2025 Maritime Digest of Arbitration Awards and Court Rulings
ASBATANKVOY -- SHORTAGE AND CONTAMINATION -- DAMAGES SET-OFF AGAINST DEMURRAGE -- Partial Final Award
When Vessel suffered a lengthy breakdown at Charterer’s supplier’s berth, Charterer withheld demurrage payment whilst claiming damages from Owner. Citing an earlier Court decision, the Panel ruled that "Unless there are explicit and clear provisions in the Charter Party permitting deductions from freight, Shipowner is entitled to freight regardless of Charterer’s claim for damage, shortage and contamination."
NYPE -- TIME CHARTER -- RISK OF PIRACY -- DEVIATION AND SECURITY GUARD EXPENSE -- Owner Award
Due to the prevalence of piracy, Vessel deviated to take on security experts. The Panel deemed the deviation to be a reasonable act, consistent with due diligence and good seamanship. Furthermore, the Panel considered the deviation to be in the interest of both parties and as such, the Vessel was on-hire throughout the deviation with the cost of the security personnel shared equally by Owner and Charterer.
ASBATANKVOY -- UNSEAWORTHINESS -- FREIGHT DIFFERENTIAL -- MITIGATION COSTS -- EXTRA INSPECTION COSTS -- Charterer Award
An extension of SMA 4016, the central issue to be decided is whether the cargo was adequately described in the charter and whether Charterer is obliged to notify Owner as to the cargo's sensitivity to iron thereby requiring tank coatings to be intact. This Award affirms that the Q88 should reference the Vessel’s current condition as opposed to the "as built" condition and that there is a breach of the Charter Party should the Vessel’s tanks not conform with the Q88.
ASBATANKVOY -- JURISDICTION -- DEVIATION EXPENSE -- FAILURE TO ACCEPT FULL CARGO -- DEMURRAGE -- TIME BAR -- Charterer Award
Charterer paid lump sum freight on the mother vessel basis a full cargo of 66K MT. When mother vessel could only load 63K MT, daughter vessel incurred deviation expenses when she had to return to Singapore to discharge the balance of the cargo. At arbitration, Owner questioned jurisdiction claiming Charterer failed to properly inform them of the arbitration, Charterer claimed costs of the deviation and Owner claimed demurrage which charterer claimed was time barred.
When determining the validity of a vessel's notice of readiness (NOR), one must consider the terms of the contract and the facts surrounding the event. In the first instance, the fundamental requirement of a valid Notice of Readiness is that the Vessel must be ready in all respects to work the cargo i.e. legally, physically and geographically. The basis of our discussion herein will focus on what constitutes the Vessel fulfilling the geographic readiness obligation, including the nuances of calling at river ports.
NYPE -- VOYAGE CHARTER OR TIME CHARTER TRIP -- OVERTURNING ARBITRATION AWARD -- REMOTENESS OF DAMAGES -- Owner Award
In upholding the arbitration award, the Court discussed whether the Charter was a Voyage Charter or Time Charter Trip, whether Owner obtaining a Rule B attachment in New York breached the London arbitration clause and whether the arbitration Panel properly applied the "assumption of responsibility" test in regards to remoteness of damage. Damages were awarded Owner basis the minimum duration of the repudiated time charter trip.
SEAWORTHINESS -- LOST PROFITS -- OBLIGATION TO MITIGATE DAMAGES -- Owner Award
Owner breached the contract when ship was deemed unseaworthy. Court of Appeal ruled that when mitigating damages, the aggrieved party must take all reasonable steps in order to mitigate the loss caused by the breach. The aggrieved party cannot recover damages which resulted from its unreasonable action or inaction or which were avoidable, however, the aggrieved party need not greatly inconvenience itself or incur extraordinary expenses in order to mitigate losses. And, unless the communication is impractical, the aggrieved party should inform the defaulting party of the steps being taken to mitigate damages.
FOB SALES CONTRACT -- REPUDIATORY BREACH -- TIME BAR --ASSESSMENT OF DAMAGES -- MITIGATION OF LOSS -- Buyer Award
When the FOB Seller failed to deliver a cargo of oil, the Court awarded Buyer damages representing the difference between the contract price and the value of the oil on the date when it should have been delivered less Buyer’s reduced hedging loss when Buyer closed out its position early due to non-delivery of the oil. The Court also ruled Buyer’s claim was not deemed time barred as there was no time bar clause in the 2007 NNPC Terms.
NYPE 1946 -- TIME CHARTER -- OPTION TO ADD OFF-HIRE PERIOD TO CHARTER PERIOD -- OPTION NOT DECLARED -- VESSEL NOT DELIVERED WITHIN INITIAL CHARTER PERIOD -- Charterer Award
During the initial time charter period the Vessel was off-hire for 159 days with the charter party giving Charterer the option to add the off-hire to the charter period. Charterer, without formally advising Owner that they were exercising this option delivered the Vessel two months after the initial period. The Panel determined that either there was no need for Charterer to formally advise Owner of Charterer exercising the option or, even if there was a need, Charterer’s actions leading up to the initial redelivery date and when continuing to trade the Vessel after the initial redelivery date was Charterer advising Owner that off-hire would be added to the initial charter period.
SALES CONTRACT -- FORCE MAJEURE -- TERMINAL EXPLOSION AND FIRE -- NEGLIGENCE -- Seller Award
In the earlier Partial Final Award, SMA No. 4073, the Panel determined Buyer was responsible for cargo in shoretanks destroyed by an explosion whilst Vessel was discharging. The Panel held off in determining whether Buyer’s force majeure defense applied to the cargo remaining onboard the Vessel until after the cause of the explosion was determined. In this Final Award, SMA No. 4083, the Panel concluded that the cause of the explosion was due to human negligence and, as such, is not within the scope of force majeure. Buyer is responsible for the extra expense in disposing of remaining product.
