approval – Relevance of parties’ negotiations leading up to contract

The owners, Seagate, chartered a vessel to the charterers, Glencore, on NYPE form. The charterers asserted that the agreement required the owners to provide a vessel approved under a ship approval system, “RightShip”. The assertion was based on clauses in the charterparty under which the owners were required to keep the vessel in an efficient state, to ensure that the vessel remained eligible for trading to ports authorised by the charter and to ensure that the vessel had all valid certificates records and other documents required for such trade. The arbitrators found in favour of the charterers, and the owners appealed under section 69 of the Arbitration Act 1996. David Steel J upheld the appeal and ruled that the agreement made no reference to RightShip and that there was nothing in the charterparty which required the owners to obtain and retain RightShip approval. David Steel J also commented that evidence of the parties’ prior negotiations was inadmissible other than to the extent that it went to establish the parties' knowledge of the circumstances with reference to which they used the words in the contract.