Marchand Navigation Co v Olam Global Agri Pte Ltd and Another –Singapore High Court – 29 Nov 2023
MARIA THEO I was chartered by Sinco from disponent owners, Marchand Navigation Co. on a NYPE form under English law and with the arbitration in London. Sinco then sub-chartered the vessel to Olam under a voyage charter. Olam incurred demurrage charges which they agreed to pay Sinco, however, Marchand exercised a lien against Olam. The notice stated that Sinco was in breach of the charterparty for failing to pay hire. Marchand claimed $406,401.47 for unpaid bunkers that had been supplied by Integr8 to Sinco. Sinco had not paid Integr8, so Marchand paid the amount to prevent the vessel’s arrest by Integr8 and took over Integr8’s rights against Sinco.
Sinco disputed Marchand’s claims, asserting no debt owed. Olam, faced with conflicting claims, proposed to pay the sum into an escrow account but Marchand rejected this. Legal action ensued resulting in the sum being directed into court on September 7, 2023. Olam accepted liability but didn’t determine payment entitlement. The dispute then focused on Marchand and Sinco.
Clause 18
The charterparty was on the NYPE standard form and contained the following clause, clause 18:
“The Owners shall have a lien upon all cargoes, and all sub-freights or hire or sub-hires or demurrages and time for detention, if any for any amounts due under this Charter, including General Average contributions, and the Charterers to have a lien on the Ship for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once. Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel.”
Issues disputed
Two critical questions emerged in the case. First, whether the disagreement between Marchand and Sinco over “amounts due under this Charter” affected Marchand’s right to enforce Clause 18 against Olam for the demurrage owed to Sinco. Marchand contended that its payment for bunkers was an amount due under the charter, justifying its exercise of the lien. Second, whether the arbitration clause affected Marchand’s ability to invoke Clause 18 against a sub-charterer owing demurrage. Sinco argued that all disputes should be resolved through arbitration and disputed the applicability of Clause 18 to bunker payments. Marchand, however, upheld its stance, citing its assignment of Integr8’s rights and asserting the validity of its lien.
Ruling
The court upheld Marchand’s lien over the $190,112 that Olam owed to Sinco, finding no need for arbitration. It ruled that Marchand’s lien under Clause 18 covered the demurrage Olam owed to Sinco and included the bunker costs. Precedents like Samuel v West Hartlepool Steam Navigation (1907) and Alpha Marine Corporation v Minmetals Logistics Zhejiang Co Ltd (The Smart, 2022) supported this decision. These cases, along with commentary in Coughlin, Time Charters (7th Edition, 2014), confirmed that an owner’s claim for bunker payments on behalf of a charterer is included under “any amounts due under this Charter” in Clause 18, as long as the charterer is responsible for the payment.
As for the arbitration clause, the court acknowledged a potential dispute between Sinco and Marchand, which triggered the arbitration clause. However, it ruled that Marchand’s lien remained enforceable despite any dispute for three reasons:
Olam, as a non-party to the charterparty, was not bound by the arbitration clause and had the right to seek resolution in court. Secondly, the arbitration clause mandated submission only for disputes arising directly from the charterparty, not for matters concerning lien enforcement. Additionally, the precedent from Care Shipping Corporation v Latin American Shipping Corporation (The Cebu, 1983) [1983] 1 Lloyd’s Rep 302, supported the enforceability of the lien even amidst ongoing disputes.
Thus, Marchand retained the right to exercise its lien under Clause 18, unaffected by any existing dispute.