Phoenix Bulk Carriers BVD Ltd v Triorient LLC (The “MV Pretty Lady”) – SMA 4373, 27 Sep 2019

Phoenix, Bulk Carriers (BVI) Ltd. (“Owner”) started this arbitration to reclaim $391,221.55 in detention and lost income arising from the series of activities involving a spot charter with Triorient LLC (hereinafter “Triorient” or “Charterer”) dated  Nov 2016 for the MN Pretty Lady (hereinafter, “Pretty Lady” or “Vessel”). Triorient chartered the vessel from Phoenix, to move a complete cargo of 34,000M T 10% MOLOO of DRI A (Intention known as in B/L immediate reduced iron (A) briquettes, hot molded) from Palau, Venezuela or ISB/SA Puerto Ordaz, Venezuela to Diliskelesi, Turkey.

The case involved Triorient’s inability to provide cargo as required by the charter party. They won a tender to purchase direct reduced iron, hot molded briquettes from Complejo Siderurgico de Guayana, C.A. Comsigua. However, when Triorient received the contract from Comsigua with directions to promptly return the executed contract and remit the fifty percent payment Triorient purposely returned the contract to Comsigua unexecuted with proposed changes to suit Triorient.

Comsigua subsequently terminated the tender on November 13, leaving Triorient with a vessel and a receiver yet no cargo. Rather than advising Owners on the lost cargo and negotiating some sort of settlement, Triorient allowed the vessel to carry on its voyage from West Africa to the load port whilst attempting to persuade Comsigua to reconsider its termination.   When Comsigua would not reconsider the termination, Triorient sought an alternate cargo which they eventually located but due to its intended load date of mid January, caused Triorient to worry that they would have to pay to hold the vessel till the cargo was prepared to load. Thus, Triorient decided to cancel the charter with Phoenix, on December 3.  Upon the vessel’s arrival in the region, Charterer had ordered it to wait downriver outside the load port.

Phoenix subsequently sought $391,221.55 plus interest for detention along with lost profits from the alleged one-sided and wrongful canceling of the charter. They also seek merit of costs in addition to charges of $87,769.22, with an assessment of the panel’s charges towards Triorient. Triorient refused Phoenix’s claims and requested that attorneys’ charges along with the panel’s charges be assessed towards the Owner. Supporting its position, Triorient argues several ideas why it is not accountable for any kind of damages to Phoenix. First, Charterers argued that the force majeure clause applies and eliminates all liability. Charterers further argue they had no requirement to load the PRETTY LADY because the vessel was not seaworthy in that she was not capable of lifting the contracted DRI.  Charterer further argued that Owner failed to properly mitigate damages.

Triorient issued some sort of cancellation notice in search of absolving itself of all duties towards the Owner regarding its failed efficiency. Because of the delays and information that Triorient did not have the cargo, Owners began to seek other choices for the vessel in order to mitigate damages. Upon being informed of the non availability of cargo, Owner sought mitigating voyages and ended up substituting the vessel into an internal fixture. Thereafter, Phoenix issued a detention statement of $144,194.44 for the time at the demurrage rate that the vessel sat before its next employment. Phoenix further sought to recover additional losses from Triorient’s cancellation which it calculated by simply subtracting the exact net result of the IMI mitigation trip from the predicted voyage results of the original hire with Triorient.  This amount was $247,027.11.

The Panel viewed the facts, evidence, and justifications presented in this case. In its Post-Hearing Memorandum, Triorient raised the unseaworthiness argument; an argument that had not been presented previously. The argument was that the Vessel cannot transport the intended cargo associated with DRI A under the charter with the vessel’s head owner and thus the Vessel is unseaworthy. In support of the claim, Triorient supplies a duplicate of the rental between Phoenix as well as the Head Owner, which references the Gard P&l. The Panel finds this argument to be misdirected, with the support taken out of context. The Panel further found the lost cargo to be the fault of Charterer when it attempted to renegotiate the sale and thus it did not fall within the context of the force majeure clause.  In ruling in full for Phoenix, the Panel ruled that Phoenix be awarded 85% of its attorneys’ fees along with the arbitrators’ fees; i.e. Triorient LLC is directed to pay Phoenix Bulk Carriers (BVI) LIMITED in the amount of $523K.