Pacific Basin IHX Ltd v Bulkhandling Handymax AS [2011] EWHC 2862 (Comm) (08 November 2011)

Pacific Basin IHX Ltd v Bulkhandling Handymax AS [2011] EWHC 2862 (Comm) (08 November 2011)

The arbitrators erred in law by construing 'may be, or are likely to be, exposed to War Risks' as referring to the seriousness of the event rather than the likelihood of exposure. The correct test is whether, in the reasonable judgment of the owners, there was a real likelihood (real danger) that the vessel would be exposed to acts of piracy. The matter must be remitted to the arbitrators to reconsider this question in light of the correct legal test.

Citation
[2011] EWHC 2862 (Comm)
Parties
Claimant: Pacific Basin IHX Limited; Defendant: Bulkhandling Handymax AS
Jurisdiction
England and Wales
Judgment Date
08 November 2011
Procedural Posture
Commercial Court Appeal Under Arbitration Act 1996 S.69 / Judgment on Appeal From Arbitration Award
Outcome
Award remitted to arbitrators for reconsideration in light of judgment.
Legal Topics
Interpretation of War Risks Clauses, Deviation in Carriage of Goods by Sea, Owners' Discretion Under Charterparty, Piracy Risks, Reasonableness of Owners' Judgment
Maritime Law Arbitration Contract Law Interpretation of War Risks Clauses Deviation in Carriage of Goods by Sea Owners' Discretion Under Charterparty Piracy Risks Reasonableness of Owners' Judgment

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Parties

Pacific Basin IHX Limited

Claimant

Bulkhandling Handymax AS

Defendant

Procedural Posture

Commercial Court Appeal Under Arbitration Act 1996 S.69 / Judgment on Appeal From Arbitration Award

Legal Issues

  1. 1 Proper construction of 'may be, or are likely to be, exposed to War Risks' in CONWARTIME 1993 clause
  2. 2 Whether owners' judgment to avoid Gulf of Aden was reasonable under the clause
  3. 3 Whether owners had a duty to make reasonable enquiries before exercising discretion

Ratio Decidendi

The arbitrators erred in law by construing 'may be, or are likely to be, exposed to War Risks' as referring to the seriousness of the event rather than the likelihood of exposure. The correct test is whether, in the reasonable judgment of the owners, there was a real likelihood (real danger) that the vessel would be exposed to acts of piracy. The matter must be remitted to the arbitrators to reconsider this question in light of the correct legal test.

Court Disposition

Award remitted to arbitrators for reconsideration in light of judgment.

Orders

  • No immediate order for remission; parties to make further submissions as to the appropriate order after considering the judgment.