(1) EDWINTON COMMERCIAL CORPORATION (2) GLOBAL TRADEWAYS LTD v TSAVLIRIS RUSS (WORLDWIDE SALVAGE AND TOWAGE LTD) (THE SEA ANGEL)

[2007] EWCA Civ 547, Court of Appeal, Rix LJ, Wall LJ, Hooper LJ, 12 June 2007

Charterparty – Time Charter - Salvage – Frustration – Delay – Detention – SCOPIC clause - Whether a delay of three months towards the end of a twenty day time charter by port detention had frustrated the charter – Pakistan

A salvage vessel chartered for twenty days was unlawfully detained by port authorities at the end of the charter, when the only outstanding obligation was redelivery. The appeal of the salvors was dismissed, Rix L.J. giving the leading judgment as follows. The application of the doctrine of frustration required a multi-factorial approach. The test of Bailhache J in Anglo-Northern and Tatem v Gamboa, comparing the unexpired length of the charter to the probable length of the delay was only the starting point. The availability of recourse to a court meant that the loss of the vessel was not inevitable. The supervening event having occurred at the very end of the charter, when the adventure itself was no longer at risk, it was a purely financial question who would bear the consequences of the delay and that would be settled by the charterparty, which in this case provided in effect that charterers were under an obligation to pay hire until redelivery. The risk of detention in connection with a salvage event entailing pollution risks was foreseeable, even if unprecedented. The salvage industry had provided for that very risk in the SCOPIC clause and although the owner was not a part of the salvage industry it had chartered the vessel to well-known salvors at a commensurate price. Following the supervening event, there was a period of commercial negotiation meaning that it was not a case of the charterparty having been frustrated then and there. In such situations of “wait and see”, it was a matter of all the circumstances of the case whether the situation had become radically different and the contract had therefore ceased to bind. The requirement for justice, finally, was not an additional test but a relevant factor underlying all and providing the ultimate rationale of the doctrine. The factor should be employed as a reality check.