Eitzen Bulk A/S v TTMI Sarl

On an appeal under section 69 of the Arbitration Act 1996, the court should not revisit a tribunal’s evaluative conclusion merely because a contractual construction may create practical difficulty. A bunker-pricing clause requiring payment at the “price actually paid” on a first-in-first-out basis refers to the price paid when the bunkers were stemmed, supported by paid invoices, rather than a price paid under a subcharter. Business common sense may assist where wording permits competing interpretations, but cannot justify importing an uncontrolled price mechanism. Post-contractual conduct cannot aid construction.

The claimant appealed under section 69 of the Arbitration Act 1996 from an award concerning bunker payments under head and subcharterparties for the vessel Bonnie Smithwick. The tribunal held that clause 15 of the SHELLTIME 4 form meant the prices paid when bunkers were stemmed, assessed first-in-first-out and supported by paid invoices. The claimant argued for the price paid by the party seeking reimbursement and also sought further reasons under section 70(4). The central issue was the proper construction of clause 15.

Appeal dismissed. The award was upheld. Clause 15’s “price actually paid” meant the price paid when the bunkers were stemmed.

1. Under section 69 of the Arbitration Act 1996, the court could not go behind the tribunal’s conclusion that obtaining relevant invoices might be difficult but was not impossible.
2. Although clause 15 was badly drafted, its first-in-first-out wording linked the price to the fuel taken on board and consumed. The paid-invoice requirement supported the price paid to obtain the bunkers, rather than a subcharter price.
3. The reimbursement construction was not more consistent with business common sense. It would require the head owner to accept a price fixed under a subcharter over which it had no control.
4. The estoppel case failed for lack of proof. The application for further reasons under section 70(4) was refused as out of time and futile. Post-contractual conduct was impermissible as an aid to construction.

The judgment concerned an appeal from an arbitration award dated 27 June 2011. Leave to appeal was granted by Teare J on 4 November 2011. The High Court dismissed the appeal and upheld the award.