Lloyd's Maritime and Commercial Law Quarterly

Edited by Professor Francis D Rose

Document

NORWEGIAN SALEFORM

The Barenbels

The central point in The Barenbels faced in turn by arbitrators, Sheen, J.1, and the Court of Appeal2 was the construction of cl. 9 of the Norwegian Saleform. The clause reads:

“9. The Sellers guarantee that the vessel at the time of delivery is free from all encumbrances and maritime liens or any other debts whatsoever. Should any claims which have been incurred prior to the time of delivery be made against the vessel, the Sellers hereby undertake to indemnify the Buyer against all consequences of such claims”.

The Barenbels was purchased from the appellant sellers by the respondent buyers through a contract dated 11 November 1980 based on the Saleform. Clause 9 formed part of the contract. In the course of trading after the sale the Barenbels called at Umm Said in Qatar.

Prior to the sale the Qatar National Shipping and Transport Company of Doha (Qatar National) had acted for the sellers; and were owed money by the sellers in respect of the operation of ships other than the Barenbels. In early 1982 Qatar National started proceedings against the sellers in Qatar, and on 6 February 1982 the Qatar court ordered the detention of the Barenbels pending the lodging of security by the sellers. To secure release of the ship the buyers’ P. & I. Club provided security by way of guarantee on which they were liable until 1988. The buyers claimed against the sellers for breach of the guarantee provided in cl. 9 and for an indemnity in accordance with that clause.

The arbitrators found for the sellers, in that

(i) the case did not fall within the first sentence of cl. 9 (the guarantee) as the phrase “all encumbrances and maritime liens or any other debts whatsoever” was limited to debts arising in respect of the ship the subject of the sale;
(ii) although the second sentence provided a right (the indemnity) independent of the first sentence, there was no claim “against the vessel”—the arrest being in accordance with the court’s power of “conservatory arrest”.

The buyers appealed against the finding in (i), and on the ground (inter alia) that there was no evidence to support the finding in (ii). Sheen, J., allowed the appeal, holding

(i) that the liability of the Barenbels to arrest as a “sister ship” fell within the first sentence either as an “encumbrance” or as the consequence of a “debt” of the shipowner;
(ii) (after admitting affidavits as to the evidence of the Qatari law produced to the arbitrators) that the arrest was not conservatory; for had no security been forthcoming there would have been an application for judicial sale.