Polaris Shipping Co Ltd v Sinoriches Enterprises Co Ltd

On an appeal on a question of law from an arbitration award, the tribunal must construe the charterparty as written. A reference to “good weather” does not require evidence to be confined to 24-hour periods running from noon to noon unless the charterparty so provides. The tribunal may nevertheless assess whether the available good-weather data constitutes a sufficiently large and representative sample. Once a breach of a speed or performance warranty is established by reference to good-weather performance, the resulting shortfall may be applied across the charter period, excluding periods of slow steaming at the charterers’ request.

The charterers claimed damages for alleged breaches of speed and performance warranties in a time charterparty concerning the vessel OCEAN VIRGO. The arbitrator rejected the claim after excluding several periods of alleged good weather because they were shorter than 24 hours from noon to noon, and after concluding that other periods were too small to provide a representative sample.

The charterers appealed under section 69 of the Arbitration Act 1996, alleging errors of law. They also challenged the award under section 68 on the basis that the arbitrator had failed to consider breach. The central issues were whether the 24-hour requirement was justified by the charterparty and whether the award misdirected itself as to the period over which damages could be assessed.

1. The appeal under section 69 was allowed and the award was remitted to the arbitrator. The award was not affected by a serious irregularity under section 68.

2. The arbitrator erred in law by directing himself that an admissible period of good weather had to comprise 24 consecutive hours running from noon to noon. The charterparty referred simply to “good weather” and contained no wording that justified importing that requirement.

3. The arbitrator was entitled, as a matter of evidential assessment, to conclude that the periods relied upon in the second leg of the ballast voyage and on the laden voyage were too small to constitute a representative sample. That conclusion was not an error of law.

4. The periods of 14 and 16 hours in the first leg of the ballast voyage had not been rejected as too small a sample. They had been excluded solely because they were not 24-hour good-weather days. The arbitrator had therefore made an error of law requiring reconsideration.

5. The arbitrator had also erred in law by treating the claim as confined to the period in which the breach was established. If a breach was established by reference to good-weather performance, the resulting shortfall was to be applied to the whole charter period, excluding periods of slow steaming on the charterers’ instructions.

6. The award was remitted for the arbitrator to determine whether the two periods in the first leg, individually or cumulatively, formed a sufficient sample; whether they established a breach; and, if so, the resulting damages.

• Arbitration: The arbitrator rejected the charterers’ speed and consumption claim.
• High Court (Commercial Court): The appeal under section 69 was allowed and the award was remitted. The section 68 challenge was rejected.