AL Dawood Shipping Lines Ltd v Dynastic Maritime Incorporated

A charterparty referring collectively to alternative questionnaire forms does not thereby incorporate each form. A reference to a paragraph of another standard form cannot incorporate a later-completed vessel-specific report that was not attached or shown to exist when the contract was made. A certificate-maintenance warranty does not require a certificate before delivery or one certificate valid throughout the charter. For relief from sanctions, the court must consider legitimate aim, proportionality and preservation of the essence of access to the courts under Article 6. Express Article 6 wording is desirable but unnecessary if the reasoning makes compliance clear. Hopeless claims may be struck out, while conditional relief may preserve arguable defences and secure procedural compliance.

The respondent, owner of a tanker, claimed unpaid hire and damages after withdrawing the vessel from a time charter for non-payment. The appellant alleged that a SIRE report had been incorporated into the charterparty and created an express warranty concerning the vessel’s IOPP certificate. It counterclaimed damages for breach of that warranty.

Following repeated procedural defaults, HHJ Mackie QC dismissed the counterclaim and entered judgment for the respondent. Cooke J refused relief from the counterclaim sanction but conditionally set aside the judgment on the respondent’s claim. The conditions were not fulfilled. The appeal concerned incorporation of the alleged warranty and whether the relief decisions complied with Article 6 and the CPR’s overriding objective.

Lord Justice Aikens, with Lord Justices Etherton and Pill agreeing, dismissed the appeal.

1. Incorporation. The charterparty contemplated that either the Q88 form or the OCIMF questionnaire would be attached. The collective description of those documents as the Questionnaire did not incorporate both. There was no evidence that the SIRE report was attached when the charterparty was made. The bare reference to paragraph 2.6 in the Q88 form could not incorporate a subsequently completed vessel-specific report. The pleaded express warranty therefore had no arguable contractual basis.
2. Certificate obligation. Clause 9.6.5 required the owner to maintain during the charter a valid IOPP certificate enabling the vessel to trade within the agreed trading limits. It imposed no requirement for a certificate before delivery and did not require one certificate to remain valid from the beginning to the end of the charter. The interim certificate did not itself establish the pleaded breach.
3. Counterclaim. Even assuming a warranty and breach, the appellant had not shown that the alleged breach caused the loss of a sub-charter. The evidence did not establish a likely fixture, its terms, the sub-charter rate or any resulting profit. The counterclaim was therefore hopeless.
4. Relief from sanctions and Article 6. Under CPR Pt 3.9, the relevant factors must be considered individually and cumulatively. Where refusal or conditional relief affects a trial on the merits, the order must pursue a legitimate aim, be proportionate and preserve the essence of the right of access to the courts. The judge should ideally state this expressly, but omission of the formula is not itself fatal if the reasoning makes compliance clear. Maintaining the strike-out of a hopeless counterclaim was legitimate and proportionate. Conditional relief on the respondent’s claim was likewise proportionate because it preserved reasonably arguable defences while addressing repeated procedural defaults.

The orders concerning HHJ Mackie QC’s judgments of 17 and 31 October 2008 were maintained. The unforeshadowed application to adduce further evidence was rejected.

• Court of Appeal (Civil Division): By judgment dated 19 February 2010, the court dismissed the appeal and maintained Cooke J’s orders.
• Queen’s Bench Division, Commercial Court, Cooke J: On 15 May 2009, relief from the sanction dismissing the counterclaim was refused. The judgment on the respondent’s claim was conditionally set aside, subject to stringent conditions that were not fulfilled.
• Commercial Court, HHJ Mackie QC: On 17 October 2008, the appellant’s counterclaim was dismissed for non-compliance with an unless order. On 31 October 2008, judgment was entered for the respondent on its claim.