Enviroco Ltd v Farstad Supply A/S (The "Far Service") - Supreme Court (Lord Hope DP, Lord Rodger, Lord Mance, Lord Collins and Lord Clarke JJSC) - 6 April 2011

(2011) 819 LMLN 1

Charterparty - Exemption clause allocating insurable risk between owner and charterer and its "Affiliates" - Vessel sustaining damage by fire during cleaning of oil tanks by contractor - Owner bringing proceedings against contractor - Contractor relying on exemption clause on basis it was an "Affiliate" of charterer - Contractor would have been an "Affiliate" had its parent company's shares not been registered in name of bank as security under terms of deed of pledge - Whether parent company ceased to be "member" of contractor by reason of pledge - Whether contractor an "Affiliate" of charterer

The vessel Far Service was chartered by the defendant (“the owner”) to Asco UK Ltd as charterer (“the charterer”). On 7 July 2002 the claimant contractor (“the contractor”) was instructed to clean the oil tanks of the vessel while she was berthed at Peterhead. Whilst the tanks were being cleaned by the contractor’s employees a fire occurred in the engine room causing substantial damage. The owner brought proceedings against the contractor in Scotland for damages, claiming about £2.7 million.