Isabella Shipowner SA v Shagang Shipping Co Ltd

Isabella Shipowner SA v Shagang Shipping Co Ltd

The arbitrator erred in law by holding that the White and Carter principle did not apply to time charters and by misapplying the legitimate interest exception. The owners’ conduct was not wholly unreasonable or perverse, and this was not an extreme case justifying the exception. The owners were entitled to refuse early re-delivery and claim hire. The section 68 challenge failed as there was no serious irregularity.

Parties
Claimant: Isabella Shipowner SA; Defendant: Shagang Shipping Co Ltd
Jurisdiction
England and Wales
Judgment Date
26 April 2012
Procedural Posture
Commercial Arbitration Appeal / Judgment on Appeal From Arbitration Award
Outcome
Appeal allowed; award varied; section 68 application dismissed
Legal Topics
Time Charterparty, Repudiatory Breach, Right to Affirm Contract, Damages, Legitimate Interest Exception, Section 68 and 69 Arbitration Act 1996
Commercial Law Arbitration Shipping Law Time Charterparty Repudiatory Breach Right to Affirm Contract Damages Legitimate Interest Exception +1 more

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Parties

Isabella Shipowner SA

Claimant

Shagang Shipping Co Ltd

Defendant

Procedural Posture

Commercial Arbitration Appeal / Judgment on Appeal From Arbitration Award

Legal Issues

  1. 1 Whether owners were entitled to refuse early re-delivery and affirm the charter or were bound to accept early re-delivery and sue for damages
  2. 2 Whether the arbitrator failed to give sufficient weight to owners’ submissions, amounting to serious irregularity under section 68 Arbitration Act 1996

Ratio Decidendi

The arbitrator erred in law by holding that the White and Carter principle did not apply to time charters and by misapplying the legitimate interest exception. The owners’ conduct was not wholly unreasonable or perverse, and this was not an extreme case justifying the exception. The owners were entitled to refuse early re-delivery and claim hire. The section 68 challenge failed as there was no serious irregularity.

Court Disposition

Appeal allowed; award varied; section 68 application dismissed

Orders

  • Declaration that owners were entitled to refuse the purported re-delivery and claim hire under the charterparty
  • Declaration that charterers were not entitled to insist on re-delivery on 9 August 2011