Taokas Navigation SA v Komrowski Bulk Shipping KG (GmbH & Co) & Ors

A war risks clause must be construed with the charterparty as a whole and in its factual context. An owner may refuse an order where the clause applies, even if the relevant risk has not increased since the charter was made, unless the charterparty shows that the owner accepted that particular risk. An express agreement to pass through one dangerous area does not necessarily amount to acceptance of risks elsewhere on the voyage. The payment of war risk insurance premiums may support acceptance of a particular risk, but general provisions for reimbursing such premiums do not do so.

The charterers appealed under section 69 of the Arbitration Act 1996 from a majority award on a preliminary issue concerning three materially identical time charterparties for the vessel Paiwan Wisdom. The charterers ordered the vessel to proceed to Mombasa with a cargo of cement clinker. The owners refused, relying on the CONWARTIME 2004 war risks clause and the risk of piracy.

The parties agreed that there had been no material change in the piracy risk between the charter date and the order. The issue was whether the owners were nevertheless precluded from relying on the clause without such an increase in risk. The arbitrators answered that question in the negative.

1. Appeal dismissed. The court upheld the majority arbitrators’ answer that the owners were not precluded from relying on CONWARTIME 2004 merely because the relevant piracy risk had not materially increased after the charterparty was made.
2. Clause 50 permitted trading to Kenya because Kenya was within the Institute Warranty Limits and was not an excluded country. However, clause 94 separately entitled the owners to refuse to proceed to a place where, in the reasonable judgment of the master or owners, the vessel was likely to be exposed to war risks. The clause contained no requirement that the likelihood of danger must have increased since the charterparty date.
3. The words permitting passage through the Gulf of Aden constituted an express agreement to pass through that area. It would therefore be inconsistent with the charterparty as a whole to allow refusal under clause 94 merely because piracy made passage through the Gulf dangerous. That agreement did not extend to every port or place on the east coast of Africa. The naval presence and convoy system in the Gulf of Aden explained the specific agreement.
4. The decision in The Product Star (No. 2) [1993] 1 Lloyd’s Rep. 397 was distinguishable. There, the charterparty, its commercial purpose and specific provision for war risk premiums relating to UAE trading showed that the owners had accepted the relevant risk at the charter date. The present charterparty contained no equivalent acceptance of piracy risk in trading to Mombasa. Its general provisions for reimbursing war risk premiums did not alter that conclusion.
5. There was no lack of commercial sense in permitting trading to Kenya while allowing refusal of a particular order if danger was encountered en route. Questions of waiver could arise where voyage instructions were accepted, but that issue did not arise because the owners refused the instructions before cargo was loaded.

• Arbitration: A majority of the arbitrators answered the preliminary question in the negative in awards dated 16 September 2011.
• High Court (Commercial Court): The appeal under section 69 of the Arbitration Act 1996 was dismissed and the majority award upheld: [2012] EWHC 1888 (Comm).