Concurrent causes

In ENE Kos 1 Ltd v Petroleo Brasileiro SA (The Kos) [2012] UKSC 17 the Supreme Court considered the rights available to an owner of a time-chartered ship following lawful withdrawal of the vessel for non-payment of hire. The Supreme Court addressed several potential bases on which the owners could recover from the charterers. The analysis of causation in the context of an indemnity clause (contained in the speeches of Lord Sumption and Lord Clarke for the majority and Lord Mance dissenting on the indemnity clause) will be of particular interest to all involved in coverage litigation. The decision is discussed by George Spalton of 4 New Square.

The Kos: the facts

The VLCC Kos was chartered on the Shelltime 3 form for 36 months (plus or minus 15 days at charterers’ option). The charterparty contained a standard form of withdrawal clause providing that if hire was not paid when due, the owners should have the right to withdraw the vessel “without prejudice to any claim owners may otherwise have on charterers under this charter”. The charterparty did not contain an anti-technicality clause and as such, when the charterers failed to make the advance payment required, the owners were entitled to withdraw Kos and did so on 2 June 2008.