Occidental Chartering Inc v Progress Bulk Carriers Ltd [2012] EWHC 3515 (Comm) (06 December 2012)

Occidental Chartering Inc v Progress Bulk Carriers Ltd [2012] EWHC 3515 (Comm) (06 December 2012)

Where a chain of charterparties is on materially back-to-back terms and the parties have treated related companies as one for the purpose of passing liabilities, the claimant may recover as damages costs incurred up the chain, provided liability is established and not precluded by remoteness or causation. The construction of the Amending Award must reflect the parties' intentions and commercial reality, not a narrow literalism. The arbitrators erred in holding that a gap in the chain of arbitration references precluded recovery.

Citation
[2012] EWHC 3515 (Comm)
Parties
Claimant: Occidental Chartering Inc; Defendant: Progress Bulk Carriers Ltd
Jurisdiction
England and Wales
Judgment Date
06 December 2012
Procedural Posture
Commercial Arbitration Appeal / High Court Appeal Under Section 69 Arbitration Act 1996
Outcome
Appeal allowed; Award varied to permit recovery of costs as damages.
Legal Topics
Arbitration Awards, Chain of Charterparties, Safe Port Warranty, Damages for Breach of Contract, Recoverability of Costs as Damages
Arbitration Commercial Law Shipping Arbitration Awards Chain of Charterparties Safe Port Warranty Damages for Breach of Contract Recoverability of Costs as Damages

Case Brief

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Parties

Occidental Chartering Inc

Claimant

Progress Bulk Carriers Ltd

Defendant

Procedural Posture

Commercial Arbitration Appeal / High Court Appeal Under Section 69 Arbitration Act 1996

Legal Issues

  1. 1 Whether the claimant (OCI) could recover as damages from the defendant (PBC) the costs incurred by a related company (OSC) in a head arbitration with the registered owners, passed down a chain of back-to-back charterparties.
  2. 2 Proper construction of paragraph D of the Amending Award and whether it permitted such recovery.
  3. 3 Whether a gap in the chain of arbitration references or charterparties precluded recovery of such costs.

Ratio Decidendi

Where a chain of charterparties is on materially back-to-back terms and the parties have treated related companies as one for the purpose of passing liabilities, the claimant may recover as damages costs incurred up the chain, provided liability is established and not precluded by remoteness or causation. The construction of the Amending Award must reflect the parties' intentions and commercial reality, not a narrow literalism. The arbitrators erred in holding that a gap in the chain of arbitration references precluded recovery.

Court Disposition

Appeal allowed; Award varied to permit recovery of costs as damages.

Orders

  • OCI entitled to recover US$164,352.04 (registered owners' costs in head arbitration)
  • OCI entitled to recover £5,500 (costs of the Award in head arbitration)