Navision Shipping AS v Precious Pearls Ltd (mv Mookda Naree)

Under an off-hire clause, an omission is not confined to failure to perform a contractual obligation. A sub-charterer’s failure to act may qualify where, in the circumstances, it should reasonably have appreciated that action was expected and that inaction might prolong the vessel’s arrest or detention. The clause must be construed by reference to its commercial purpose and the burden lies on the party relying on the exception to the prima facie off-hire rule.

A clause allocating responsibility for cargo claims arising during West African trading generally concerns cargo carried or ordered to be carried under the relevant charter. It does not ordinarily extend to a cargo claim concerning a different vessel and a different employment.

The vessel Mookda Naree was arrested in Guinea to secure a cargo short-delivery claim brought against Cerealis concerning cargo carried on another vessel, the Supertramp. The vessel was employed under successive time charters involving Precious Pearls Ltd, Navision Shipping A/S and Conti Lines Shipping NV.

The arbitrators held that the arrest remained within the exception to the off-hire clause because Cerealis, as sub-charterer, failed promptly to deal with or secure the claim. They also held that a West African trading clause allocating responsibility for cargo claims applied, keeping the vessel on hire and making Navision liable for associated losses. Conti and Navision appealed on questions of law.

1. Clause 47. The appeals concerned the proper construction of the off-hire exception for an arrest or detention occasioned by an act, omission or default of a charterer or sub-charterer. The clause established a prima facie off-hire rule, and the party relying on the exception had to show that the case fell within it. This approach accorded with The Global Santosh [2016] UKSC 20; [2016] 1 WLR 1853.
2. “Omission” was not limited to failure to perform a contractual obligation under the sub-charter. Inaction could constitute an omission where the sub-charterer should reasonably have appreciated that it was expected to act and that failure to do so might cause or prolong the arrest. The arbitrators were entitled to find that Cerealis should have acted promptly after learning of the arrest and the claim against it. There was therefore no error of law in their conclusion that the vessel remained on hire from 12:00 on 17 December 2018.
3. Clause 86. The arbitrators erred in treating the expression “cargo claims” as extending to every claim relating to cargo. Read with clause 43, clause 102 and the charter as a whole, clause 86 concerned cargo claims arising from cargoes carried or ordered to be carried pursuant to the relevant charter. The SMG claim concerned cargo carried on the Supertramp, not the Mookda Naree under Navision’s charter. It therefore fell outside clause 86.
4. Conti’s appeal was dismissed. Navision’s appeal succeeded only to the extent that the head-charter award was wrong as to the period before 12:00 on 17 December 2018 and as to damages under clause 86. The award was remitted to the arbitrators on agreed terms.

• Arbitration: Separate awards dated 11 February 2020 held that the vessel remained on hire under the off-hire exception and under clause 86.
• High Court (Commercial Court): Leave to appeal on questions of law was granted by Foxton J on 23 June 2020. The court dismissed Conti’s appeal and allowed Navision’s appeal in part, remitting the head-charter award.