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Court dismisses appeal on whether vessel’s deviation was for a reasonable purpose

News / / Court dismisses appeal on whether vessel’s deviation was for a reasonable purpose

Troy Maritime SA v. Clearlake Shipping Pte Ltd (MV Andreas) [2018] EWHC 2310 (Comm)

The Court has recently dismissed an appeal by Owners on whether the arbitral Tribunal had made a mistake in law in finding that the vessel’s deviation had not been for a reasonable purpose. The Court agreed with the Charterers that this was a finding of fact and could not be appealed as a point of law.

The background facts

The Owners chartered their vessel to the Charterers for a voyage from Tuapse, Russia, to the Antwerp, Rotterdam, Amsterdam, Hamburg range. The cargo was loaded and the vessel set sail on 10 July 2016.

On 11 July, the second engineer asked to disembark at Istanbul, Turkey, for urgent repatriation due to “serious family problems”. Based on the vessel’s estimated arrival date in Hamburg of 20 July, dispensation was sought, and granted, from the vessel’s Flag State to sail from Istanbul to Hamburg without a second engineer.

When it became clear that the vessel would not reach Hamburg by 20 July, the Owners ordered the vessel to deviate from its course and call at Gibraltar to take on a replacement second engineer and an additional technician. The Owners’ position was that they had to embark a replacement second engineer in order to remain compliant with their safe manning certificate.

Having deviated, the vessel then collided with a submerged nuclear submarine that led to the vessel’s hull being damaged. As a result, the vessel was required to proceed to Setubal, Portugal, for inspection and repairs before being allowed to continue to Rotterdam to complete its voyage and discharge the cargo.

The Owners subsequently brought a claim against the Charterers for demurrage and port dues incurred at Rotterdam. The Charterers counterclaimed for damages incurred as a result of the deviation.

The Tribunal considered whether the vessel was entitled to deviate to Gibraltar to embark a replacement engineer. Clause 26 of the charterparty provided as follows:

"…the Vessel…to deviate for the purposes of saving life and property, or for any other reasonable purpose."

Whilst not referred to by the Owners, the Tribunal also noted that the Owners might have sought to rely on Article IV Rule 4 of the Hague-Visby Rules, which had been expressly incorporated into the charterparty. This provides that:

"…Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom."

The Tribunal found in favour of the Charterers and held that the deviation was not permitted by the terms of the charterparty on the basis that, whilst it was reasonable for the vessel to deviate to disembark the second engineer, it was unreasonable for the Owners to request a dispensation letter for a period that was insufficient to permit the vessel to complete the contractual voyage.

The Owners appealed, arguing that the Tribunal had asked the wrong question and should have asked:

"Whether, in light of the dispensation which had been obtained by the Owners from the Flag State Authority, which was only valid until 20 July 2016, it was reasonable to deviate to Gibraltar?"

The Owners submitted that the Tribunal had applied the incorrect legal approach in concerning itself with whether the dispensation period sought was unreasonably short. This was irrelevant. Rather, the question whether the deviation was reasonable had to be assessed on the basis that the authority had only issued a dispensation up until 20 July.

The Commercial Court decision

The Court stated that whether the deviation was reasonable was a question of fact and, accordingly, fell outside the scope of an appeal under section 69 Arbitration Act 1996, which was concerned only with appeals on points of law. A decision on whether a deviation was reasonable was, in general, an entirely factual question. There was an established line of English case-law confirming that findings of fact were a matter for the tribunal and that, in considering an appeal on a point of law, the Court must rely on the facts as found by the arbitrators without qualification. Accordingly, the Court viewed the Owners’ appeal as an unacceptable attempt to upset a factual decision of the Tribunal.

The Court added that the Tribunal was entitled to take into account the fact that the dispensation period was insufficient for the vessel to proceed to the discharge port. The starting point as to what constitutes a “reasonable deviation” was a wide one and, in any event, was not capable of being considered an error of law for the purposes of a section 69 appeal.

The Court also thought that the question of law identified by the Owners did not arise out of the Tribunal’s award as the Tribunal had not made a finding that the purpose of the deviation was to comply with Flag State requirements for safe manning.

Finally, the Court stated that the Tribunal was entitled to consider the Owners’ failure to seek a longer dispensation period and that its finding was within a reasonable range of conclusions in the event that it had properly identified the correct question of law.

Consequently, the Owners’ appeal was dismissed.

Comment

This case highlights the English Court’s unwillingness to allow parties making section 69 applications to dress up a tribunal’s findings of fact as an appeal on a point of law. In circumstances where the parties have chosen to refer their disputes to arbitration, rather than to litigate them in the courts, the Court will not interfere with the arbitrators’ factual findings, nor lightly overturn their decisions.

Rania Tadros

Rania Tadros Managing Partner

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