DHL Project & Chartering Limited v Gemini Ocean Shipping Co Limited
[2022] EWCA Civ 1555
Pan Ocean Co Ltd v Daelim Corporation
24 February 2023
[2023] EWHC 391 (Comm)
High Court
A ship was off-hire due to a failed inspection. The judge agreed that the arbitrator should have made the charterer and the owner cooperate to speed up the re-inspection. The case will go back to the arbitrator to decide how much money the owner should get.
Key Facts
- •Pan Ocean Co Ltd (Charterers) appealed an arbitration award against Daelim Corporation (Owners) regarding a dispute over off-hire time of the vessel DL LILAC.
- •The dispute arose from a failed holds inspection at Jubail, the loading port, due to rust, paint flakes, and cargo residue.
- •The vessel was placed off-hire under clause 69 of the charterparty (amended NYPE 1993 form) until passing reinspection.
- •The Tribunal implied a term obligating Charterers to have the vessel reinspected without delay after the Master notified readiness.
- •The Tribunal awarded Owners US$106,611.92 in hire and US$16,308.93 in bunkers for the delay.
- •The appeal concerned whether the Tribunal erred in implying the term and its application.
Legal Principles
Test for implication of terms: A term is implied if it's necessary to give business efficacy to the contract or is so obvious it goes without saying.
Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742
Arbitration Act 1996, section 69(2): An appeal on a question of law requires either party agreement or court leave. Subject to section 70(2) restrictions.
Arbitration Act 1996
Arbitration Act 1996, section 70(2): An appeal cannot be brought if the applicant hasn't exhausted available arbitral processes of appeal, review, or recourse under section 57.
Arbitration Act 1996
Arbitration Act 1996, section 57: The Tribunal may correct an award for clerical mistakes or ambiguity.
Arbitration Act 1996
LMAA Terms 2017, Article 27: The Tribunal has powers to correct mistakes, omissions, or ambiguities and provide explanations.
LMAA Terms 2017
Courts strive to uphold arbitral awards, reading them reasonably and commercially. Awards are read as a whole.
Zermalt Holdings SA v Nu-Life Upholstery Repair Limited [1985] 275 EG 1134; MRI v Erdenet [2013] EWCA Civ 156
Outcomes
The appeal was allowed in part.
The Tribunal used the correct test for implied terms but incorrectly formulated the implied term and its application. The implied term should have required reasonable diligence from both parties for reinspection, not a strict obligation on Charterers alone.
The Award was remitted to the Tribunal.
To determine the proper application of the correctly formulated implied term, assess whether either party breached it, determine the relevant timescales, and calculate the financial consequences.