SK Shipping Europe PLC v. Capital VLCC 3 Corporation and Others (The “C Challenger”) – Court of Appeal (Males, Phillips and Carr LJJ) [2022] EWCA Civ 231– 25 February 2022
Capital Maritime and Trade Corporation negotiated a two-year time charter for two vessels from SK Shipping on November 25, 2016. Under the charterparty, Capital VLCC 3 was named as Capital Maritime and SK Shipping Europe PLC was named as SK Shipping.
The speed and consumption data of the vessels’ last 3 voyages were set out in the charterparty and were guaranteed by SK Shipping in clause 24(a) of the Shelltime 4 form. The guarantee by SK Shipping was that the warranted performance would be achieved over the whole term of the charter, with adjustment being made for adverse weather conditions. In the event of over-consumption, Capital Maritime would be owed compensation.
In February 2017, Capital Maritime complained that the consumption of bunkers was far greater than outlined in the charter, and they stopped paying hire for one of the vessels in June 2017. In October 2017, Capital Maritime motioned to terminate the charter for repudiatory breach for that same vessel on the grounds of misrepresentation. Proceedings continued in respect to this vessel alone.
Capital Maritime claimed that representations had been made during the parties’ negotiations and that they had been entitled to cancel the charter in October 2017.
The original judgment stated that the data from the last 3 voyages that was presented and was assumed to be upheld over the next voyages, ceased to be true. In this case, the representations were made negligently but not fraudulently. However, the ruling stated that Capital Maritime would have ended the charter because of over-consumption whether or not the original representations had been made. Because of this, Capital Maritime’s misrepresentation case failed, and it was decided that they had not been entitled to terminate the charterparty in October 2017. The early termination of the charterparty had been deemed a repudiatory breach itself and entitled SK Shipping to damages.
Capital Maritime appealed this decision citing that the representation of consumption in the charter implied a guaranteed representation of future performance.
In the appeal it was held that there was no specific guarantee of future performance indicated in the charter. The warranties that were proposed in the contractual negotiations formed clause 24 of the Shelltime 4 form and specifically mentioned the possibility of over-consumption. It was upheld that the charter would have been canceled because of over-consumption whether or not the initial representations had been made.
The appeal was dismissed.