Navalmare UK v Kale Maden Hammaddeler Sanayi ve Ticart - The Arundel Castle

DMC/SandT/17/13

England

Navalmare UK Limited v Kale Maden Hammaddeler Sanayi ve Ticart AS (The “Arundel Castle”)

English Commercial Court: Knowles J: [2017] EWHC 116 (Comm): 31 January 2017

Ravi Aswani (instructed by Sutherland Europe LLP) for Navalmare

Michael Proctor (instructed by Shaw Lloyd & Co) for Kale

VOYAGE CHARTER: MEANING OF “PORT LIMITS”: ARBITRATION ACT 1996 SECTION 69 APPEAL

Summary

The particular terms of the voyage charter, which was a port charter, meant the vessel was not an arrived ship when anchored outside the “port limits” marked on the Admiralty chart for Krishnapatnam port, despite the port authority ordering the vessel to anchor at that location due to congestion at the port.

Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor of England & Wales, and International Contributor to DMC’s Case Notes

Background

Navalmare (“Owners”) voyage chartered the “Arundel Castle” to Kale (“Charterers”) on an amended GENCON 94 form for a voyage with cargo loaded at the port of Krishnapatnam, on the East coast of India.

The voyage charter required the tender of the notice of readiness "on vessels arrival at load/disch ports within port limits".

The loading port was congested and the vessel was unable to proceed straight to berth. She anchored at a location directed by the port authority. Navalmare tendered notice of readiness. A demurrage claim followed.

The arbitrators (Mr Brian Williamson and Mr John Schofield) held that notice of readiness given where the vessel was outside "port limits" was invalid. They identified "port limits" by reference to the relevant Admiralty chart. It was common ground that the vessel anchored outside the "port limits" shown on that chart.

On appeal to the High Court, the question for determination was: "On a proper interpretation of the fixture recap… if the [owners] had no right to tender notice of readiness outside port limits, what is the meaning of port limits?"

Navalmare submitted that "port limits" included any area within which vessels were customarily asked to wait by the port authorities and over which the port authorities exercised authority or control as regards the movement of shipping.

Alternatively, Navalmare submitted, "port limits" included any area where vessels loaded or discharged cargo including berths, wharves, anchorages, buoys and offshore facilities, as well as places outside the legal, fiscal or administrative area where vessels were ordered to wait for their turn, no matter the distance from that area.

Judgment

The judge noted the common law position is that as defined by the House of Lords’ decision in The “Johanna Oldendorff” (fn1):

“Before a ship can be said to have arrived at a port she must, if she cannot proceed immediately to a berth, have reached a position within the port where she is at the immediate and effective disposition of the charterer. If she is at a place where waiting ships usually lie, she will be in such a position unless in some extraordinary circumstances proof of which would lie in the charterer.”

The judge noted that the formulation of the test for an arrived ship was concerned not only with the nature or quality of the vessel’s position but also with the question whether that position was inside port limits rather than outside, even though a usual waiting place would not always be within the port in question.

Given the possibility that the limits of a port might be indefinite or unclear, the judge further stated that where there was a (national or local) law that defined the limits of the port in question, those were the limits that would apply in the case of that port. But where there was not such a law, then a good indication of what the port limits were was given by the area over which the port authority exercised its powers to regulate the movements and conduct of ships.

As such, the judge considered that with 40 years having passed since the House of Lords’ decision, it remained the better course to leave matters at the stage of description provided in that decision.

In the present case, the judge noted the parties had provided little relevant material to the arbitrators. The parties did not suggest there was a law, local or national, that defined the port limits at Krishnapatnam. The parties also did not address the area over which the port authority exercised its powers to regulate the movements and conduct of ships.

In these circumstances, the judge noted the arbitrators were left with the Admiralty chart, which showed an area described as "Limit of Port of Krishnapatnam". It showed anchorages within that area for vessels of up to 180 metres and vessels of over 180 metres in length. The “Arundel Castle” anchored at a distance of 1250 metres outside that area.

The judge, therefore, concluded:

“This limited material, taken with the absence of further material, tolerably allows an inference that the vessel was outside the area described by Lord Reid [in The “Johanna Oldendorff”]. The arbitrators were entitled to reach a conclusion of fact that the vessel was not within port limits, or at least that the owners had not proved that she was. This does not mean that in another case, on more complete or additional material, the same conclusion would be reached even as regards the port of Krishnapatnam.”

Of the remaining points raised by the parties, the judge further concluded that:

a) while the owners said that the port authority had accepted the vessel as arrived, even if that was the case, that was not a conclusion reached under the terms of the fixture recap;

b) the definition of "port" in the Laytime Definitions for Charterparties 2013/The Baltic Code 2014 cannot be taken to provide a definition of "port limits", save where the parties deliberately choose it as their definition (which they did not do in this case);

c) having regard to the treatment of the subject matter by the authorities, the court was not at liberty to hold that “port limits” means “geographical” port limits, as shown by an Admiralty chart.

Comment

The judgment confirms that The “Johanna Oldendorff” remains the leading authority on determining whether a vessel has “arrived” within port, for the purpose of a port charter, other than where the parties have, by the contract terms agreed, expressly narrowed or widened the scope of the applicable definition.

The judgment also highlights the wide variety of evidential sources available when determining whether a vessel is arrived. In consequence, owners and charterers should take care to ensure they are aware of the applicable facts when fixing, if they wish to be certain of the outcome. Alternatively, they should amend the contract to meet their own purposes.

Footnote 1: [1974] A.C 479, per Lord Reid at p.535