Incorrect application of legal principle to facts of case not itself an “error of law”

In Troy Maritime SA v Clearlake Shipping Pte Ltd, before the English Commercial Court* the owners claimed to be appealing on a point of law, but the court disagreed.

This case decided that a tribunal’s decision on whether the deviation of a vessel had been for a “reasonable purpose” was a finding of fact, and could not be successfully appealed as a point of law under section 69 of the Arbitration Act 1996.

Edward White, Associate at Thomas Cooper Singapore LLP, contributed a case note.

In July 2016 Troy Maritime SA (the owner) chartered MV Andreas to Clearlake Shipping Pte Ltd for a voyage from Tuapse, Russia, to the ARA Hamburg range.

The contract was on an amended BPVoy4 form for the carriage of a cargo of unleaded gas oil. Clause 26 of the Charterparty provided that “the Vessel shall have liberty to sail with or without pilots, to tow or go to the assistance of vessels in distress and to deviate for the purpose of saving life and property, or for any other reasonable purpose.”

Article IV Rule 4 of the Hague-Visby Rules was also incorporated into the Charterparty, which provided that “any reasonable deviation shall not be deemed to be an infringement or breach of these Rules, or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom”.

On July 11th 2016 the Vessel’s second engineer requested permission to disembark at Istanbul due to serious family problems. The Vessel applied to its flag state, the Panama Maritime Authority, for special dispensation to sail without a second engineer for the remainder of the voyage. The PMA granted the Vessel’s request, on the condition that a second engineer boarded the Vessel no later than July 20th 2016 – that being the stated ETA in Hamburg.

However, it became apparent that the Vessel would not reach its discharge port by July 20th. The Owners arranged for the Vessel to call at Gibraltar in order to take on both a replacement second engineer and a technician needed to service the Vessel’s auxiliary boiler.

Unfortunately the Anreas collided with a submerged nuclear submarine off Gibraltar, following which the parties referred a number of disputes to arbitration.

The Arbitration

One of the disputes referred to arbitration was a counterclaim by the Charterers for damages arising from the Vessel’s deviation to Gibraltar. The Owners argued that this deviation had been for a reasonable purpose under Clause 26, as the Vessel needed to pick up a replacement second engineer to ensure compliance with her safe manning certificate.

The Owners did not seek to rely on Article IV Rule 4 of the HVR, but the Tribunal noted that it might have been open for them so to do.

The Tribunal found that, although it was reasonable for the Owners to allow the second engineer to leave the Vessel at Istanbul, the deviation to Gibraltar could have been avoided altogether had the Owners requested a longer dispensation period from the PMA in their initial application. Therefore the deviation was not justified by a reasonable purpose, and the Charterers were entitled to claim for the losses arising from it.

The Owners were granted permission to appeal to the Commercial Court on what was said to be a question of law:

“Is a deviation of a vessel in the course of a voyage, in order to comply with flag state requirements for the maintenance of her Safe Manning Certificate, a ‘reasonable purpose’ within the meaning of clause 26 of the parties’ charterparty or a ‘reasonable deviation’ within the meaning of Article IV, r. 4 of the Hague-Visby Rules?”

The Owners’ main contention was that the Tribunal had based its decision solely or substantially on the issue of whether the Owners should have sought a longer dispensation period from the PMA. This, the Owners argued, was not a “relevant circumstance”, considering the Charterers had not claimed that the Owners’ failure to do so was a breach of the Charterparty in and of itself.

  1. The Charterers argued that the Tribunal’s decision as to whether or not the deviation was reasonable amounted to a finding of fact, and fell outside the scope of a section 69 appeal.
  2. The Charterers also argued that there was no question of law to be answered by the Court. Rather, the Owners’ appeal alleged the incorrect application of legal principle to the facts of the case, which could not itself be considered an “error of law”.
  3. In addition the Charterers took issue with the question the Owners had asked the court to determine, as it was premised on a finding by the Tribunal that the deviation had been for the purpose of complying with Flag State requirements for the maintenance of the Vessel’s Safe Manning Certificate. The Charterers noted that the Tribunal had not made any finding to this effect.
  4. Finally, the Charterers contended that the Tribunal was in any event entitled to consider the Owners’ failure to seek a longer dispensation period in reaching its decision, and that its decision was within the range of reasonable results which a tribunal correctly directing itself on the law could have reached.

Butcher J found in favour of the Charterers and dismissed the Owners’ appeal as “an attempt to upset a factual decision of the Tribunal”. It was for the Tribunal to decide, as a question of fact, what the “relevant circumstances” were for the purposes of determining whether a deviation had been reasonable.

The judge in any event took no issue with the Tribunal’s findings of fact and found no reason to exclude antecedent faults, such as the failure to request a longer dispensation period.

The writer noted that  this case illustrates the difficulties faced by parties seeking to bring section 69 applications before the court. In particular, it demonstrated the reluctance of the courts to entertain any challenges to a tribunal’s finding of fact, even when the challenge was presented as an appeal on a point of law.

*Butcher J.: [2018] EWHC 2310 (Comm): 31 July 2018

Mr Y. Kulkarni QC, instructed by Holman Fenwick Willan, for the Claimant

Mr T. Bird, instructed by Hill Dickinson, for the Defendant