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Lloyd's Law Reporter


[2021] EWHC 1157 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Butcher, 5 May 2021

Charterparties (time) – Vessel lost after grounding while departing port – Owners purporting to exercise lien on freight – Whether charterparty containing implied term obliging owners to allow charterers to collect freight – Whether charterer may prevent shipowner from directing payment of freight to owner – Implied terms – Business necessity – Shipowner's obligation to account to charterer for excess freight collected

The claimant owners of MV Smart had on 1 August 2013 chartered the vessel to the defendant charterers on an amended New York Produce Exchange form for a time-charter trip. On 19 August 2013 the vessel ran aground while departing the port of Richards Bay in South Africa and was lost. Correspondence and dissent arose between the owners and charterers as to which party was entitled to recover freight under a voyage party entered into by the defendant and two bills of lading issued by the owners with freight payable “as per charterparty”, the owners having purported to exercise a lien and the charterers having invoiced the voyage charterer. The voyage charterer put a sum into escrow, but was subsequently wound up by order of the court without having paid the full amount. In arbitration, the owners claimed in excess of US$100 million in respect of the loss of the vessel and asserted that the loss was due to the charterers’ breach of a safe port warranty. The charterers denied that the grounding was caused by any unsafety of the port, contending instead that it was caused by negligent navigation by those on board and pursued counterclaims in respect of lost freight. A partial arbitration award issued on 12 June 2020 held that there was a safe port warranty, that the port had some shortcomings, but that the loss was due to the master’s negligence which had broken the chain of causation, causing the grounding. The issue now for determination was the remedies to which the owners and charterers were entitled, respectively. The tribunal had held that charterers were entitled to recover as damages the value of freight not paid by the voyage charterer. The question of law upon which permission to appeal had been given was “Did the charterparty contain an implied obligation that the claimant would not revoke the defendant’s authority to collect from GNR the freight payable under the bills of lading unless hire and/or sums were due to the claimant under the charterparty?”.

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