Eleni Shipping Ltd v Transgrain Shipping BV

In a time charter, a charterer must bring itself within the clear words of an exception to the obligation to pay hire. Any genuine ambiguity is resolved in favour of the owner. Construction remains a unitary exercise directed to the objective meaning of the contract, read as a whole and in its commercial context.

Where a clause lists capture, seizure, detention and arrest followed by qualifying words referring to authority or legal process, those words may govern all four events. A piracy off-hire clause linked to transit of the Gulf of Aden may operate by reference to piracy as an immediate consequence of that transit, rather than a strictly defined geographical boundary, where the contractual and factual context supports that construction.

The claimant owners appealed under section 69 of the Arbitration Act 1996 against an arbitral award rejecting most of their claim for hire after their vessel was captured by pirates in the Arabian Sea.

The charterparty contained two relevant additional clauses. Clause 49 suspended hire for capture, seizure, detention or arrest by an authority or legal process. Clause 101 addressed Gulf of Aden transit and provided for suspension of hire if the vessel was threatened or kidnapped by piracy. The tribunal majority treated clause 49 as covering piracy capture and clause 101 as applying where piracy occurred within, or as an immediate consequence of transiting, the Gulf of Aden. The central issues were the proper construction of both clauses.

1. Appeal partly allowed. The appeal succeeded on clause 49 and failed on clause 101. The court reserved the form of order and costs.
2. The construction of a commercial contract is a unitary exercise. The court determines the objective meaning of the language in its contractual and factual context, reading the document as a whole and testing competing constructions against commercial consequences. These principles apply to charterparties.
3. Time charterers bear the risk of delay and remain liable for hire unless they establish a clear contractual exception. Accordingly, any genuine doubt about the meaning of an off-hire exception is resolved in favour of the owners.
4. Clause 49 suspended hire only for capture, seizure, detention or arrest by an authority or legal process. The qualifying words naturally governed all four expressions. That construction was supported by the syntax, the relationship with clause 15, and the uncommercial consequences of treating detention as an unqualified off-hire event. Clause 101 did not alter that conclusion because it contained its own piracy provision.
5. Clause 101 was engaged where piracy detention was an immediate consequence of a transit which the clause required the owners to undertake. The tribunal had found that “Gulf of Aden” had no ascertainable geographical meaning in this charterparty context, and that finding could not be challenged under section 69. The clause’s commercial purpose was to facilitate Suez Canal trading while allocating the resulting piracy delay risk to the owners. It was therefore unnecessary to confine the off-hire provision to a fixed geographical area. A voyage unrelated to Gulf of Aden transit would not engage the clause.

The claimant appealed under section 69 of the Arbitration Act 1996 against an arbitral award dated 19 February 2018, as corrected. The tribunal majority had rejected most of the owners’ claims.

• High Court (Commercial Court): appeal succeeded on clause 49 and failed on clause 101; form of order and costs reserved.