Dolphin Tanker Srl v Westport Petroleum Inc

On an appeal under section 69 of the Arbitration Act 1996, the court generally determines the question of law from the arbitral award and the relevant contract. Additional arbitration documents may be admitted only where the award refers to them and the court needs them to determine the identified question of law. The court must accept the arbitrator’s factual findings and must not allow factual challenges to be recast as questions of law.

Contractual wording defining a vetting review as a charterer’s nomination to an oil major was given its natural effect. A rejection qualified under the clause where the latest SIRE report was considered as part of the vetting process; it was unnecessary to prove that the report was an effective cause of the rejection.

The Owners appealed under clause 41(c)(ii) of a five-year time charterparty, relying on questions of law arising from an arbitration award. The arbitrator had held that the Charterers were entitled to terminate under clause 50 after four qualifying rejections in a consecutive run.

The appeal concerned: the meaning of “oil major”; whether an owner-commissioned BP pass interrupted the sequence of rejections; and whether a rejection qualified only if the latest SIRE report was an effective cause of the rejection. The Owners also sought to rely on material beyond the award and charterparty.

1. Admissibility on a section 69 appeal. The appeal was confined to questions of law arising out of the award. The general rule was that the court should consider the award and the relevant contract. Other documents could be admitted only where the award referred to them and the court needed them to determine the identified question of law. The court could not receive new factual or expert material to challenge the arbitrator’s findings or commercial-background conclusions. The Owners’ additional documents were therefore irrelevant and inadmissible.
2. Meaning of “oil major”. The unqualified expression in clause 50, read with the definition of a vetting review and the commercial structure of the clause, included the six recognised oil majors, including ConocoPhillips. The five companies named in the initial approval provision formed a preferred subset for that provision, but did not restrict the meaning of “oil major” in the in-service termination provisions.
3. Owner-commissioned pass. Under clause 50, a vetting review or inspection required a nomination by the Charterers to an oil major. The BP inspection arranged by the Owners therefore did not interrupt the consecutive run of qualifying rejections. The possible commercial difficulty arising from an unexercised off-hire option did not justify departing from the clear wording. The judge noted, without deciding the point, that a term might require nomination within a reasonable period if the off-hire option were exercised.
4. Latest SIRE report. Clause 50 did not require proof that the latest SIRE report was an effective cause of the rejection. It was enough that the oil major considered that report as part of the nomination and vetting process. The arbitrator’s findings that the report was probably reviewed or would have been considered were sufficient.
5. The arbitrator had made no error of law. The Owners’ appeal was dismissed.

The judgment states that the Owners appealed to the High Court under clause 41(c)(ii) of the charterparty against an arbitration award dated 22 July 2010. The award had held that the Charterers were entitled to terminate the charterparty.