Ease Faith Ltd v Leonis Marine Management Ltd [2006] 1 Lloyd's Rep. 673

This was a towage dispute. Brookes & Co. acted for the Claimant, Ease Faith Ltd ("Ease Faith").

By a towage agreement under the International Ocean Towage Agreement ("the sub-towcon") Ease Faith appointed Leonis Marine Management Ltd ("Leonis"), a tug owner, to tow the dead vessel "Kent Reliant"from Balboa, Panama, to China for demolition.

Leonis itself entered into an agreement with the Part 20 Defendant tug owner, Cloudfree Shipmanagement Ltd ("Cloudfree"). This agreement ("the head towcon") was, again, in the International Ocean Towage Agreement form, but was not identical to the sub-towcon. The sub-towcon contained the express provision that the tug was to proceed at utmost dispatch whereas there was no such provision in the head towcon.

The vessel was delayed in reaching China. There were three identifiable periods of delay: there had been a delay where the tug stopped steaming because a hire instalment had not been paid; there had been a subsequent delay when the convoy arrived off Shanghai when Cloudfree purported to exercise a lien over "Kent Reliant" and there had been delays caused because the tug had proceeded, at times, using only one of her two engines. Because of the delay, the purchasers in China were only prepared to pay a reduced purchase price because of the late delivery.

Ease Faith claimed damages from Leonis on the grounds that the tug failed to carry out the voyage with due dispatch. Ease Faith's claimed for (i) additional pilot and escort charges arising from the delay, (ii) the reduction in the purchase price for the "Kent Reliant" and (iii) the loss of interest arising from the delay in receiving the purchase price.

Leonis defended the claims and brought Part 20 proceedings against Cloudfree. Cloudfree defended the claim and made a number of counterclaims. Cloudfree claimed that Leonis had misrepresented the displacement of the Kent Reliant; she had been described in the towcon as being in "light ballast condition", whereas she was heavier than represented. As a result of this, Cloudfree argued that they had suffered loss because the tug had consumed extra bunkers.

Both Cloudfree and Leonis submitted that Ease Faith's claims were excluded by clause 18.3 of the standard wording of the towcon form which provided that, "Save for [specified provisions] neither the tug owner nor the hirer shall be liable to the other party for loss of profit, loss of use, loss of production or any other indirect or consequential damage for any reason whatsoever". Cloudfree also argued that Leonis were estopped by convention from complaining that the delay when the tug stopped steaming because an instalment of hire had not been paid constituted a breach of the head towcon.

The Court held that,

1	There were undertakings in both towcons that "Kent Reliant" was in a light ballast condition and, on the facts, those undertakings had been complied with. The counterclaims of Cloudfree and Leonis based on the alleged misrepresentation failed.
2	The tug had failed to proceed with utmost despatch when she stopped steaming because a hire instalment had not been paid.
3	It was implicit in the sub-towcon that the tug would use both her engines on order to proceed at utmost dispatch. Leonis were, therefore, in breach of the sub-towcon for failing to proceed at utmost dispatch during the periods when the tug only used one of her engines.
4	The term "loss of profit" in clause 18.3 of the towcons did not refer to the particular venture in which the company was engaged but to loss of profits generated by future use of the tug or the tow.
5	Ease Faith's claim against Leonis in respect of pilot and escort charges and in respect of the reduced price paid succeeded
6	Although the head towcon did not contain any express provisions about the speed with which the tug should proceed, it was an impled term of the head towcon that Cloudfree should have completed the towing operation with all reasonable dispatch.
7	What was reasonable in the context of a contract providing for utmost dispatch was not necessarily the same as what was reasonable in the absence of that stipulation. In this case, progress at reasonable speed or all reasonable dispatch was progress at a speed that could reasonably be achieved if both engines were routinely used. Because the tug had proceeded at a reduced speed as a result of using only one of her engines, Cloudfree were in breach of the implied term of the head towcon that they should complete the towing operation with all reasonable dispatch.
8	Leonis were not estopped by convention from complaining that the delay when the tug stopped steaming because an instalment of hire had not been paid constituted a breach of the head towcon
9	Cloudfree were, therefore, in breach of the head towcon. As a result, Leonis were in breach of their obligations to Ease Faith. Therefore, Ease Faith's claim for damages against Leonis succeeded and Leonis were entitled to recover against Cloudfree in respect of their liability to Ease Faith. Cloudfree's claims failed.

Andromeda Marine SA v O W Bunker & Trading A/S (The "Mana") [2006] 2 Lloyd's Rep. 319

By a bunker supply contract with American time charterers, the Defendants, O W Bunker & Trading A/S ("OW Bunker"), supplied bunkers to the vessel m.v. "Mana", owned by the Claimants, Andromeda Marine SA ("Andromeda"). The bunker supply contract contained an exclusive English jurisdiction clause. The time charterers went into charter 7 bankruptcy before making payment for the bunkers. OW Bunkers then sought payment from Andromeda on the basis that it had a maritime lien against the vessel.

Brookes & Co. acted for Andromeda.

Andromeda commenced proceedings against OW Bunker in England claiming a declaration that Andromeda was not a party to the bunker supply contract, It relied on article 17 of the Brussels Convention which provides that parties can agree that the courts of a particular contracting state are to have exclusive jurisdiction.

Shortly thereafter, OW Bunker arrested the vessel in Portugal and subsequently commenced in rem proceedings in the Texas District Court, asserting a maritime lien. OW Bunker challenged the jurisdiction of the English Court, submitting that since Andromeda had asserted that it was not a party to the contract for the sale of bunkers it could not rely on article 17.

Article 17 of the Brussels Convention

If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either in writing or evidenced in writing or, in international trade or commerce, in a form which accords with practices in that trade or commerce of which the parties are or ought to have been aware. Where such an agreement is concluded by parties, none of whom is domiciled in a Contracting State, the courts of other Contracting States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction.

The court or courts of a Contracting State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved.

Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to the provisions of Articles 12 or 15, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 16.

If an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention.

Andromeda, however, argued that it article 17 did apply at the time the English proceedings were brought because at that time OW Bunker's case had been that Andromeda was a party to the bunker supply contract which contained the exclusive jurisdiction clause. Andromeda argued that it had accepted the English jurisdiction clause as binding upon it in relation to the claims brought by OW Bunker. Andromeda argued that OW Bunkers' subsequent case, that Andromeda was not a party to the supply contract, did not change the arguments under article 17.

The Court held that it did not have jurisdiction to hear Andromeda's claim because,

1	For article 17 to apply, the agreement as to exclusive jurisdiction had to be clearly and precisely demonstrated not just by looking at the words of the contract but all the circumstances.
2	The question was whether Andromeda had agreed by acceptance to be bound by the jurisdiction clause. Although it might be possible for an acceptance to be demonstrated by the issue of proceedings in the chosen jurisdiction, Andromeda could not be said to have accepted, let alone accepted clearly and precisely, the jurisdiction clause when the purpose of the proceedings was to deny that it was bound by the contract which contained the clause. Before a jurisdiction clause could be "accepted" within the meaning of article 17, there had to have been some kind of offer capable of being accepted. All that was on offer in the present case was acceptance of the contract as a whole or nothing. A person was not entitled to pick and choose which clauses he would and would not accept. There was no evidence of Andromeda ever having accepted the jurisdiction clause or the contract in which it was contained
3	In any event, OW Bunker had never actually asserted that Andromeda was a party to the bunker supply contract. OW Bunker had relied on a maritime lien.
4	The time when the court had to judge whether jurisdiction was properly asserted was the time when the challenge to the jurisdiction was before it.

ST Shipping & Transport Inc v Vyzantio Shipping Ltd (The"Byzantio") [2004] EWHC 3339 (Comm)

By a charterparty on an amended Shelltime 4 form, Vyzantio Shipping Ltd, ("Vyzantio") chartered their vessel m.t. "Byzantio" to ST Shipping & Transport Inc. ("ST Shipping").

Vyzantio was a Maltese company whose registered office was no more than a nameplate at address in Valletta. Its sole director was a Greek citizen resident in Greece. Its managers were Aegean Shipping Management S.A. ("Aegean"). Vyzantio also had a contract with a firm of Maltese lawyers ("CDRA") for the provision of registered office services.

A dispute had arisen in respect of the vessel's last voyage under the charter. The vessel had been sub-chartered for this last voyage and had been delayed because of engine problems.

On 4 September 2002 ST Shipping sent a fax to Aegean requesting a six-month extension to the existing 12-month limitation period as their sub-charterers had indicated that a cargo claim might arise. Aegean agreed to an extension for any cargo claim. On 12 September 2002 ST Shipping issued a claim form which gave Vyzantio's address in Malta and was marked "Not for service out of the jurisdiction". On 20 September 2002 ST Shipping's solicitors notified Aegean by fax that a dispute had arisen under the charter inasmuch as the sub-charterers had indicated that a cargo claim would be forthcoming. The fax did not say that a claim form had been issued.

There was no further correspondence between ST Shipping and Vyzantio until after August 2004, however, the claim was pursued. On 11 March 2003 St Shipping obtained permission from the Court (in a without-notice application) to issue a concurrent claim form for service out of the jurisdiction and to serve it in Malta. They also successfully applied to have the validity of the concurrent claim form to be extended for six months.

On 28 April 2003 ST Shipping issued a concurrent claim form but it was not lodged with the Foreign Process Department of the High Court until 27 August 2003 by which time there was insufficient time to effect service, so a second application was made, without notice, to extend the time for service for a further six months. An extension to 12 March 2004 was obtained.

On 13 November 2003 the concurrent claim form was lodged again with the Foreign Process Department and thus the process of serving the claim form in Malta in accordance with Maltese law had begun.

Under Maltese law, where a Maltese company has no representatives resident in Malta, "Curators" are appointed to received service on the company's behalf. In this instance, notice of the application by the Attorney General of Malta to appoint Curators was served on CDRA on 5 February 2004.

On 2 March 2004 ST Shipping applied, without notice, for a third extension of time for service of the claim form and, on 3 March 2004, were granted a further extension up to 12 September 2004.

Shortly thereafter, two Curators were appointed to receive service on behalf of Vyzantio in Malta. The proceedings were duly served upon the Curators between 16 and 20 April 2004. Vyzantio, however, failed to enter an acknowledgement of service and, default judgment was entered against it on 16 July 2004.

Around 10 August 2004 CDRA sent Vyzantio copies of two Maltese court documents which had been translated into English. This was the first that Vyzantio knew of the proceedings. Vyzantio applied on 20 August 2004 to have the claim form, service of the claim form and default judgment set aside.

Vyzantio argued that the whole action should be set aside because,

1	The claim form had already expired by the time the Court made its orders of 11 March 2003
2	The order which had been made on 11 March 2003 was actually dated 31 March 2003 and only took effect on that date. Since the claim form had, by then expired, an extension of its validity could not be granted because there was no general power to grant extensions with retrospective effect.
3	Alternatively, the default judgment should be set aside under CPR 13.3(1)(a) (defendant having some real prospect of successfully defending the claim) and/or under CPR 13.3(1)(b) (some other good reason why the judgment should be set aside). As to r. 13.3(1)(b), Vyzantio argued that the default judgment should be set aside because ST Shipping had deliberately served the claim form by stealth in that the method of service had not brought the claim to its attention and thus Vyzantio had been caught unawares.

The Court held that,

1	The claim form had not expired by the time it was extended on 31 March 2003; the character of a claim form was determined by whether it was intended to be served out of the jurisdiction and not upon whether permission to serve it out of the jurisdiction had been granted. A claim form addressed to a defendant resident abroad was potentially valid for six months under CPR 7.5(3) even if it was marked "Not for service out of the jurisdiction".
2	The extension granted on 31 March 2003 was granted pursuant to an application made within time. The Court had power to grant the extension even though it made the order after the period of six months had expired. There was no question of the order being backdated in contravention of CPR 40.7.
3	Therefore, on the facts, the extensions of time for service of the claim form were justified and accordingly the claim form would not be struck out on the ground that the without notice orders should not have been made.
4	The circumstances in which the default judgment was obtained did provide a good reason why the default judgment should be set aside. These circumstances were (1) St Shipping's decision to serve the claim form in Malta without mentioning it to Aegean and (2) there had been a very considerable interval of time between the correspondence about the claim in September 2002 and the date of service in April 2004. This lapse of time had lulled Vyzantio into believing that the claim was not being pursued. Accordingly, the default judgment would be set aside under CPR 13.3(1)(b).
5	Although Vyzantio had a case to answer on the merits, the issue was not so clear that it could be determined summarily. Accordingly, the default judgment would also be set aside under CPR 13.3(1)(a) and since Vyzantio had succeede under both limbs of CPR 13.3, a condition of securing the claim was not appropriate.

Brookes & Co. acted for Vyzantio in this dispute.

Welex A.G. v Rosa Maritime Limited (The"Epsilon Rosa") [2002] EWHC 762 (Comm)

(see also our review of this case)

In early 2001 Liberty Steel and Services GmbH ("Liberty") purchased 5394 tonnes of steel plates from Welex A.G. ("Welex"). The delivery terms were c.f.r. free out Szcezecin, INCO Terms 2000, together with Welex's general purchase terms which stated (inter alia), "Unless otherwise agreed, bills of lading tendered under CIF and CFR contracts may be issued incorporating terms of any charter party".

The vessel, m.v. "Epsilon Rosa", owned by Rosa Maritime Limited ("Rosa") and managed by Epsilon Shipmanagement Ltd ("Epsilon"), was chartered to transport the cargo. The charterers were Red Sea Heavy Industries LA ("Red Sea") who fixed the charter through Red Sea's brokers, Caspi Cargo Lines ("Caspi").

On 19 March 2001 Caspi sent a recap telex which included the words "ARB IN LONDON ENGLISH LAW TO APPLY". Clause 47 of the recap telex had been amended by hand to read: "Arbitration if any to be settled in London in accordance with the Rules of the LMAA". Epsilon confirmed that the terms of the recap telex were in order and that "Epsilon Rosa" was fully fixed.

A bill of lading on the Congenbill form expressly "to be used with Charterparties" was issued for the carriage of the cargo. The shippers were shown to be Ilyich Iron and Steel Works and the consignee was named as "Korympic Steel International G.m.b.H. on behalf of Welex A.G." The bill of lading had been claused with ship's remarks that the cargo had been stored in the open, was wet before shipment and exhibited some rust. Clause 1 of the bill of lading stated: "All the terms, conditions, liberties and exceptions of the Charter Party including the Law and Arbitration Clause are herewith incorporated."

On the vessel's arrival at the discharge port the claimant's surveyors found that the cargo had been damaged. They believed that the damage was due to wetting by seawater and blamed leaking hatchcovers.

On May 31 2001, Rosa sold the "Epsilon Rosa" to Alexia Navigation Ltd ("Alexia"). In July 2001 Welex arrested the vessel in Portugal. Welex then filed a claim with the District Court of Szczecin against Rosa and Alexia claiming US$868,564. Alexia attempted to lift the arrest proceedings but failed.

On 19 September 2001, Rosa commenced arbitration proceedings in London pursuant to the fixture evidenced by the recap telex. In these proceedings Welex sought a declaration that no arbitration agreement had been incorporated into the contract of carriage and Rosa applied for an anti-suit injunction restraining Welex from continuing the proceedings in Szczecin or otherwise prosecuting proceedings against Rosa other than by way of the arbitration.

Rosa submitted that a charterparty had been executed and therefore the arbitration clause in it had been incorporated into the contract of carriage evidenced by the bill of lading. In the alternative, Rosa submitted that in the event a charterparty had not been executed, the recap telex and the associated documentation was sufficient to constitute the charterparty for the purpose of incorporating the arbitration clause.

The Court held,

1	it was common ground that the reference to a charter party in clause 1 of the bill of lading referred to a document or documents. It would not refer to an oral agreement and it was also common ground that it must have been agreed and reduced to writing when the bill of lading was issued.
2	while a contract for chartering a ship was normally embodied in printed form the parties' agreement could remain in written fax or telex exchanged. A signed charterparty was unnecessary. The terms of the charterparty could be readily identified from the contents of the recap telex and the standard form to which it referred.
3	the transferee of a bill of lading should not be affected by oral terms but the submission that where the contract is contained in or evidenced by a recap telex this did not qualify for the purpose of having been reduced to writing could not be accepted.
4	on the facts and the evidence Welex had been aware of and had approved the fixture; the "charter party" referred to in the bill of lading was the agreement contained in the recap telex.
5	on the assumption that English law was applicable, the arbitration clause referred to in the executed charterparty (alternatively the recap telex) was incorporated into the bill of lading.

The conclusion that the arbitration clause referred to in the executed charterparty was incorporated into the bill of lading was premised on the assimption that English law was applicable by virtue of art. 8(2) of the Rome Convention as enacted in the Contracts (Applicable Law) Act, 1990. The question as to whether Welex was entitled to rely on the laws of Ukraine or Switzerland and, if not, whether Rosa was entitled to an anti-suit injunction was to be heard in a subsequent hearing (Welex A.G. v Rosa Maritime Limited (The"Epsilon Rosa") (No. 2) [2002] EWHC 2035 (Comm) - see below).

Brookes & Co. acted for Rosa.

Welex A.G. v Rosa Maritime Limited (The"Epsilon Rosa") (No. 2) [2002] EWHC 2035 (Comm)

Article 8 of the Rome Convention

Material validity

1. The existence and validity of a contract, or of any term of a contract, shall be determined by the law which would govern it under this Convention if the contract or term were valid.

2. Nevertheless a party may rely upon the law of the country in which he has his habitual residence to establish that he did not consent if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law specified in the preceding paragraph.

This was the second of two hearings, the first of which had concluded that if English law was applicable, an arbitration clause referred to in an executed charterparty was incorporated into the bill of lading.

The issues before the Court in this second hearing were (1) whether the claimant, Welex was entitled to rely on the laws of the Ukraine or Switzerland to establish that it did not consent to the incorporation of the arbitration clause by virtue of art. 8(2) of the Rome Convention and, if not, (2) whether the defendant, Rosa, was entitled to an anti-suit injunction to restrain Welex from pursuing proceedings otherwise than by arbitration.

If Welex could rely upon the law of its country of residence, Switzerland, it could establish that it did not consent to the arbitration clause because (1) under Swiss lay, Welex would be bound to those terms to which the original shipper had consented and (2) under Ukraine law, the shippers were not bound by the arbitration clause.

It was held by the Court that,

1	the burden was upon Welex to displace the effect of art. 8(1) of the Rome Convention. The shippers had presented the Congenbill to the master for signature and it was not suggested that there was anything unreasonable in holding Welex to the contract of carriage as a whole. An arbitration clause is common in such contracts and in due course Welex succeeded to the shippers' rights and obligations. There was nothing "eccentric" or unjust in the English law to hold that both shipper and consignee were bound by the terms of the dispute resolution clause.
2	the transaction was an entirely conventional one and there was nothing in the circumstances which rendered it unreasonable to determine the effect of Welex's conduct by reference to English law.
3	Welex had not shown sufficient strong reasons to displace Rosa's entitlement to enforce the contractual bargain that there would be arbitration in London and therefore an anti-suit injunction would be granted.

Brookes & Co. acted for Rosa.

Welex A.G. v Rosa Maritime Limited (The"Epsilon Rosa") [2003] EWCA Civ 938

Welex appealed the above decisions. The issues for determination were whether the English law and London arbitration terms in the charterparty were incorporated into the bill of lading and whether Rosa ws entritled to an anti-suit injunction restraining Welex from proceeding with its claim in Poland.

The Court of Appeal upheld the decisions of the Commercial Court.

Schiffahrtsgesellschaft MS "Merkur Sky" m.b.H & Co. K.G. v MS Leerort NTH Schiffahrts G.m.b.H & Co. K.G. ("The"Leerort") [2001] EWCA Civ 1055

On 19 September 1998 the vessel "Zim Piraeus", having just entered the harbour, collided with the vessel "Leerort" in the Jaya Container Terminal, Colombo. Leerort had been lying in a berth and was laden with cargo. Leerort flooded and there was severe damage to her cargo.

Brookes & Co. represented the cargo interests.

The owners of "Zim Piraeus", Schiffahrtsgesellschaft MS "Merkur Sky" m.b.H & Co. K.G. admitted liability, accepting that the vessel had entered the harbour at excessive speed and that the master had failed to engage manual control immediately before going astern when he knew that the vessel's forward speed would prevent an astern start-up in automatic mode and that having engaged manual control, the master had failed to put the engine immediately full astern. They applied for an order limiting their liability for the collision.

It was held by the Admiralty Court that the owners were entitled to limit their liability. The cargo interests chalenged the the owners' rights to limit their liability in the Court of Appeal.

The Court of Appeal held that,

1	it was only the personal act or omission of a shipowner which defeated the right to limit liability. In order to defeat the right it was necessary to identify tyhe causative act or omission on the part of the shipowner, charterer, manager or operator that caused the loss. It was only conduct committed with intent to cause such loss or recklessly with knowledge that such loss would probably result that defeated the right to limit and this required foresight of the very loss that actually ocurred, not merely of the type of loss that occurred.
2	when damage resulted from a collision the shipowner would only lose his right to limit if it could be proved that he deliberately or recklessly acted in a way which he knew was likely to result in the loss of or damage to the property of another in circumstances where the same consequences would be likely to flow to his own vessel.
3	the cargo interests had not demonstrated that the owners had carried out any act or made any omission with the intention of bringing their vessel into collision or performed recklessly with the knowledge that it was likely to produce this result
4	the owners were entitled to limit their liability

Other reported cases:

	Global Container Lines Ltd v Bonyad Shipping Co. [1999] 1 Lloyds Rep. 287
	Lukoil-Kaliningradmorneft Plc v Tata Ltd and Global Marine Transportation Inc. [1999] 1 Lloyd's Rep. 365
	Lukoil-Kaliningradmorneft Plc v Tata Ltd and Global Marine Transportation Inc. [1999] 2 Lloyd's Rep. 129
	Global Container Lines Ltd v Bonyad Shipping Co. [1998] 1 Lloyd's Rep. 528.