STX Pan Ocean v Ugland Bulk Transport

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STX Pan Ocean Co Limited v Ugland Bulk Transport AS (The "Livanita")
English Commercial Court: Langley J: [2007] EWHC 1317 (Comm): 06 June 2007

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David Davies (instructed by Clyde & Co) for the Claimant, STX Pan Ocean
Timothy Young QC and Sudhanshu Swaroop (instructed by Stephenson Harwood) for the Defendant, Ugland Bulk

Echoing the decision in AIC Ltd v Marine Pilot Ltd
1, the court found that a charterparty providing for "one time charter trip via St Petersburg..." combined with a trading exclusion containing the words "trading to be worldwide between safe ports, safe berths and anchorages and places..." did contain an express warranty as to the safety of St Petersburg.

DMC Category Rating: Confirmed

This case note is based on an Article in the June 2007 Edition of the ‘Shipping Offshore and Transport Bulletin’, published by the international firm of lawyers, DLA Piper. DLA Piper is an International Contributor to this website.

The relevant charter contained the provisions set out in the Summary above and a further provision that "the vessel shall not be required to enter any ice-bound port ... or where there is risk that ... the vessel will not be able on account of ice to safely enter the port or get out..."

Sailing under that charter, the Livanita ("the vessel") sailed from St Petersburg to Dunkirk in January 2003 and was damaged by ice. The shipowner claimed for the damage to the vessel’s hull, alleging breach by the charterer of the safe ports clauses in the charter.

On appeal from an arbitration award against the charterer, the court had to consider whether, where a charterparty expressly names a loading port and also contains, in a different section of the charterparty, a safe port warranty, that safe port warranty applies to the named loading port.

The judge found that there was no inherent inconsistency between a safe port warranty and a named loading or discharging port. In considering the terms of a charter, effect should be given to all terms that are not inconsistent and, in the absence of inconsistency here, effect should be given to both the relevant terms.

As the arbitration tribunal had pointed out, it did not matter that the safe port warranty fell within a provision dealing (also) with trading exclusions or that the standard warranty in the original form had in this case been deleted. The words in the typed in clause ("trading to be worldwide between safe ports…) were clear and consistent with the other terms, and effect could be given to them.

The judge confirmed that he had read the decision in AIC Ltd v Marine Pilot Ltd1 and agreed with it.

[1] [2007] EWHC 1182 Comm

Safe Port
One point that arose in this case and that may be worth bearing in mind for winter journeys involving northern ports is that ice does not necessarily equate with unsafety. Just because St Petersburg may be customarily affected by ice in January does not mean that the shipowner voluntarily took on a risk of damage by ice. In this case, the presence of ice itself was plainly contemplated by both parties as it was referred to in the charter. It was ice blocks caused by an ice-breaker that caused the unsafety and damage to the vessel and not the presence of ice in itself.

Arbitration and Procedure
In permitting the charterer to appeal against the arbitrators’ award, Tomlinson J found that, although there was a relatively small sum in issue (around US$73,000), the question of law in issue was one which would substantially affect the rights of the parties and was of great interest to the market. No doubt to the chagrin of the shipowner and charterer, important issues of this kind can sometimes arise when there is not a huge amount at stake financially and there is the risk inherent in that of costs becoming disproportionate to the sums in issue. The resolution of the issue, however, is often worth it to remove future uncertainty for the parties and for the market in general.

In the main hearing, Langley J also highlighted the need to ensure that all possible grounds for appeal from an award have been raised before the arbitrators. He indicated that an additional ground, which was spelled out by Tomlinson J in permitting leave to appeal but which had not been expressly raised before the arbitrators, could not be raised on appeal.

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