Dainford Navigation Inc. v PDVSA Petroleo S.A. "Moscow Stars"

Dainford Navigation Inc. v PDVSA Petroleo S.A. "Moscow Stars"

There is a sufficient nexus between the cargo and the arbitral proceedings where a contractual lien is exercised over the cargo as security for a claim in arbitration, making the cargo 'the subject of the proceedings' for the purposes of section 44(2)(d) of the Arbitration Act 1996. There is overwhelmingly good reason to order a quick sale given the ongoing costs, lack of viable alternatives, and the impasse between the parties. The court therefore has power and should exercise its discretion to order sale of the cargo.

Parties
Claimant/owner: Dainford Navigation Inc.; Defendant/charterer: PDVSA Petroleo S.A.
Jurisdiction
England and Wales
Judgment Date
02 August 2017
Procedural Posture
Commercial Arbitration Related Application / Judgment on Application for Order for Sale of Cargo Under Section 44 of the Arbitration Act 1996
Outcome
Application granted
Legal Topics
Interim Relief in Arbitration, Lien Over Cargo, Order for Sale of Goods, Charterparty Disputes
Arbitration Commercial Law Shipping Law Interim Relief in Arbitration Lien Over Cargo Order for Sale of Goods Charterparty Disputes

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Parties

Dainford Navigation Inc.

Claimant/owner

PDVSA Petroleo S.A.

Defendant/charterer

Procedural Posture

Commercial Arbitration Related Application / Judgment on Application for Order for Sale of Cargo Under Section 44 of the Arbitration Act 1996

Legal Issues

  1. 1 Whether the court has power under section 44(2)(d) of the Arbitration Act 1996 to order sale of cargo not itself the subject of the arbitration claim but over which a lien is exercised as security for sums claimed in arbitration
  2. 2 Whether there is 'good reason' to order a quick sale under CPR 25.1(c)(v)
  3. 3 Whether the court should exercise its discretion to order sale in the circumstances

Ratio Decidendi

There is a sufficient nexus between the cargo and the arbitral proceedings where a contractual lien is exercised over the cargo as security for a claim in arbitration, making the cargo 'the subject of the proceedings' for the purposes of section 44(2)(d) of the Arbitration Act 1996. There is overwhelmingly good reason to order a quick sale given the ongoing costs, lack of viable alternatives, and the impasse between the parties. The court therefore has power and should exercise its discretion to order sale of the cargo.

Court Disposition

Application granted

Orders

  • Order for sale of the cargo on board the vessel 'Moscow Stars' in the terms proposed by the claimant
  • No requirement for fortification of the claimant's undertaking in damages at this stage