PAN OCEAN CO LTD V DAELIM CORPORATION

[2023] EWHC 391 (Comm), King's Bench Division, Commercial Court, Sir Ross Cranston sitting as a High Court Judge, 24 February 2023

Arbitration – Error of law – Implication of terms into charterparty – LMAA Terms – Arbitration Act 1996, sections 57, 69 and 70

The claimant Charterers entered into a time charterparty early in 2017 for the carriage of a cargo of urea. Disputes were to be resolved by LMAA arbitration. Clause 69 provided that if the vessel failed to pass any holds inspection, the vessel was to be placed off-hire until the inspection was passed. The holds were inspected on 16 February 2017, but the inspection failed due to the presence of rust, paint flakes and cargo residue. At 15.30 on 19 February 2017, the master of the vessel notified the agents that the vessel had been cleaned and requested a re-inspection. That did not take place until 4 March 2017, when the re-inspection was passed. The Charterers treated the vessel as off-hire after 15.30 on 19 February 2017 and deducted US$110,765 in hire and US$16,308 in bunkers by reason of the failure of the cargo holds inspection. The defendant Owners contended that it was an implied term of the charter party that the Charterers were required to carry out any re-inspection with reasonable diligence and without any undue delay, and that they were in breach of that implied term.