5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

[Home][Databases][WorldLaw][MultidatabaseSearch][Help][Feedback]

EnglandandWalesHighCourt(Commercial
Court)Decisions

Youarehere:BAILII>>Databases>>EnglandandWalesHighCourt(CommercialCourt)Decisions>>WesternBulk
ShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)
URL:http://www.bailii.org/ew/cases/EWHC/Comm/2012/1224.html
Citeas:[2012]1CLC954,[2012]EWHC1224(Comm),[2012]2Lloyd'sRep163,[2012]2AllER(Comm)1140

[Newsearch][Viewwithouthighlighting][PrintableRTFversion][Help]

NeutralCitationNumber:[2012]EWHC1224(Comm)
CaseNo:2012FOLIO535

INTHEHIGHCOURTOFJUSTICE
QUEEN'SBENCHDIVISION
COMMERCIALCOURT

RoyalCourtsofJustice
Strand,London,WC2A2LL
11/05/2012

Before:

MRJUSTICECHRISTOPHERCLARKE
____________________

Between:
WesternBulkShipowningIIIA/S Claimant
and
(1)CarboferMaritimeTradingApS
(2)OceanTaskCorp
(3)SeaTaskCorp Defendants

____________________

ThomasMaceyDare(instructedbyWinterScott)fortheClaimants
NigelJacobsQC(instructedbyHolmanFenwickWillan)fortheDefendants
Hearingdates:27thApriland1stMay2012
____________________

HTMLVERSIONOFJUDGMENT
____________________

CrownCopyright

MRJUSTICECHRISTOPHERCLARKE
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 1/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

1.The"WesternMoscow"isagearedbulkcarrierof32,450grt,whichwascompletedbytheDayang
shipyardin2011.ShewasdeliveredintocharterserviceinmidOctober2011.Herdisponentowners
("Owners")WesternBulkShipowningIIIA/Sseektohavecontinuedaworldwidefreezinginjunction
grantedexpartebyPopplewellJon10April2012againstOceanTaskCorp.("OceanTask"),thesecond
defendants,andSeaTaskCorp.("SeaTask"),thethirddefendants,whoweresubandsubsubcharterersof
thevesselfromOwnerstogether,"theRespondents".TheRespondentsareMarshallIslandcorporations
with"branchoffices"atanaddressinAthens.Theynowapplytodischargetheinjunctionontheground
thattheCourthasnosubstantivejurisdictionagainstSeaTaskandinanyeventthatthereisnoriskof
dissipationinrespectofeitherRespondent.ThecharterersofthevesselfromtheownerswereCarbofer
MaritimeTradingApS("CMT"),thefirstdefendants.

2.Thevesselwas,atthematerialtime,thesubjectofalongcharteringchain,whichwasasfollows:

HeadOwnersOwnersCMTOceanTaskSeaTaskSinochartOceana

TheCMTcharter

3.On7June2010,theOwnerscharteredthevesseltoCMTonatimecharterof3438monthsduration
fromthedateofherdelivery(theCMTcharter).ThehirewasUS$17,700perday.Thecharterwasan
amendedNYPEcharter.ItprovidedforLMAAarbitrationandEnglishlaw(clause17).Itcontainedan
amendedNYPElienclause18(seepara29below)andclauses37and41(seepara26below)providing
forthedeductionofbunkersfromhireonredelivery.

4.ForsomereasonperhapsbecauseofrequirementsbythosefinancingtheWesternBulkGroupitwas
subsequentlydecidedthattheregisteredownershipwouldvestinWAIIL.P.("theHeadOwners")whoon
30September2010concludedaCharterpartywithOwnersforaperiodof7275monthsatadailyrate
ofUS$17,000.Thatcharterpartycontainedthesameclauses17,18and,sofarasmaterial,37and41.

TheOceanTaskcharter

5.InNovember2010,asappearsfromafixturerecapof2November2010relatingtoafixtureofthe
previousday,CMTsubcharteredthevesseltoOceanTaskonbacktobacktermssaveastohireandspeed
&consumption("theOceanTaskcharter").ThatcharterthuscontainsanEnglishlawandarbitration
clause.Thehire,atanyrateinitially,was$18,000perday.OceanTask'scaseisthatthehirewas
subsequentlyreducedto$15,725perdayasfromDecember2011whenOceanTaskagreedtocharterthe
"HeilanRising".

SeaTasktakingoverOceanTask'soperations

6.AtthisstageSeaTaskwereOceanTask'smanagers,pursuanttoaManagementAgreementdated10
September2008whichwastocontinueinforceforaslongasOceanTaskcontinuedtoexist,subjectto
terminationbyeitherpartyontheoccurrenceofcertainspecifiedevents,beinginessencetheinsolvency
of,oramaterialbreachcommittedby,theotherparty.TheAgreement(inrespectofwhichSeaTaskand
OceanTaskwereadvisedbydifferentfirmsofEnglishlawyers)issubjecttoEnglishlawandLMAA
arbitration.Thetwocompanieshaveseparateshareholders.Whethertheshareholdersarelinkedtoeach
otherinany,and,ifso,whatwayisnotapparent.

7.AccordingtotheevidenceofMrCharalambosKatsamas,whoisadirectorofbothRespondents,inthe
summerof2011anunderstandingwasreachedbetweenrepresentativesoftheshareholdersofthetwo
companiesthatatamutuallyconvenienttimeOceanTaskwouldbetakenoverbySeaTaskandthetwo
operationswouldbeamalgamatedintoone.ThiswasbecausesomeoftheinterestsbehindOceanTaskhad
losttheirenthusiasmforshipping.Untilthetakeover,whosepreciseformwastobedecided,SeaTaskwas
tocharterOceanTask'svesselsatratescurrentatorshortlybeforetheengagement.Bythistime
OceanTaskwasverysubstantiallyindebttoSeaTask.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 2/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

The"AquaAtlantic"charter

8.AccordingtotheRespondents,thefirstvesseltobeoperatedinthismannerwasthe"AquaAtlantic"
whichwascharteredbyOceanTasktoSeaTaskon3September2011.OceanTaskhadcharteredthisvessel
fromCarboferGeneralTradingSAofLugano,althoughallhirewaspaidtoCMTasagreedbyaC/P
addendum.AccordingtotheRespondents,thecharterpartybetweenOceanTaskandSeaTaskinrespectof
the"AquaAtlantic"incorporatedaGreeklawandarbitrationclause(clause17)andprovidedbyclause18
thatOwnersshouldnothaveanylien.ItalsoprovidedbyClause45that"Charterersmayoffsethire
againstdebtowedtoCharterersbytheOwners".

TheSeaTaskcharter

9.Onwhatissaidtobe10October2011OceanTasksubsubchartered"WesternMoscow"toSeaTaskCorp.
("theSeaTaskcharter")for6months+/30days.(Thatitdidsoonsometermsissomethingthatthe
Ownersarepreparedtoacceptforthepurposeofthisapplication).Thereisadisputeoverthetermsofthe
SeaTaskcharterand,inparticularwhetheritcontained(asonthefaceofthedocumentwhichissaidtobe
thatcharteritdoes)thesameclausesinrelationtoGreeklawandarbitration,absenceoflien,andsetoff
asthe"AquaAtlantic".Thehireissaidtobe$13,500,althoughtheauthenticityofthatfigureis,also,in
dispute.

10.TheSeaTaskcharterwassignedbyMrKatsamasonbehalfofSeaTaskandbyMrMariosGerardison
behalfofOceanTask.

TheSinochartcharter

11.On12October2011SeaTaskacting(asitclaimsandasforthepurposesofthepresentapplication
Ownersarepreparedtoaccept)asprincipal,subsubsubcharteredthevesseltoacompanycalledChina
NationalCharteringCo.Ltd("Sinochart"),foratimechartertrip,ontermsincorporatingtermsmaterially
thesameastheCMTcharter(theSinochartcharter).ThehirepayablebySinochartis$14,825.The
charterperiodwasabout4toabout6months,"about"meaning+/15days.

TheOceanacharter

12.SinochartinturnfurthersubcharteredthevesseltoOceanaShippingAG("Oceana")eitherforavoyage
orashortperiod.SinochartandOceanaarenotpartiestotheseproceedings.

13.ThevesselwasdeliveredasanewbuildingintoserviceundertheCMTcharterandtheOceanTaskcharter
directfromtheyardon14October2011.ShewasdeliveredintoserviceundertheSinochartcharteronthe
followingday.

14.On8February2012,OwnersterminatedtheCMTcharterandwithdrewthevesselfromthecharter
service,onthegroundsofCMT'srepudiationofthatcharterandnonpaymentofhire.CMTappearsto
haveacceptedwhatitregardedasOceanTask'srepudiationoftheOceanTaskcharter(onaccountofnon
paymentofhire)thepreviousday.OceanTaskclaimthattherepudiationwasthatofCMT.Ownersnow
haveoutstandingclaimsagainstCMTforunpaidhire,disbursementsanddamagesforrepudiation.The
totalamountofthoseclaimsexceeds$6million.Themajorpartofthatrelatestotheclaimfor
repudiation.

15.AsisapparentfromtheaboveboththeCMTandtheOceanTaskcharterscontainatermgivingOwnersa
lienoverallsubhireinrespectofanyamountsdueundertheCMTcharter.

16.OwnershaveexercisedtheirlienundertheCMTcharter,bygivingnoticetoCMT'ssubcharterer,
OceanTask.Ownersclaimtobeentitled,eitheratlaworinequity,topursueCMT'sclaimsforunpaidhire
againstOceanTaskundertheOceanTaskcharter.AccordingtoCMT,theamountofthatclaimisaround$
380,000.OceanTasksaythatnothingisdue.
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 3/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

17.Inaddition,byexercisingthatlien,OwnersclaimthattheyhaveacquiredCMT'sequivalentlienunderthe
OceanTaskcharter.Ownershaveexercisedthatsecondlien,bygivingnoticetoSeaTask.Ownersclaimto
beentitled,eitheratlaworinequity,topursueOceanTask'sclaim(ifany)forunpaidhireagainstSeaTask
undertheSeaTaskcharter.SeaTasksaythatnothingisdueundertheSeaTaskcharter.Ownerscontendthat
itistobeinferredthataround$380,000islikelytobeoutstanding.

18.BythisrouteOwnerssaythattheyhavegoodarguableclaimsonthemeritsagainstbothOceanTaskand
SeaTaskandtheysaythatthereisarealriskthatOceanTaskandSeaTaskwilldissipatetheirassetssoas
toavoidpayingthemunlessrestrainedbyinjunction.

19.Theinjunctionswereobtainedundersection44oftheArbitrationAct1996andsection37(1)ofthe
SeniorCourtsAct1981onthefootingthattheOceanTaskchartercontainedanEnglishlawandLondon
arbitrationclause,andthatitwastobeinferredthatthe(true)SeaTaskchartercontainedoneaswell.

20.OceanTaskandSeaTasknowapplytodischargethefreezinginjunctionortoresistitscontinuance.They
haveproducedwhattheysayistheSeaTaskcharter.AsIhavesaid,thetermsofthatdocumentdifferfrom
thoseoftheOceanTaskcharterinthat:

a)Thelawandarbitrationclause(clause17)providesforGreek,asopposedtoEnglish,law
andarbitration

b)Thelienclause(clause18)hasbeenchangedtoaclauseprovidingthatthereshallbe"no
lien"

c)Thehirepaymentclause(clause37)expresslypermitsSeaTasktooffsetsumsowingtoit
byOceanTaskagainsthire.TheRespondentsdenythatanyhirewasowingundertheSeaTask
charterandsaythat,eveniftherewas,itwouldbewipedoutbytheverylargedebtswhich
OceanTaskowestoSeaTaskand

d)TherateofhirepayablebySeaTask(clause37)$13,500perdaywassignificantly
lowerthantherateundertheSinochartcharterof$14,825whichOwnerssaywasthemarket
rateforthevessel.

21.ThefeaturestowhichIhavereferredinthepreviousparagrapharesaidbytheOwnerstobesuspicious
andtoprompttheinferencethatwhathasbeenpresentedinevidenceastheSeaTaskcharterisnotthetrue
SeaTaskcharterandthatthetrueSeaTaskchartercontainsdifferentterms.

Theissues

22.Theapplicationstocontinueanddischarge,thus,raisethefollowingissues:

i)DotheOwnershaveagoodarguablecasethattheyhavesizeableclaimsagainstCMT?

ii)DosuchclaimsfallwithinthelienclauseintheCMTcharter?

iii)ByvirtueofthatclausehaveownersacquiredCMT'sclaimsforunpaidhireagainstOceanTaskunder
theOceanTaskcharterbywayofsecurityforOwners'claimagainstCMT?

iv)DoesCMThaveanywellarguableclaimsagainstOceanTask?

v)HaveOwnersalsoacquiredOceanTask'sclaimforunpaidhireagainstSeaTaskundertheSeaTask
charterbywayofsecurityforOwners'claimagainstCMT?

vi)AreanyclaimsbyOceanTaskagainstSeaTasksubjecttoEnglishlawandarbitration?

vii)DoesOceanTaskhaveanywellarguablemonetaryclaimagainstSeaTask?
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 4/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

viii)IsthereariskofdissipationbyeitherRespondentsuchaswouldjustifyanorder?

ix)IsthereanybasisuponwhichjurisdictioncanbeexercisedagainstSeaTaskiftheSeaTaskcharterhas
aGreeklawandarbitrationclause?

Issue(i)Owners'claimsagainstCMT

23.AccordingtoOwners'finalhirestatementinrespectoftheCMTcharter,asatthedateofterminationof
theCMTcharter(8February2012)CMTowedOwners$602,275.47.CMT'sfinalhirestatementputsthe
figureat$176,689.10infavourofOwners.

24.PartoftheundisputedbalancerepresentsUS$87,855.27inexpensesincurredforCMT'saccountin
connectionwiththevessel'stransitofthePanamaCanalinDecember2011.Theremainderrepresents
unpaidhire,lessvariousdeductions.Thedisputeisoverthosedeductions.Leavingasidemattersofno
materialconsequence:

a)CMTcontendsthatinDecember2011thevesselwasoffhireforatotalof5.39daysat
CristobalandBalboa,ateitherendofthePanamaCanal.IthasdeductedanettotalofUS$
114,491.11foroffhireandoffhirebunkersetc.inrespectofthatperiod.Ownersdenythat
thevesselwasoffhireforanyofthoseperiodsand

b)CMTallegesthatitisentitledtobecreditedwiththevalueofbunkersonredelivery,inthe
totalsumofUS$311,077.70.OwnershavedeniedthatCMTwasentitledtothatdeduction,
onthegroundsthatSeaTaskclaimedtoownthebunkersremainingonboard,whichitdidin
anemailtoCMTof6February2012.

25.OwnerssaythatthevesselwasnotoffhireasCMTallege.ThedelaysatCristobalandBalboawerethe
resultoftheshippers'loadingtoomuchcargoonboardthevesselcontrarytotheMaster'sorders,withthe
resultthatthevesselhadtobelightenedinordertotransitthePanamaCanal.Thisversioniscontradicted
bythecharterers,startingwithOceana,whohavesoughttodeducthireupthechain.Theysaythatthe
Masterfailedtoexercisepropersupervisiononloading.Itisnotpossiblenowtodeterminewhoisrighton
thisissue.IamsatisfiedthatOwnershaveanarguablecasethatthevesselwasnotoffhireascharterers
allege.

26.OwnersalsohaveagoodarguablecasethatCMTisnotcontractuallyentitledtobecreditedwiththecost
ofthebunkersremainingonboardonthedateofterminationoftheCMTcharter.Clauses37and41ofthe
CMCcharterprovidethat:

"37Charterersareentitledtodeductfromlastsufficienthirepaymentsestimated
quantitiesofbunkersonredelivery

41Valueofbunkersondeliverytobepaidtogetherwithfirsthirepayment,valueofbunkers
onredeliverytobedeductedfromlastsufficienthirepayment"

Itisarguablethattheseclausesareapplicableifthereisacontractualredeliverybutnotifthereisa
resumptionofpossessionfollowingtheacceptanceofarepudiationasOwnersclaimhashappenedinthis
case:seeThe"SpanTerza"[1984]1WLR27.Forthepurposesofthepresentapplicationonly,Owners
acceptthatCMTisarguablyentitledtoclaimasumequivalenttothevalueofthebunkersremainingon
boardonarestitutionarybasis.Butsuchaclaimisnotavailableagainstaclaimforhire,sinceitisnota
claimforsomebreachofobligationwhichhasdeniedthechartererstheuseofthevesselorprejudiced
themintheiruseofit:TheNanfri[1978]QB927,976.

27.Thereis,thus,asMrNigelJacobsQCfortheRespondentsaccepted,anarguableclaimfor$602,257.91,
beingtheadmittedfigureof$176,689.10,plusCMT'sfigurefordeductionsinrespectofoffhire$
114,491.11,plusCMT'sfigureforthecostofbunkersonredelivery$311,077.70.
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 5/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

28.Inaddition,OwnershaveanarguableclaimfordamagesforwrongfulrepudiationoftheCMTcharterin
thesumof$5,907,055.CMTmightarguablybeentitledtosetoffitscrossclaiminrespectofthevalueof
theredeliverybunkersagainstthisdamagesclaim.Butthatwouldstillleaveanetdamagesclaimforover
US$5.5million.

Issue(ii)DoOwners'claimsagainstCMTfallwithinthelienclauseintheCMTcharter?

29.ThelienclauseintheCMTcharter(andtheOceanTaskcharter)isanamendedversionofclause18ofthe
NYPE1946form.Itprovidesinmaterialpartasfollows(amendmentsunderlined):

"ThattheOwnersshallhavealienuponallcargoes,andallsubfreights,hireandsubhire
foranyamountsdueunderthisCharter,includingGeneralAveragecontributions"

30.Owners'claimforthebalanceofhireplainlyfallswithintheclause.MrMaceyDarefortheOwners
submittedthataclaimfordamagesforrepudiationarguablyfallswithintheclauseonthefollowingbasis:

a)Aclaimfordamagesforbreachofacharterpartyiscapableofbeingasum"due"forthe
purposesofalienclause.Seee.g.:LyleShippingCo.v.CardiffCorporation(1899)5Com.
Cas.87(possessorylienfordemurrage)

b)Theobligationtopaydamagesforrepudiationisasecondaryobligationwhicharisesupon
therepudiationbythecharterersoftheirprimaryobligationtoperformthecharterparty.The
amountsduepursuanttothatsecondaryobligationmayberegardedasdue"under"the
contractsinceitisthecontractwhichisthesourceoftheobligationtopaythem."Under"is
tobeconstruedinthesamewayas"arisingoutof",oratleastascoveringrightsand
obligationswhicharecreatedbythecontractitself:FionaTrustvPrivalov[2007]UKHL40
para11perLordHoffmann(discussingearliercasesonarbitrationclauses)and

c)InSamuelvWestHartlepool(1906)11Com.Cas.115atp118,WaltonJsaid"Astothe
sumof3000,damagesforbreachofcharterparty,therewouldbenolienforthat".Thisis
not,hesubmitted,astatementofprinciple,asopposedtoastatementthattherewasnolienat
therelevantdatebecauseanyrighttodamageshadnotthenaccrued:seehislaterdecisionin
SamuelvWestHartlepool(No.2)(1907)12Com.Cas.203.

31.Itisnot,however,necessarytoexpressanyviewonthispoint(andIdidnothearsubmissionsfromMr
Jacobsuponit)sincetheamountarguablydueundertheCMTcharterexceedswhatisarguablydueunder
thesubcharters:seeparas56and98below.

Issue(iii)HaveOwnersacquiredCMT'sclaimsagainstOceanTaskundertheOceanTask
charter?

32.ThetruenatureofthelienprovidedforintheamendedNYPEform,hasstillnotbeendeterminedbyany
appellatetribunalwhosejudgmentisbindingonme.Decisionsastoitsnaturehavebeenreachedby
judgesatfirstinstanceofgreatdistinction(Lloyd,Nourse,Saville,SteynandKerrJJ)andobiterbyLord
RussellofKillowenbutacontraryviewhasbeenexpressed,probablyobiter,byLordMillettinaPrivy
Councildecision.

33.MrJacobssuggestedthat,sincethequestionwasoneoflawandaffectedwhetherreliefcouldbegiven,it
wasormightbenecessaryformetodecideit:seethecasesreferredtoatDiceyandMorris11.15footnote
13.InHutton&CovMofarrij[1989]1WLR488,495LJsaidthataplaintiffcouldrelyontheconceptor
testofgoodarguablecaseonlyinsituationswhichleaveroomforfurtherinvestigationofissuesoffactor
ofmixedfactorlawastowhetherornotsomerequirementofOrder11wassatisfied.Whetherornot
OwnershaveanyrightinthenatureofanassignmentofCMT'sclaimsagainstOceanTask(or
OceanTask'sclaimsagainstSeaTask)doesnotseemtometofallwithinthatcategory.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 6/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

34.Certainmatterscanbestated.Alienoversubhireisarighttoreceivesubhireashireandtostopitatany
timebeforeithasbeenpaidtothetimechartererorhisagent:TagartvFisher[1903]1KB391atp395
perLordAlverstoneCJ(acaseonsubfreight).Inthatcasethefreightdueunderthebillofladinghad
beenpaidtothecharterers,whosebillitwas.EarlHalsburysaidthat:

"therightoverthefreightmustbeexercisedatatimewhenthereisfreighttobe
paidassuch,and...whenthefreighthasoncebeenpaidthelienisgone"

andthat

"therighttostopthepaymentoffreighttothepersontowhomitisduemustbe
exercisedwhiletherightforsuchpaymentexists".

35.Theshipownerperfectshisrightoflienbygivingnoticetothesubchartererthatheisexercisinghislien.
Ifthesubchartererhasalreadypaidthechartererbythetimethenoticeisgiven,thelienfailstobiteon
anything:TheSpirosC[2000]2Lloyd'sRep319,para11,perRixLJ.

36.Therehavebeensaidtobetworealisticallypossiblejuridicalbasesforthelien:

a)Itoperatesasaformofequitableassignmentbythechartererbywayofsecurityfor
paymentofwhatisowedtotheowner(whichmayormaynotconstituteanequitablecharge)
and

b)Itconfersasuigenerispersonalcontractualrightofinterceptionanalogoustoanunpaid
seller'srightofstoppageintransitu.

Equitableassignment

37.Theproblemarisesbecauseoftheuseoftheword"lien"whichordinarilyreferstoarighttoretain
possessionofachatteluntilpaymentofasumduefromitsowner.Byextensionthewordmaycovera
righttoproperty,suchasadebtowedforsubfreightorsubcharterhire,whichisassignedbytheperson
towhomthedebtisowedassecurityforanobligation,whichheowestotheassignee.Thedebtor,once
hehasnoticeofthelien,maynotmakepaymenttohiscreditoriftheobligationtothelienorisunpaid
andthelienormayclaimthedebtinfulfilmentofthecreditor'sobligationtohim.Thatthatwasthebasis
ofthelienappearsfromthejudgmentofLloyd,J,ashethenwas,inCareShippingvLamsco("The
Cebu")(No.1)[1983]1QB1005.

Contractualright

38.Thealternativeview,propoundedbyanarticlebyDrFidelisOditahentitled"Thejuridicalnatureofalien
onsubfreights"[1989]LMCLQ191,isthatadoptedandexpressedbyLordMillett,givingtheopinionof
thePrivyCouncilinAgnewvCommissionersofInlandRevenue[2001]2AC710,thatthelienisa
creatureofthemaritimelawandis"acontractualnonpossessoryrightofakindwhichissuigeneris".
Thebasisforthisanalysisisthat,ifthelienisacharge,itisofakindunknowntoequity.Anequitable
chargewouldconferaproprietaryinterestbywayofsecurity,sothat,ifthesubfreightwaspaidtoathird
partyatanyrateifhehadnoticeofthelienhewouldbeboundbyit.Butalienonsubfreightsis
defeasibleonpayment.InexpressingtheviewthathedidinAgnewvCIRLordMillettespoused,byway
ofjudgmentobiterbutinanopinionconcurredinbyLordsBingham,Nicholls,HoffmannandHobhouse
thesubmissionwhich,ascounsel,hehadunsuccessfullyadvancedbeforeNourseJ,ashethenwas,in
The"UglandTrailer"[1985]2Lloyd'sRep372.

TheCebu(No1)

39.ItwascommongroundbeforeLloydJthatthemechanismwhichrequiredsubcharterers,ifgivennotice,
topaytheownerswasanequitableassignmentoffreightdueunderthesubcharter.KerrJhadsaid

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 7/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

somethingtothateffectinTheNanfri[1978]QB927,942.IntheHouseofLords[1979]AC757,787
LordRussellofKillowensaid:

"Thelienoperatesasanequitablechargeuponwhatisduefromtheshippertothecharterer,
andinordertobeeffectiverequiresanabilitytointerceptthesubfreight(bynoticeofclaim)
beforeitispaidbyshippertocharterer".

40.LloydJwassatisfiedthattheassignment,althoughbywayofsecurity,wasanabsoluteassignmentforthe
purposeofsection136oftheLawofPropertyAct1925,followingHughesvPumpHouseHotel[1902]2
KB190.Hethoughtthatthelegalanalysismightbedifferentifthetruenatureofthelienwasthatittook
effectasanequitablechargebut,inthelightoftheargumentspresented,hedidnotfinditnecessaryto
considerthatpossibilityfurther.InThe"SpirosC"[2000]2Lloyd'sRep319Rix,LJsaidthatthenatureof
thelienor'srights"isthoughttobeanequitableassignmentbythetimecharterertotheshipownerbyway
ofsecurity".

41.OwnersdidallthatwasrequiredtoperfecttheirlienoverthesubhirepayableundertheSeaTaskcharter,
bygivingnoticesoflientoOceanTaskc/oSeaTaskasinTheCebu(No.1),cit.Therewasnoneedfor
OceanTasktogiveitsownseparatenoticetoSeaTask.Thosenoticesweregivenon10January,17
January,7Februaryand5April2012.AllofOwners'claimsagainstCMTweredueundertheCMT
charterasatthedateofthatlastnotice.SubstantiallythewholeoftheOwners'claimforthebalanceof
hireundertheCMTcharterwasdueasatthedatesoftheearliernotices.

TheUglandTrailer[1985]2Lloyd'sRep372

42.InthatcaseNourseJheld(bywayofratio)thattheshipowner'slienonsubfreightswasaformof
equitableassignmentmadebythechartererbywayofsecurityforwhatisowedbythecharterertothe
shipowner,and,beinganequitableassignmentofachosebywayofsecurity,createdanequitablecharge
onthechose.Theassignmentwasnecessarilyequitablebecauseitwasmadeinthecharterpartywithout
notice(atthetimeofthecharter)totheshipper.HerejectedthesubmissionofMrMillett,QCthatthe
shipowner'sinabilitytofollowthesubfreightintothehandsofthechartererdemonstratedthatthelien
gavetheshipownernoproprietaryrighttothesubfreightonthebasisthatthesubmissionconfusedthe
natureoftherightwiththeeventwhichdefeatsit.Heheldthat,iftheshippermadepaymentofthefreight
toathirdpartywithnotice,"itcouldnotbedoubtedthattheshipownercouldfollowthemoneyintothe
handofthethirdparty".Buthecouldnotdosooncepaymentwasmadetothechartererbecausethatwas
theeventwhichdefeatedtheright.Theequitablechargewasonethatrequiredregistrationunderthe
CompaniesAct.

43.InThe"AnnangelGlory"[1988]1Lloyd'sRep45SavilleJ,ashethenwas,hadtoconsiderwhetherthe
UglandTraderwasrightlydecided.HedecidedthatTagart(inwhich,asappearsfromreportsofthecase
in88LT451and72LJKB202therehadbeenargumentastowhetherthelienwasintruthsomeformof
chargeorotherequitableright)wasconcernedwiththeextentoftherightandnotitsnature.Iagree.He
rejectedtheargumentofMrRichardAikensQC,ashethenwas,thatthelienclausesimplygavethe
ownerstheauthorityofthecharterertocollectthesubfreight.Astothefurtherargumentthatatthetime
ofthechartertherewasnothingtoassign,heheldthatthatwasnotdeterminative.Thepartiescouldagree
toassignfuturechosesinactionandiftheydidso,oncethosechosesinactioncameintoexistence,"the
assignorautomaticallyandimmediatelybecomesatrusteeandtheassigneethebeneficiaryofthatchose
inaction".Heheldthatclause18initsunamendedformconstitutedanagreementbythecharterersto
assigntoownersbywayoffloatingsecuritytherighttopaymentofsubfreightsfallingdueunder
contractstobemadebythecharterersinrespectofthevesselthesubjectoftheheadcharter.Healsoheld
thatclause18createdafloatingchargeonaspecifiedpartofthecharterers'propertynamelysubfreights
tobecomeduetocharterersinrespectofthevesselandwasregistrable.

44.InThe"AttikaHope"[1988]1Lloyd'sRep439SteynJ,ashethenwas,wascontenttoadoptLord
Russell'sdescriptionoftherightinTheNanfri.Inthatcasetherewasaconflictbetweentheownersand
theassignees.Thelatterhadgivenearliernoticeofassignmentand,undertheruleinDearlevHall,they
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 8/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

prevailed.InTheCebu(No2)[1990]2Lloyd'sRep316SteynJreferredwithapprovaltoTheUgland
Trader,TheAnnangelGloryandTheAttikaHope,whilstholding,contrarytothedecisionofLloydJin
TheCebuNo1that"subfreights"inclause18didnotcoversubtimecharterhire.Sincethepresentcase
concernstheamendedclause18whichcoverssubhire,thatquestiondoesnotherearise.

45.InSamsunLogixCorpvOceantrade[2008]1Lloyd'sRep450GrossJ,ashethenwas,founditboth
unnecessaryandrashtoenterintoterritorydisputedby(interalios)LordMilletandNourseJ.

46.InCoscoBulkCarriersvArmadaShipping[2011]EWHC216BriggsJconsideredthejuridicalnatureof
thelienonsubhirebutdidnotfinditnecessarytodecidebetweentherivaltheories.

LordMillett'sview

47.InAgnewLordMillettsaidthattheinabilityoftheshipownertoenforcethelienagainsttherecipientof
thesubfreightarose(i)irrespectiveoftheidentityoftherecipientand(ii)notbecausepaymentwasthe
eventwhichdefeateditbutbecausetherightdependedonanunderlyingpropertyrightthattheliendid
notgive.

48.Astothefirst,NourseJhadthoughtitindisputablethatunderthelienclausetheshipownercouldfollow
themoneyintothehandsofathirdpartyi.e.someonewhowasnotthepersontowhomthesubfreight
waspayable,suchasthechartererorhisagent,ifthatthirdpartyhadnoticeofthelien.Ihavedoubts
aboutthat.Therightis,ononeview,anassignmentbythechartererofthefuturesubfreight.Ifpayment
ofthatsubfreightismadetothecharterertherightceasestoexist.Thereisnolongeranyfreightdueto
whichitcanattach.NourseJ'sexamplewouldappear,therefore,tocovertherarebutnotimpossiblecase
inwhichthefreight(or,indifferentcircumstances,subhire)ispaidtothepersonwhoisnotthecharterer
orhisagent.Insuchacase(a)itmustbedoubtfulwhetherthepaymentofasumequivalenttothe
freight/hireduetoapersonwhowasnotentitledtoreceiveitis,intruth,tobecharacterizedasapayment
offreight/hire,whateverthepayermighthavethoughtorcalleditand(b)ifthefreight/hirehasbeenpaid
tosomeonewhoisnotthechartererorhisagentthecharterer'srighttoitremains.Hehasnotbeenpaid.
If,however,paymentofthatsumtosuchapersonisproperlytoberegardedasfreightorhirepaidassuch
Idonotseewhyitcannotbefollowedif,butnotunless,thepayeehaspriornoticeoftheassignment.

49.Astothesecond,Idonotseewhytheclausecannotberegardedasamountingtoanagreementtoassign
futuredebtsbywayofsecurity,whichgivesrisetorightsinequity:TaillbyvOfficialReceiver[1888]13
AppCas523InreLund[1915]2Ch345.Therightcannotbeexercisedifnothingisduetotheowner
and,beinganagreementtoassignadebt,itcannotsubsistifthedebtinquestionispaidwithoutnoticeof
theassignment.Althoughthelienprovidesanimmediatesecurityinterestatthedateofthecharter,itmay
bethatitcreatesnoproprietaryinterestinfavouroftheowneruntiltheownergivesnotice[1]because,
untilthen,itisopentothecharterertoclaimthedebtintheordinarycourseofbusiness[2].Theassignment
may,inrespectofanEnglishCorporation,beregistrableandvoidforwantofregistrationagainsta
liquidatorandcreditorsandtheremaybequestionsasbetweendifferentcompetingclaimantstothedebt
orthemoniesrepresentingthem[3].

50.Butnoneofthatseemstometobeareasontoholdthatthereisnoassignmentatall.InAgnewLord
Milletdescribedthelienassimilartoafloatingchargewhileitfloatsbutincapableofcrystallizationand
saidthattheliendidnotgiveanypropertyright.Idonot,however,withrespect,followwhythelienis
incapableofcrystallizationbynoticefromtheownersothat,uponnotice,givesrisetoapropertyright.

51.Further,iftherightisonlysomeformofsuigeneriscontractualrightitisoneofrestricteduse.Itwould
givetheownersnodirectclaimagainstthesubchartererbutonlyarighttohavethecharterersrestrained
fromreceivingthesubcharterhireororderedtodirectitspaymenttotheownersortoablockedaccount.
(Iftheaccountwasthatofthecharterer'ssolicitorstherightwouldprobablybelost:seeSamsunLogix).It
maybethatthesubchartererswouldbeincontemptif,withnoticeoftheinjunction,theymadepayment

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 9/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

tothecharterers,anditmaybethattheycouldbejoinedinanyactionagainstthecharterersforthe
purposeofsecuringprotectivereliefbuttherewouldbenodirectrightoftheownersagainstthem.

52.Inthosecircumstances,ontheassumption,whichseemstomecorrect,thatitisnecessaryformetodecide
thequestion,and,withadegreeoftrepidationinadvancingintoterritoryintowhichGrossJfeltitrashto
tread,Iprefertoholdthattheclausecreatesanassignmentbywayofcharge[4],followingtheauthorities
atfirstinstancedecidedbydistinguishedjudgesofthiscourtwhichmusthavebeenactedonas
authoritativeformanyyears.Iamfortifiedinsodoingbytheanalysisinanarticle"LiensonSubfreights"
byGraemeBowtlein2002LMCLQ289.Atthelowestitiswellarguablethatthatisthecorrectanalysis.

Issue(iv)DoesCMThaveanyclaimsagainstOceanTask?

53.Ownersclaimthat$381,803.80remainsowingfromOceanTasktoCMTinunpaidhire.OceanTasksay
thereisabalanceof$3,054.75intheirfavour.Thedifferencelargelyrelatestothreeissues.Thefirsttwo
are:

i)WhetherthevesselwasoffhireateitherendofthePanamaCanaland

ii)WhetherthedelaysandexpensesincurredthereweretheresultofabreachonthepartofCMTas
disponentowners.

AsIhavepreviouslyindicated,Ownershaveagoodarguablecasethattheanswertoboththesequestions
is"No".Thethirdis:

iii)WhethertherewasanoperativeagreementtoreducethedailyrateofhireundertheOceanTaskcharter
afterthefirst60daysfrom$18,000to$15,725.Thisissueisworthabout$126,00055.49days@($
18,000$15,725)perday=$126,239.75.

54.IamsatisfiedthatCMThasanarguableclaimforabout$256,000againstOceanTaskunderthe
OceanTaskcharterbutnofurther.Theagreementtoreducethehireafterthefirst60daysissetoutin
emailspassingbetweenMrMortenJacobsenofCMTandMrJesperLollesgaardofSeaTask,actingfor
OceanTask,of13September2011.Itisapparentfromthesethatthehirewastobereducedinorderto
providethatthehireforthe"HeilanRising"andthe"WesternMoscow"shouldbetheaverageoftherates
undertheexistingcharterforeach(namely$18,000and$13,450).The"HeilanRising"wastobe
deliveredbyCMTtoOceanTaskinMarchorApril2012.MrJacobsen'semailof13Septembersuggests
that,shouldMrLollesgaardaccepthisproposalforthereduction/increaseofhireonthetwovessels,the
P&IClublawyersshouldbeaskedtodraftanagreement.Butthetwoemailscontainaproposalandits
acceptance,neitherofwhichareexpressedasconditionalorsubjecttocontract.Thefactthatlawyers
mightbeaskedtodraftanagreementdoesnotsignifythatnoagreementwasmadebytheexchange.In
December2011hirewaspaidtwiceatthe$18,000ratebutthedifferencebetweenthatandthe$15,725
wasexpresslypaidasanadvanceonfuturehire.

55.CMT'sfinalhirestatementof24January2012appliedtheoriginalrate.CMTisreportedinanemailof20
March2012fromMrHoughton,theRespondents'solicitor,tohaveconfirmedthatthegoverning
charterpartywasneveramendedsoastovarytherateofhire.Buttheemailsof13Septembershowthat
therewasanagreedvariationofhire.ThepersonreportingfromCMTisnotidentifiednorisitapparent
whetherhewastalkingaboutaformalamendmentorwhetherhewasawareoftheemailexchange.

56.Accordingly,Ownershaveagoodarguablecasethattheybecameentitled,legallyorequitably,toclaim
about$256,000fromOceanTaskundertheOceanTaskcharteronorbefore5April2012.Thatcharter
containsanEnglishlawandjurisdictionclause.

Issue(v)HaveOwnersacquiredOceanTask'sclaim(ifany)forunpaidhireagainstSeaTask?

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 10/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

57.TheOwnerscontendthattheyhavealieninrespectnotonlyoftheamountsduebyOceanTasktoCMT
butalsoinrespectofamountsduebySeaTasktoOceanTask.

58.Wherethereisachainofcharterseachcontaininglienclauses,thepartyatthetopofthechainbecomethe
assignee(inthesenseofbeingthebeneficiaryofacontracttoassignfuturedebts)notonlyofthesubhire
owedtotheheadchartererbyasubcharterer[i.e.herethehirepayablebyOceanTasktoCMT],butalso
ofthehirepayableunderthesubsubcharterbythesubsubcharterer,[i.e.herethehirepayableby
SeaTasktoOceanTask]:"TheCebu"(No.1).

59.InTheCebu(No.1),cit.,p.1016EGtheheadcharterandthesubcharterbothcontainedanunamended
versionofNYPE1946clause18(withoutexpressreferencestohireandsubhire).LloydJheldthat,on
theproperconstructionofthatclause,thetimechartererhadassignedtotheownersbywayofequitable
assignment,notonlysubhireduetoitunderitsdirectsubcharter,butalsoanysubhiredueunderany
subsubcharterofwhichitwasequitableassignee.Inthatcasethestringofcharterswas:

OwnersNavieraToltecaLamscoItex

60.MrRichardSiberryforthedefendantshadsubmittedthatNavieraToltecacouldclaimsubfreightsdue
fromItextoLamscoandOwnerscouldclaimsubfreightsduefromLamscotoNavieraTolteca.Butthere
wasnowayinwhichOwners,wholackedprivityofcontractwithLamscoorItex,couldclaimagainst
Itex.MrJacobshasrepeatedthatsubmissionbeforeme.LloydJrejectedthatsubmissiononthebasisthat
NavieraToltecawascapableofassigningtoownerstherightwhichithaditselfreceivedbywayof
equitableassignment.Itdidnotmatterthatithadreceivedthatrightbywayofsecurity.Heheldthatit
wastheclearintentionofthepartiestobederivedfromthelanguageusedinclause18thatNaviera
Toltecahadassignednotonlysubfreightsduetoitascharterersbutalsoanysubfreightsdueunderany
subsubcharterofwhichitwasequitableassignee.

61.Irespectfullyagreewiththatanalysis.Inusingtheexpression"allsubhire"thedraftsmanwasnot
simplyseekingtomakeclearthatall,asopposedtosome,ofthesubcharterhirewasthesubjectofthe
lienbuttoprovidethatitwastoextendtoallsubhiredowntheline.Ifthatbetherightconstructionitis
onetowhichthelawcanandshouldgiveeffect.Equityconsidersasdonethatwhichoughttobedone.If
A(e.g.Lamsco)agreestoassigntoB(e.g.NavieraTolteca)afuturedebtwhichistobeowedtohimbyD
(e.g.Itex)andBagreesthatthatdebtshallbeassignedbyhimtoC(e.g.Owners)bywayofsecurity,then,
whenthedebtarisesandthesecuritybecomesenforceable,thedebtowedbyDtoAistobetreatedin
equityasduetoC.TheagreementtotransferasbetweenAandBandasbetweenBandCbindsthe
consciencesofAandB.

62.On10January,17January,7Februaryand5April2012OwnersgavenoticetoSeaTask,althoughthefirst
twonoticesweretoOceanTaskc/oSeaTask.

63.Accordingly,Ownershaveagoodarguablecasethattheybecameentitled,legallyorequitably,toclaim
anyamountduefromSeaTaskundertheSeaTaskcharteronorbefore5April2012.

Issue(vi)AreanyclaimsbyOceanTaskagainstSeaTasksubjecttoEnglishlawand
arbitration?

64.TheRespondentscontendthattherecanbenoquestionofafreezingorderbeingcontinuedagainst
SeaTaskbecausethereisnoclaimagainsttheminrespectofwhichtheEnglishCourthassubstantive
jurisdiction.ThisisbecausetheSeaTaskcharterissubjecttoGreeklawandarbitration.Ifso,itis
submitted,thereisnoscopeforserviceouteitheronthebasisofadirectclaimbyOwnersasassignees
againstSeaTaskasdebtorsorunders44oftheArbitrationAct1996.Ownerscontendthattherearestrong
reasonstodoubtwhethertheSeaTaskcharterpartynowputforwardisintruththecharterpartywhichwas
enteredintobetweenSeaTaskandOceanTask.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 11/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

65.Ontheassumptionthatitisnecessary,inordertoestablishEnglishjurisdiction,thattheSeaTaskCharter
besubjecttoEnglishlawitwouldbenecessaryforOwnerstoestablishthattheyhaveagoodarguable
case.InthepresentcontextthatmeansshowingthattheOwnershaveeithermuchthebetterorthebetter
sideoftheargumentastothefalsityofthesupposedSeaTaskcharter:BolsDistilleriesBVvSecuricor
YachtServicesLtd[2007]1WLR12,paras2628CecilvBayat[2010]EWHC641.Inconsideringthat
questionitisnecessarytotakeaccountofthefactthattheargumentfortheOwnersis(a)thattheSeaTask
charterthathasbeenproducedisprobablyaforgeryinthatitpurportstobe,butisnot,theactual
agreementbetweenthepartiesand(b)thatMrKatsamas'evidencethatitisthetrueagreementis
probablyknowinglyfalse.IturnthereforetoconsiderthefactorsreliedonbytheOwners.

66.TheOwnerssubmitthatitissurprisingthattheSeaTaskcharterisintheformofaformalcharterpartyand
notsomethingagreed,asweretheOceanTaskandSinochartchartersbyaninformalemailrecap.Idonot
findthisparticularlysurprising.Thecharterwasnotfixedthroughbrokersandthepartiestoitwere
closelyconnected,anddealingwitheachotherfacetofaceinAthens.SeaTaskwasthemanagementagent
ofOceanTask.Inthosecircumstances,whilstaformaldocumentcouldbeexpected,asamatterof
prudence,foraccountancyreasons,Idonotregardtheabsenceofemailsprecedingitassuspicious.

67.On12OctoberSeaTaskemailedtotheMasteraskinghim,afterdeliveryofthevesselfromtheDayang
Yard,torevertwithasigneddeliverycertificate,aproformaofwhichwasattached,certifyingdeliveryby
SeaTasktoSinochart.TheMasterdeliveredsuchacertificatedated15October.Thesecontemporaneous
documentsareconsistentwiththemakingofapriorcharterbetweenOceanTaskandSeaTask.

68.TheratespecifiedintheSeaTaskcharteris$13,500perday.Ownerssubmitthatthatisunlikelytobethe
trueratebecause,ifitwas,itwouldmeanthatOceanTaskwascharteringouttoSeaTaskat$13,500and
SeaTaskwasthencharteringouttoSinochartat$14,825,thusmakingaprofit.Thatwouldbeinconsistent
withSeaTask'sfiduciarydutyasOceanTask'sagent.Itismuchmorelikelythatthecharterhirewasatthe
rateof$18,000perday,theratepayableundertheOceanTaskcharter.OtherwiseOceanTaskwouldnot
beabletofulfilitsobligationstoCMT.

69.Idonotfindthiscompelling.First,itisnotcleartomewhyOceanTaskshouldputin$13,500ifthetrue
figurewas$18,000.Itcould,Isuppose,havebeentoensurethattherewaslesshireforpartiesupthe
chaintoattach,whilstensuringthat,inrealitymorewaspaidtoOceanTask.Ownerssuggestedthatthe
rateappearsbecauseitcouldbemadetofitinwiththeamountspaidbySeaTasktoOceanTaskwhich
appearintheOceanTaskbankstatements.Butthereseemstomeamuchmoreplausiblereasonforthe$
13,500figure.The$18,000figurewasagreedin2010(foramuchlongercharter)andby2011ratesof
hirehadfallen.Soitisnotsurprisingthattherewasalowerfigurein2011.Ifthemarketratewasaround
$13,500$14,900,itwouldmakelittlesensetoagreetopay$18,000,particularlygivenOceanTask's
indebtednesstoSeaTask.

70.The$13,500hireintheSeaTaskcharterislessthanthe$14,825hireintheSinochartcharter.Butthe
formerfigurewasforacharterwhichcouldendafter5monthswhereastheSinochartchartercouldend
after3.5.MrJacobsprofferedacalculationwhichshowedthatthedifferenceinnethire(i.e.after
commissions)betweenthetwocharterswas$921.5perday.Intheeventthatbothcharterslastedforthe
minimumtimetheSinochartcharterwouldendfirst.Theprofitduringtheminimumperiodofthe
SinochartfixtureofaboutS96,000wouldhavebeenwipedoutifSeaTaskwasunabletoemploythe
vesselfor7.5days.MrMaceyDaresubmittedthatitwas,nevertheless,surprisingtofindagapofnearly
$1,000perdayunderthetwocharters.But,asitseemstome,thedifferenceintheirlengthsprovidesa
plausiblecommercialreasonforit.

71.Thereisnobrokerageevidencebeforethecourtastowhatthemarketrateswereandinthose
circumstancestheonlyevidencethat$13,500wasamarketrateisthatofMrKatsamas:paras10&13.In
thosecircumstancesIamnotmindedtoconcludethat$13,500was,orwasperceivedtobe,an
undervalue.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 12/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

72.OwnerssubmitthattheinclusionintheSeaTaskcharteroftheGreeklawandarbitrationclause,theno
lienclause,andthesetoffclauseisverysurprisingandunlikelytohavebeenagreedinarm'slength
negotiations.Astotheformeritdoesnotseemtomeparticularlyoddthatacharterbetweentwo
corporations,whichrepresentGreekinterestsor,atanyrate,aremanaged(inpart)fromGreeceshould
haveaGreeklawandarbitrationclause.Thepositioncouldbeexpectedtobedifferentifthefixturewas
negotiatedthroughabrokingchainbythoseaccustomedtoinsertLondonarbitrationclauses.Itistruethat
theManagementAgreementprovidedforLMAAarbitration.ButthatagreementwasdraftedbyEnglish
lawyersonbothsides.MrKatsamas'evidencewasthattheparties'relationshipbecamecloserastime
passed.Idonotfinditparticularlysurprisingthat,inthosecircumstances,Londonarbitrationwasnot
selected.

73.Alienclauseisveryfrequentlyseenincharterparties.ItispartoftheNYPEform.Butitisopentoparties
toexcludeitortoprovideasinCoscovArmadaShippingthatthereshallbenoassignmentofhire.If
thatisdonethechartereravoidspossibleexposuretointerpleadersuitsandinterferencewithhiscashflow
particularlyimportantincircumstanceswheresomeoneinthepositionofSeaTaskmaybeowed
substantialsumsbysomeoneinthepositionofOceanTaskwhicharenotcapableofbeingsetoffagainst
hireandthusfalldueinfulltoanassigneeeventhoughOceanTaskwouldnotseektoclaimthem.

74.ThesetoffclauseappearstomeentirelyrationalparticularlyincircumstanceswhereOceanTaskowedso
muchtoSeaTask.ItwasnotinfactreliedonbySeaTaskinthefinalhirestatement.

75.Next,OwnersdrawattentiontotherecapoftheSinochartcharter.Thisrecordsthecharterchainasbeing
HeadOwnersOwnersCMTOceanTaskSeaTask,anddescribesthevesselas:

"ASPEROWSBTBCP(CL29)".

Therecap,whichwasdraftedbyChinesebrokers,thensetsoutthekeycommercialtermsandprovides:

"OWISEASPERATTACHEDOWSPROFORMANYPECP(BASEDONBTBC/P)
STRICTLYANDLOGICALLYAMENDEDASPERMAINTERMSAGREEDWITHFOLL
ALTERATIONS".

Cls30:3rdline1tobereplacedby2owiseclausetoremainasperbtbcp,nodeletions

Cls56

Deliverynotices:Onfixingandthendailynoticesasperbtbc/pexcept5/3/2/1daysdefinite
redlynotice"

76.TheattachedproformaconsistsofanamendedNYPEformwithdetailsblankedout,includingtheidentity
oftheownersandthecharterers,towhichareattachedadditionalclauses29111.TheamendedNYPE
formappearstobevirtuallythesameastheamendedNYPEformfortheCMTCharter:seeforinstance
thereferencetoOslointhefirstline,thereferencestoclause41inclause3,clause37inclause4and
clause71inclause10andtheamendmenttoclause19[5].Itthuscontainstermsastoarbitrationandlien,
whicharemateriallythesameasthoseoftheCMTandOceanTaskcharters.Clause37(HirePayment)of
theadditionalclausesandtheattachedquestionnaireshowthedisponentownerasSeaTask.Theattached
clausesaresimilarbutnotidenticaltothosecontainedintheCMTCharterandtheSeaTaskCharter.

77.TheRespondentssaythatthewords"basedonBtBC/P"showthattheSinochartcharterwasnotbeing
putforwardasidenticaltotheSeaTaskcharter.Ownersacceptthattheproformawouldnotbeidenticalto
theSeaTaskcharterinsofarastheproformanamesSeaTaskasthedisponentownerandrequireshiretobe
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 13/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

paidtoit.Butotherwiseitis,theysay,clearfromthewordsinthefinalrecapand,inparticularthegeneral
referencetothetermsbeing"BASEDONBTBC/P"inthe"OWISEASPER"clauseandthereferenceto
"asperbtbc/p"inrespectofclauses30and56thatthetermsoftheproformaarethetermsofSeaTask's
backtobackcharter.

78.Idonotregardthesewordsasnecessarilyhavingthatsignificance.Therecapdidnotattachthecharterto
SeaTask(i.e.theactualbacktobackcharter)andprovidethatitwouldapplytoSinochartchartersubject
tospecifiedexceptions.Itattachedwhatwasdescribedasaproformacharterbyablankedoutownertoan
unidentifiedchartererwhichwassaidtobe"basedon"the(actual)backtobackcharterparty.Thatatleast
allowedforthepossibilitythatthereweresomeclausesintheactualbacktobackcharterpartywhich
differedfromtheattachedproforma.IfSeaTaskwantedthecharterwithSinocharttocontainatermwhich
differedfromtheattachedproformaitwould,ofcourse,havebeennecessarytospecifythatinthecharter
negotiationsandtherecap.Butinsofarastheywerecontentforthetermstobethesameastheproforma,
itwasnotnecessarytoexplain,ifitwasthecase,thattheactualbacktobackcharterhadsomedifferent
provision.Thereareinfactanumberofdifferencesbetweentheclausesformingpartoftheproformaand
theSeaTaskcharter:e.g.clauses55,59,62and81.

79.Idonotthinkitmattersforthesepurposeswhetherthereferencesinclauses30and56intherecapto"as
perbtbc/p"were(asMrJacobssuggested)referencestotheproforma,forwhich"btbc/p"was
shorthand,ortotheactualchartertoSeaTask.

80.Iturnthentoconsiderthedocumentswhichbearontheauthenticityofthecharter.

81.On6OctoberSeaTaskwrotetotheMasterintroducingthemselvesasOceanTask'smanagersand
describingMrGerardisasoneofthoseinchargeofitsoperations.Nomentionwasmadeofacharterto
SeaTask.Butthecharterhadnotthenbeenmade.Itisonlysaidtohavebeenmadeon10October.The
emailof12OctobertotheMasterpresumesachartertoSeaTask.TheSinochartrecapof13October
describesthecharterpartychainincludingSeaTask.

82.On10January2012SeaTask,asOceanTask'sagents,emailedCMTtosaythatinconsequenceofowners'
(i.e.CMT's)noticeandinanticipationoftheirwithdrawing"wehaveourselveswithdrawnthevesselfrom
theserviceofoursubcharterers,witheffectfromabut16:00yesterday".TheCMTnoticeappearstohave
beengivenbecauseofafailureofOceanTasktopayhiretoCMT,whichhappenedbecauseOceanTask
fearedthat,iftheydid,theywouldbeleftindebitbecausetheywouldnevergetpaidforthebunkerson
boardwhen,aswasexpected,CMTcollapsed.(CMTisnowinliquidation).Itisnotclearonthefaceof
thatemailwhoare"oursubcharterers".MrKatsamas'evidenceisthathewasreferringtoSinochart.Itis
clearfromafurtheremailsentbyMrGerardistotheMasteronthesamedayonbehalfofSeaTaskthatthe
vesselhadbeenwithdrawnfromtheservicesofSinochart.

83.OwnerssubmitthatitshouldhavebeenSeaTaskwhowerewithdrawingthevesselfromSinochartand
thatthedraftsmanofthefirstemailmusthavethoughtthatOceanTaskwascharteringdirecttoSinochart.
ItisplainfromMrKatsamas'evidencethathewasthedraftsmanandthatthatwasnotwhathethought.In
circumstanceswhereSeaTaskwasbothagentforOceanTaskinrespectoftheCMTcharterandprincipal
undertheSinochartcharterIdonotregardtheambiguityintheexpression"oursubcharterers"asofany
greatsignificance.

84.On19January2012MrKatsamasemailedanumberofaddresseestosaythattherewasnocontractual
rightforotherstolienanysubhiresbelongingtoSeaTaskordownthechainfromthem.Therewas,thus,
earlyreferencetotheabsenceofalienatwhatappearstobethefirstoccasionwhenthepointwas
relevant.Asimilarmessagewassentbyhimon19January2012toCMT.

85.On10February2012SinocharttoldSeaTaskthattheyunderstoodthatSeaTaskhadsaidthattheliens
claimedwerenotvalidbecausetheircharterdidnotcontainalienclauseandaskedwhetherSeaTask
couldprovidethemwithdocumentstosupportthis.MrKatsamasrepliedtosaythatSeaTaskowednohire
toOceanTaskandthattherewasnolienbecauseofclause18oftheSeaTaskcharterparty,thetermsof
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 14/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

whichhesetout.Hedidnotattachacopyofthecharter.Ownerssaythatthisissuspicious.Idonottake
thatview.MrKatsamassetouttheclauseinwhichSinochartwereinterested.Sinochartdidnotthereafter,
sofarasappears,askforacopyofthecharteritself.

86.IalsothinkthereisforceinMrJacobs'pointthat,iftheSeaTaskcharterputforwardisaforgery,SeaTask
musthavehadaconsiderabledegreeofforesightastohowthislitigationwasgoingtopanout,andinhis
submissionthattheemailsappeartobeagenuineresponsetothesituationasitunfolded.

87.Ownersdrawattentiontotheabsenceofinterimhirestatementsandtothefactthatthefinalhirestatement
showspaymentsofhireinroundnumbers(e.g.$275,000,$360,000,$248,500),andthatononlyoneof
thepaymentdebitadvicesisthereareferencetothepaymentbeingonhireaccount(ontheothersthereis
ablankunder"paymentdetails").Noneofthisstrikesmeasparticularlysurprisinggiventheclosenessof
therelationshipbetweenthetwocompanies.

88.ThedocumentwhichpurportstobetheSeaTaskCharterof10October2011wasproducedinevidenceon
Monday23April2012i.e.theMondaybeforethereturndate.Idonotfindthatparticularlysuspicious.It
wasproducedwhentheevidenceinresponsetotheapplicationswasfiledandaspartofit.

89.IamnotpersuadedthatOwnershaveeithermuchthebetter,orthebetter,sideoftheargumentastothe
validityoftheSeaTaskCharterof10October2011.OnthecontraryitseemstomethattheRespondents
havemuchthebettersideoftheargument.Ideclinetoholdthatthereisagoodarguablecasethatthe
documentproducedisnotthetrueSeaTaskcharter.Noristhereagoodarguablecasethatthecharterhada
rateofhireofanythingotherthan$13,500.

90.ItfollowsthattheSeaTaskcharterisnotshowntobeonesubjecttoEnglishlaworarbitrationandis
probablysubjecttoGreeklawandarbitration.Thereis,therefore,nobasisforservingSeaTaskoutofthe
jurisdictiononthefootingthatOwnershaveaclaimagainstthemwhichissubjecttoEnglishlaw.I
considerbelowwhetherserviceoutispossibleevenifthearbitrationistobeheldinGreeceandunder
Greeklaw.

Issue(vii)DoesOceanTaskhaveanymonetaryclaimagainstSeaTask?

91.AccordingtotheRespondentsthereisnohireoutstandingundertheSeaTaskcharter.SeaTask's
preliminaryfinalhirestatementshowsabout$141,000tobeduetoit.Thissumisreachedbyusing$
13,500asthehirerate.TheRespondentscontendthattherewouldbeasmallbalanceduetoSeaTaskeven
iftheywereunsuccessfulinrelationtotheoffhireandrelatedoverloadingissues.Thatwouldinvolve
deductingfrom$141,012.01figuresof$72,765,$14,818,$795,$6,453,$434and$24,000which
wouldmake$120,176.29.Ownerscontendthatitwouldalsobenecessarytoaddtheexpenseoftransitof
thecanalwhichwouldproduceatotalfigureof$208,031.56which,afterdeductionof$141,012.01,
wouldproduceadebtofatleast$67,019.55.Iregardthatasarguable.

92.MrJacobscontendsthat,evenifthatbeso,thedebtowedbyOceanTasktoSeaTaskcanbesetoffunder
clause37.Thatclauseprovidesthatthecharterersshallpayhiresemimonthlyinadvanceandthat
"CharterersmayoffsethireagainstdebtowedtotheCharterersbytheOwners".MrMaceyDaresubmits
thatthisclausegivesthecharterersanoptioneithertopayhiretothenominatedbankaccountortooffset
hireagainstthedebt.Butthelatteroptionrequireschartererstochooseit.Thathadnotoccurredbythe
timeoftheexerciseofthelien.Thereafteritwastoolate.Indeed,asMrJacobswaskeentoemphasize,
thesetoffwasnotreliedonbySeaTaskeveninthefinalhirestatementissuedbythem.Theeffectofthe
assignmentisthatpaymentmustbemadetotheassignee.Setoffisaformofpaymentandafternotice
fromtheassigneepaymentmustbetohim.Thissubmissionappearstometobecorrectandcertainly
arguable.

93.MrJacobshasanotherstringtohisbow.HesubmitsthattheOwners'claimasassigneesisinanyevent
subjecttoequitieswhichwouldincludethepreexistingdebt.AstothatMrMaceyDaresubmittedthat
therulethatanassigneetakessubjecttoequitiesrestsonthebasisthatitwouldbeunjusttodeprivethe
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 15/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

debtorofarightofsetoffwhichhadarisenbeforetheassignee'srightwasperfected.Butitwouldnotbe
unjusttodeprivehimofthatrightwhereheknewoftheassignmentbecausehenegotiatedit.Thatwasthe
positioninthiscaseinrelationtothelienclauseintheOceanTaskcharter,inrespectofwhichSeaTask
actedasagentforOceanTask.Secondly,hesubmitsthatSeaTaskdoesnotcometoequitywithclean
handsbecausetheyhaveputforwardwhatisprobablyafalseversionoftheSeaTaskCharterorbecause
thatcharterinvolvesafraudulentpreference.

94.Iamnotpersuadedthateitherofthesepointsissound.AstothefirstIdonotregardthefactthatSeaTask
negotiatedtheOceanTaskcharterasgoodreasontodeprivethemofthebenefitofthefactthatall
assigneestakesubjecttoequities.WhenSeaTaskonbehalfofOceanTaskagreedtothelieninthecharter
itmustbetakentohaveagreedtoalienwhichwouldoperateintheusualwayinwhichassignments
operateandsubjecttotheusualequities.

95.AstothesecondIamnotpersuadedthatSeaTaskdonotcomewithcleanhandsoneitherbasis.

96.ItseemstomehoweverthatOwnersareentitledtoclaimthe$62,000freefromthesetoffonthebasis
thattherightofsetoffgivenbytheSeaTaskcharterisarightwhichrequirestobeexercised.Ifitisnot
exercisedthehirebecomesdue.Anassignmenttakingeffectafterthehirebecomesdueandbeforethe
exerciseofanyrightofsetofftakespriority.ItisnotsuggestedthatthedebtowedbyOceanTaskto
SeaTaskisadebtwhichwould,inaccordancewithTheNanfribecapableofsettingoffagainsthire,
absentthespecificcontractualprovision.AlthoughtheSeaTaskcharterisgovernedbyGreeklawithas
notbeenshownthatGreeklawisanydifferenttoEnglishlawinthisrespect.

97.LastlyMrJacobssubmittedthattheOwnersasassigneemustgivecreditasagainstSeaTaskforOwners'
retentionofthebunkers.Idonotregardthatsubmissionaswellfounded.Thefinalhirestatements
evidencewhatisinessenceasaleofthebunkersfromSeaTasktoOceanTaskandthentoCMT.Icannot
regardSeaTaskashavinganysubsistingclaimagainstOceanTask.

98.AccordinglyitseemstomethatOwnershaveanarguableclaimagainstSeaTaskforabout$62,000.

Riskofdissipation

99.Ownerssubmitthatthereisaclearriskofdissipationinthiscase.Thebasisuponwhichthiswasputin
theskeletonargument,andfurtherdevelopedinsubmission,togetherwithmyobservationsthereonareas
follows:

a)Bothcompaniesaremanagedbythesamepersonnel(SeaTaskareOceanTask'smanagers).
TheManagementAgreementgivesSeaTasktotalcontrolofOceanTask'sbusiness.Itfollows,
itissaid,thatifthereisariskofdissipationbyonecompanythereislikelytobesucharisk
inrespectoftheother.

Thatdoesnot,however,establishtheexistenceofsucharisk.

b)Inwayswhichareunexplained,andinexplicable,OceanTaskhasapparentlybeenincurring
debtstoSeaTaskatanastonishingrateoverUS$1.5millionintheyear2010.

Astothat,Idonotknowpreciselyhowthedebthassoincreased.ItwouldappeartobebecauseSeaTask
hasbeensupportingOceanTask.ButthedebthasbeencertifiedbyMooreStephensandIhavenobasis
uponwhichtodoubtthefigure.

c)TherearestronggroundsforconcludingthatMrKatsamasmayhavemisrepresentedthe
termsoftheSeaTaskcharterbyclaimingthattheSeaTaskcharterhasnolienandasetoff
clause.Bydoingso,hehasfrustratedOwners'attemptstoexercisetheirlienoverSeaTask's
claimforoutstandinghireundertheSinochartcharter.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 16/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

AstothatitseemstomeunlikelythatMrKatsamashasmisrepresentedthetermsoftheSeaTaskcharter.

d)TherateofhireintheSeaTaskcharterwasbelowthemarketrateandthenosetoffclause
wasinsertedtoinsulateOceanTaskfromcreditorsupthechainwhomightotherwisebe
entitledtoexercisealienonsubhiresdowntheline.ThiswastothebenefitofSeaTaskatthe
expenseofOceanTask'sothercreditorsincludingOwnersandCMT.

Astothat,Idonotacceptthattherateofhireislikelytohavebeenbelowthemarketrateorthatthe
insertionofasetoffclausewasfornojustifiablecommercialreason.

100.InTTMILtd.v.ASMShippingLtd.[2006]1Ll.R.401atparas2427Isaidthis:

"25ThepurposeoftheMarevajurisdictionissometimesreferredtoasthepreventionofthe
"dissipationofassets".Withoutexplanationthatphraseis,itself,obscure.AsColmanJstated
inGangwayLtdvCaledonianParkInvestments(Jersey)Ltd(2001)2Lloyd'sRep715the
underlyingpurposeofthejurisdictionisnottoprovideaclaimantwithsecurityforitsclaim
buttorestrainadefendantfromevadingjusticebydisposingofassetsotherwisethaninthe
ordinarycourseofbusinesssoastomakeitselfjudgmentproofwiththeresultthatany
judgmentorawardinfavouroftheclaimantgoesunsatisfied.Thepurposeisnottoprovide
securityfortheclaimantinrespectofhisclaim.Itiswellestablishedthatitisnotnecessary
toestablishthatthedefendantislikelytoactwiththeobjectofputtinghisassetsbeyond
reach.Whathastobeshownisthatthereis,absentaninjunction,"arealriskthata
judgmentorawardinfavouroftheplaintiffswouldgounsatisfied":The"Niedersachsen":
[1983]2Lloyd'sRep600.Thatformulationcannot,however,beregardedasacomplete
statementofthelaw.Adefendantmaybelikelytomakeperfectlynormaldispositions,suchas
thepaymentofordinarytradingdebts,theeffectofwhichmaybethat,whenanyawardis
made,itis,inwholeorinpartunsatisfiedwhen,absentthosepayments,itmighthavebeen
satisfiedorsatisfiedtoagreaterextent.Somethingmorethanarealriskthatthejudgment
willgounsatisfiedisrequired.

26ThusinacaseintheCourtofAppealofOntarioChitelvRobart[1982]39O.R.(2d)
513,5323theCourtsaid:

"Theapplicantmustpersuadethecourtbyhismaterialthatthedefendantis
removingorthereisarealriskthatheisabouttoremovehisassetsfromthe
jurisdictiontoavoidthepossibilityofjudgment,orthatthedefendantis
otherwisedissipatingordisposingofitsassets,inamannerclearlydistinctfrom
hisusualorordinarycourseofbusinessorliving,soastorenderthepossibility
offuturetracingoftheassetsremote,ifnotimpossibleinfactorinlaw".

27Tosimilareffect,inKetchumInternationalPlcvGroupPublicRelationsHoldings(1997)
1W.L.R.4StuartSmith,L.J.referredtothejurisdictionoftheCourtofAppealtoensurethat
itsjudgmentsonappealwerenotrenderedvalueless"byanunjustifiabledisposalofassets".

101.IamnotpersuadedthatthereisarealriskofOceanTaskorSeaTaskmakingunjustifiabledisposalsof
assetsotherwisethanintheordinarycourseofbusinesswiththeintention,orhavingtheeffect,thatany
judgmentagainsteitherofthemgoesunsatisfiedorisverydifficulttoenforce.Onthecontrarythisseems
tomearelativelystandarddisputeastowhatisdue,andfromwhomtowhom,attheendofthevarious
chartersofthevessel,andwhetheranylienshavebeenvalidlyexercisedandwithwhateffect.

102.InthosecircumstancesIwouldnotbemindedtocontinuetheorderofPopplewellJagainsteither
Respondent.

Serviceout

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 17/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

103.ThatconclusionmakesitunnecessarytodeterminewhetherIhavejurisdictiontomakesuchanorder
againstSeaTaskeventhoughitisnotapartytoaLondonarbitrationgovernedbyEnglishlaw.

104.Astothat,section2oftheArbitrationAct1996,whichisinPart1providesthat

"(1)TheprovisionsofthisPartapplywheretheseatofthearbitrationisinEnglandand
WalesorNorthernIreland.

(3)Thepowersconferredbythefollowingsectionsapplyeveniftheseatofthearbitrationis
outsideEnglandandWalesorNorthernIrelandornoseathasbeendesignatedor
determined

(a)section43(securingtheattendanceofwitnesses),and

(b)section44(courtpowersexercisableinsupportofarbitralproceedings)

butthecourtmayrefusetoexerciseanysuchpowerif,intheopinionofthecourt,thefact
thattheseatofthearbitrationisoutsideEnglandandWalesorNorthernIreland,orthat
whendesignatedordeterminedtheseatislikelytobeoutsideEnglandandWalesorNorthern
Ireland,makesitinappropriatetodoso".[Boldadded]

105.Section44,whichisinPart1oftheAct,provides:

"Unlessotherwiseagreedbytheparties,thecourthasforthepurposesofandinrelationto
arbitralproceedingsthesamepowerofmakingordersaboutthematterslistedbelowasithas
forthepurposesofandinrelationtolegalproceedings.

(2)Thosemattersare

(e)thegrantingofaninteriminjunctionortheappointmentofa
receiver.

(3)Ifthecaseisoneofurgency,thecourtmay,ontheapplicationofapartyorproposed
partytothearbitralproceedings,makesuchordersasitthinksnecessaryforthepurposeof
preservingevidenceorassets.

(5)Inanycasethecourtshallactonlyifortotheextentthatthearbitraltribunal,andany
arbitralorotherinstitutionorpersonvestedbythepartieswithpowerinthatregard,hasno
powerorisunableforthetimebeingtoacteffectively."

106.Order62.5providesasfollows:

"(1)Thecourtmaygivepermissiontoserveanarbitrationclaimformoutofthejurisdiction
if:

(b)theclaimisforanorderundersection44ofthe1996Act

(c)theclaimant

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 18/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

(i)seekssomeotherremedyorrequiresaquestiontobedecidedbythecourt
affectinganarbitration(whetherstartedornot),anarbitrationagreementoran
arbitrationawardand

(ii)theseatofthearbitrationisorwillbewithinthejurisdictionorthe
conditionsinsection2(4)ofthe1996Actaresatisfied".

107.Itseemstomeplainthatsection44oftheArbitrationAct1996givestheCourtjurisdiction,inthe
circumstancestowhichitrefers,toentertainanactionforaninjunctionwhentheseatofthearbitrationis
outsidetheUnitedKingdom(inwhichcasethelawtobeappliedisquitelikelynottobeEnglishlaw),and
thatOrder62.5(1)(b)givestheCourtpowertogivepermissiontoserveanarbitrationformoutofthe
jurisdictionwhethertheseatofthearbitrationisLondonorAthens(cfOrder62.5(1)(c)wheretheseat
mustbewithinthejurisdiction),andregardlessofthelawwhichappliestothecontract.Thusitisnot
necessaryinordertofoundjurisdictiontoestablishthattheSeaTaskcharterissubjecttoEnglishlaw:see
MobilCerroNegrovPetroleumdeVenezuela[2008]1Lloyd'sRep684wherepermissionwasgrantedto
serveoutunderCPR62.5(1)(b)wherethecontractinquestionwassubjecttothelawofVenezuelaandto
arbitrationinNewYork.

108.Asimilarpositionarisesundersection25oftheCivilJurisdictionandJudgmentsAct1982,asextended
bytheCivilJurisdictionandJudgmentsAct1982(InterimRelief)Order1997,whichenablestheHigh
Court"tograntinterimrelief"inrelationto"proceedings"thathavebeenorareabouttobecommencedin
aforeignstate.

109.Itis,however,highlymaterialtoaclaimforreliefundersection44thatnoGreekarbitrationhasbeen
commencednorhasanyundertakingbeengiventocommenceone.Intheabsenceofeitheritwouldnot
beappropriatetograntreliefagainstSeaTaskinsupportofanysubstantiveclaimagainstit.

Chabra

110.MrMaceyDaresoughttoplacesomerelianceonthejurisdictiontograntreliefagainstthirdparties
recognizedinTSBPrivateBankInternationalSAvChabra[1992]1WLR231andotherauthorities.
UnderthisjurisdictiontheCourtmaygrantreliefagainstathirdparty,againstwhomtheclaimantdoesnot
haveacauseofaction,whoisholdingtheassetsofsomeoneagainstwhomtheclaimantdoeshaveacause
ofaction.Thus,itwassubmitted,iftherewasnosubstantivejurisdictionagainstSeaTaskbecauseofthe
GreeklawclauseintheSeaTaskcharter,neverthelessreliefcouldbegrantedagainstthemuponthe
footingthattherewereclaimswhichaliquidatorofOceanTaskcouldpursueagainstSeaTaskandSeaTask
shouldberestrainedfromdisposingofitsassetsinawaythatmightfrustraterecoveryinrespectofthose
claims.

111.InresponsetothesesubmissionsMrJacobssubmittedthattherewouldbenobasisforgranting
permissiontoserveSeaTaskoutofthejurisdiction.HereferredtoValedoRiovBaoSteel[2000]2
Lloyd'sRep1inwhichThomasJ,ashethenwas,heldthattheprovisionsofwhatwasCPRPD49Gdid
notpermitserviceoutofthejurisdictionofaclaimbyownersthatbrokershadhadauthoritytocontract
onBaoSteel'sbehalf.Thatwasaclaimagainstsomeonewhowasnotapartytothearbitrationand
involvedadifferentprovisionofthethenrules(whichdidalsoprovideforserviceoutofanapplication
undersection44).ThomasJheldthattherelevantparagraphoftherules,thethenequivalentofCPR62.5
(1)(c)appliedonlytoapplicationsbyandagainstpartiestoanarbitration.

112.BycontrastinTedcomFinancevVetabetHoldings[2011]EWCACiv191,inaninterlocutorydecision,
theCourtofAppealthoughtthattherewasanarguablecasethatthecourthadpowertoorderserviceofan
arbitrationclaimformundersection44andPart62.5(1)(b)againsttheseconddefendants,whowerenot
partiestotherelevantarbitration,inordertopreserveassetswhichwerethesubjectmatterofthe
proceedings.TheCourtalsoheldthattheseconddefendantswerearguablynecessaryorproperpartiesto
theclaimagainstthefirstdefendants.

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 19/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

113.InBNPParibasSAvOJSCRussianMachines[2012]1Lloyd'sRep61BlairJgavepermissionforthe
serviceoutofthejurisdictionofwhatwereineffectapplicationsforantisuitinjunctionsagainst:

i)thefirstdefendant,whichwasaguarantoroftheclaimant,thebeneficiaryoftheguarantee,undera
guaranteewithanEnglishlawandarbitrationclauseonthebasisofCPR62.5(1)(c)and

ii)theseconddefendant,arelatedcompany,whichhadbegunproceedingsseekinginvalidationofthe
guaranteeinMoscow,eventhoughtheseconddefendantwasnotapartytothearbitrationagreement,on
thefootingthatthe2nddefendantwasanecessaryorproperparty.

114.Idonotproposetoresolvethiscontroversy(althoughIinclinetotheviewregardedasarguablebythe
CourtofAppealandespousedatpara6.039ofGeeonCommercialInjunctions)since,assumingthatI
havejurisdictionIwouldnotbemindedtograntpermission.

115.InrelationtothisheadofclaimOwnersseektorelyontheprinciplesstatedbytheHighCourtof
AustraliainCardilevLEDBuildersPtyLtd[1999]162ALR294.InthatcasetheHighCourtsaidthis:

"WhatthenistheprincipletoguidethecourtsindeterminingwhethertograntMarevarelief
inacasesuchasthepresentwheretheactivitiesofthirdpartiesaretheobjectsoughttobe
restrained?Inouropinionsuchanordermay,andweemphasisetheword"may",be
appropriate,assumingtheexistenceofotherrelevantcriteriaanddiscretionaryfactors,in
circumstancesinwhich:

(i)thethirdpartyholds,isusing,hasexercisedorisexercisingapowerofdispositionover,or
isotherwiseinpossessionof,assets,including"claimsandexpectancies",ofthejudgment
debtororpotentialjudgmentdebtoror

(ii)someprocess,ultimatelyenforceablebythecourts,isormaybeavailabletothejudgment
creditorasaconsequenceofajudgmentagainsttheactualorpotentialjudgmentdebtor,
pursuanttowhich,whetherbyappointmentofaliquidator,trusteeinbankruptcy,receiveror
otherwise,thethirdpartymaybeobligedtodisgorgepropertyorotherwisecontributetothe
fundsorpropertyofthejudgmentdebtortohelpsatisfythejudgmentagainstthejudgment
debtor.'

ThatcasewasfollowedbyBriggsJinRevenue&CustomsCommissionersvEgleton[2006]EWHC2313
(Ch)[2007]1AllER606.

116.Itwassaidthat,inthepresentcase:

i)Theeffectofthebelowmarketrateofhire($13,500comparedto$14,825)intheSeaTaskcharterwas
toincreaseOceanTask'sindebtednesstoSeaTaskoverthatwhichitwouldhavebeenifaproperratewas
paidandtogiverisetoaclaimbyOceanTaskagainstSeaTaskforbreachoffiduciaryduty

ii)TheeffectofthesetoffclausewastoinsulateSeaTaskfromcreditorsupthelinewhowouldotherwise
beentitledtoexercisealienonsubhireduebySeaTaskandtheeffectofthenolienclausewastoinsulate
thosebelowSeaTaskinthelinefromclaimsbycreditorsupthelineand

iii)ThesemeasureswerecalculatedtobenefitbothOceanTaskanditsmajorcreditor,SeaTask,atthe
expenseofOceanTask'sothercreditorsincludingCMTandOwners.

117.TheeffectofthatissaidtocreateafraudulentpreferenceinfavourofSeaTask.SeaTaskisasubstantial
creditorofOceanTask,whichmaywellhavebeeninsolventatallmaterialtimes.Byhavingarateof$
13,500intheSeaTaskcharterwhenthemarketratewas$14,825SeaTaskensuredthatlessof
OceanTask'sdebttoitwaspaidoffthanshouldhavebeen.Byinsertingitselfinthechainofcharterparties
withasetoffclauseSeaTask(a)wasabletorecoupthedebtduetoitfromOceanTaskbysettingthatdebt
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 20/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

offagainstthehireduefromittoOceanTaskand(b)preventedthosefurtherupthechainfromclaiming
thehireduebySeaTaskinsatisfactionofthedebtsowedtothem.Thenolienclausepreventedthose
higherupthechainfromclaiminghirefromthosebelowSeaTaskinthechainwhilstSeaTaskwasableto
doso.SeaTaskcouldtherebyinterceptmonieswhichwouldordinarilypassupwardsforthebenefitof
othercreditorsandobtainpaymentforitself.FurtherthechartertoSeaTaskat$13,500isatransactionat
anundervalueandthesameislikelytobetrueofthe"AquaAtlantic"charter.

118.AliquidatorofOceanTaskcouldclaimfromSeaTaskthedifferencebetween$14,825and$13,500per
dayasdamagesforbreachoffiduciaryduty,orasasecretprofitorasafraudulentpreferenceora
transactionatanundervalue.ThefactthatSeaTaskandOceanTaskhavebehavedinthisillicitmanneris
indicativeofariskoffurtherdissipation.

119.Idonotregardthesesubmissionsasconvincing.First,asIhavesaid,Idonotacceptthatthe$13,500rate
hasarguablybeenshowntohavebeen,ortohavebeenunderstoodtohavebeen,abelowmarketrate.Nor
doIseehowOceanTaskcouldberegardedasfraudulentlypreferringSeaTaskasacreditorbyreceiving
lessthanthemarketrateofhire.TheeffectofthatwouldbetodelaythetimewhenSeaTaskwaspaidoff.

120.Secondly,Idonotregardthenolienandsetoffclausesascommerciallyunjustifiableand,iftheyarenot,
theredoesnotseemtomeanyrealprospectthattheirinclusionintheSeaTaskcharteristoberegardedas
afraudulentpreferenceofSeaTaskoverOceanTask'sothercreditors.Theeffectofthesetoffclauseisthat
SeaTaskcansetoffthedebtduetoitbyOceanTasknotwithstandingtherestrictionsonsetoffprescribed
byThe"Nanfri".ThatmayhavetheeffectthatCMTcannotrecover(byassignment)againstSeaTaskin
respectofthedebtowedbyOceanTasktoSeaTask.Suchaninabilitymeansthatthesecurityconstituted
bytheassignmentisnotwhatitmighthavebeenifthesetoffclausehadnotexisted.However,Ifindit
difficulttotreatthatasafraudulentpreferencebyOceanTaskofoneofitscreditorsinfavourofanother.
TheeffectisthatacreditorofOceanTaskhasalessefficacioussecuritythanhemightotherwisehavehad.

121.TheinsertionofSeaTaskinthechaindoeshavetheeffectthatSeaTaskmaysecurepaymentof
OceanTask'sdebttoitbysettingit(orsomeofit)offagainsthire.Butthisis,ineffect,paymentfor
obligationsowedbySeaTasktoOceanTaskfortheprovisionbyOceanTaskoftheservicesofthevessel,
fromwhichSeaTaskderivesthebenefitofthechartertoSinochart.

122.Sofarasthenolienclauseisconcerned,itseffectistoprecludeOceanTaskfromclaiming,bywayof
assignment,againstthosebelowSeaTaskinthechain,andthustopreventthoseaboveOceanTaskfromso
claimingeither.ButIseenobasisuponwhichOceanTaskshouldberegardedasmakingafraudulent
preferenceonaccountoftheabsenceofalienclause.SeaTaskcannotberegardedasboundtogrant
OceanTaskanassignmentofdebtsduetoit(whichis,inessencewhatthelienprovidesfor)however
commonsuchlienclausesmaybe.

123.Thus,theclaimswhichtheOwnerscontemplatemightbebroughtbyaliquidatoragainstSeaTaskappear
tomeremarkablyunpromising.Aclaimbasedonthedifferencebetween$13,500and$14,875perday
(lesscommission)forthe113daysoftheSinochartcharterwouldbeworthabout$100,000.The
likelihoodofitbeingpursuedbyaliquidatorofOceanTaskseemsremote.Whetheranyonewillactually
seektoputOceanTaskintoliquidationisdoubtful.TheOwnershavegivennoundertakingthattheywill
doso,muchlessthattheywillfinanceanyclaim.Ifaclaimwastobebrought,itwouldbemetbyaclaim
fortheverylargesumowedbyOceanTasktoSeaTask,which,whetherornotitcouldbesetoff,wouldbe
oneofOceanTask'sdebts.

124.InthosecircumstancesIwouldnothavebeenmindedtograntanyreliefonthebasisofCardilevLED
BuildersasfollowedinRevenueCommissionersvEgleton.

125.ForthesereasonsIproposetodischargetheinjunctionsgrantedbyPopplewellJ.

126.Iamgratefultothepartiesfortheirhelpfulsubmissions.Iwouldhavebeenmoregratefuliftheyhadnot
beenaccompaniedbysowoefullyinadequateanestimate[2hours]ofthetimeforthehearing.
http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 21/22
5/10/2017 WesternBulkShipowningIIIA/Sv(CarboferMaritimeTradingAPS&Ors[2012]EWHC1224(Comm)(11May2012)

Note1SeeWJGogh,Companycharges,2ndEdn[1996]:Theassignmentofpresentandfuturepropertybywayof
floatingsecuritycausesnoequitableproprietaryinteresttoariseimmediatelyinthepresentpropertynor
subsequentlyinthefuturepropertymerelyonitsacquisition[Afloatingcharge]doesnotoperateasaspecific
assignmentevenofpersonalproperty,buthasreferencetopropertyinexistenceatafuturedate[Back]

Note2ForanexampleofafloatingchargeonfuturebookdebtsseeReKeenanBrosLtd[1985]BCLC302and
Agnewitself.[Back]

Note3Nopriorityissueshavebeenraisedinthepresentcase.[Back]

Note4AsdoesScruttononCharterparties,21stEdition,page317.Oneofthecurrentauthors(Eder,J)wascounselfor
theownersinTheCebu(No1).[Back]

Note5Itdoes,however,containacrossingoutofDecksinclause7whichisnotintheCMTcharter.[Back]

BAILII:CopyrightPolicy|Disclaimers|PrivacyPolicy|Feedback|DonatetoBAILII
URL:http://www.bailii.org/ew/cases/EWHC/Comm/2012/1224.html

http://www.bailii.org/cgibin/format.cgi?doc=/ew/cases/EWHC/Comm/2012/1224.html&query=(%22notice)+AND+(of)+AND+(lien%22) 22/22