Bottiglieri Di Navigazione SpA v Cosco Qingdao Ocean Shipping Company

Where a charterparty expressly provides a remedy for unclean holds on delivery or at the first loadport, that provision governs the entitlement to place the vessel off-hire for that failure. A general off-hire clause does not create a later right to rely on the same condition, particularly where the charterparty allocates subsequent cleaning to the crew and keeps the vessel on hire.

The remedies for breach and for off-hire may remain legally distinct. However, a charterer who knowingly accepts unclean holds, fails to require cleaning, and represents by its conduct that compliance is unnecessary may waive the breach and any consequential damages claim, or be estopped from pursuing it.

Owners obtained an arbitral award for hire and expenses under a time charterparty. The charterers challenged the award under sections 68 and 69 of the Arbitration Act 1996.

The dispute concerned coal residues left in the vessel’s holds on delivery. The charterers accepted delivery and loaded iron ore, but the holds later required cleaning before rapeseed could be loaded at a second loadport. The tribunal rejected both an off-hire claim and a damages claim. The issues before the court were whether the charterers retained an off-hire entitlement at the second loadport, and whether the tribunal had committed a serious irregularity or reached a decision open to appeal.

1. Off-hire claim. The application for permission to appeal under section 69 of the Arbitration Act 1996 was refused. Clause 13 of the fixture note and amendment 5 to clause 46 addressed cleanliness on delivery or arrival at the first loadport. Clause 92 allocated intermediate hold cleaning to the crew and provided that the vessel would remain on hire. Clause 15 therefore did not apply to loss of time caused by the vessel’s failure to present clean holds at the first loadport where the charterers had not exercised the clause 13 remedy.

2. The waiver issue arose only if that construction was wrong. Since the tribunal’s construction was correct, the question whether acceptance of delivery waived a later off-hire entitlement did not arise. In any event, the tribunal’s conclusion was not obviously wrong or open to serious doubt, and the questions were not matters of general public importance within section 69(3).

3. Damages challenge. There was no serious irregularity under sections 33 and 68. On a fair and non-literal reading of the award and the parties’ submissions, waiver and estoppel in relation to all complaints about the holds, including damages, had been argued before and considered by the tribunal.

4. Clauses 13 and 46 created separate remedies. Failure to exercise the clause 13 off-hire remedy did not automatically extinguish a damages claim under clause 46. It was, however, evidence capable of supporting waiver when combined with the charterers’ knowledge of the dirty holds, their unqualified acceptance of the vessel, and the owners’ consequent conduct.

5. The tribunal was entitled to infer waiver of the grain-clean requirement and to find waiver by estoppel or promissory estoppel. The waiver could have been retracted prospectively on reasonable notice, but could have permanent effect where retrospective retraction would be inequitable. The applications were accordingly refused.

The judgment describes an arbitration conducted on documents alone, resulting in an award dated 10 May 2004. The court refused the charterers’ applications under sections 68 and 69 of the Arbitration Act 1996.