West Law Report

Breach in failure to meet pollution Convention

Posted in Environmental law, Times Law Report by mrkooenglish on June 11, 2008

From The TimesJune 10, 2008

Breach in failure to meet pollution Convention
Golden Fleece Maritime Inc and Another v ST Shipping and Transport Inc in the Court of Appeal
Court of Appeal

Published June 10, 2008

Golden Fleece Maritime Inc and Another v ST Shipping and Transport Inc

Before Sir Anthony Clarke, Master of the Rolls, Lord Justice Longmore and Lord Justice Lawrence Collins

Judgment May 23, 2008

Owners of vessels which failed to comply with the Marine Pollution Convention, as warranted in the charterparty and were unable to carry to all specified ports the full range of petroleum products set out therein, were in breach of time charters.

The Court of Appeal so held, dismissing the appeal of shipowners, Golden Fleece Maritime Inc and Pontian Shipping SA, against the decision of Mr Justice Cooke ([2007] 1890 (Comm)) that they were liable in damages to the charterers, ST Shipping and Transport Inc, for breach of charter from the date when work ought to have been carried out to enable the vessels to comply with the amended Marine Pollution Convention.

Mr Gavin Kealey, QC and Mr Timothy Hill for the owners; Mr Nicholas Hamblen, QC and Mr Malcolm Jarvis for the charterers.

LORD JUSTICE LONGMORE said that since the 1970s the Inter-Governmental Maritime Consultative Organisation, since 1982 the International Maritime Organisation, had been concerned to minimise occurrences and consequences of pollution. Under its auspices, the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 had introduced internationally recognised regulations covering the prevention of pollution of the marine environment by ships.

The parties to that Convention had gradually been requiring improvements of the design of tanker vessels. A requirement that segregated ballast tanks should be fitted alongside the vessel while oil was carried in the central tanks was introduced. Those vessels were called double-sided. The final step was to require the cargo tanks to be protected not only at the sides but also at the bottom, or double-hulled.

Amendments to the 1972 Convention to secure that end were adopted in 1992 and came into force in 1993 by regulation 13F of annex 1 to the Convention. They applied to existing ships 30 years after delivery to the original owner.

The International Maritime Organisation accelerated the phasing out of single-hulled tankers by adopting regulation H of annex 2 to the Convention to come into force on April 5, 2005. From that date only double-hulled vessels could carry fuel oil cargoes. There were, however, exemptions from that regime in regulations 13H(5), (6) and (7).

The charterparties in question were made on May 30, 2003, and August 10, 2004. Neither vessel was double-hulled. The parties treated them as double-sided although to a small extent they were not with the result that they did not meet the requirements of the exemption.

The critical question was whether the failure of the vessels to comply with the Convention’s new provisions for double-hulled vessels meant that the owners were in breach of charter after April 5, 2005.

The charters were on the Shelltime 4 form, a standard form of time charter. Its terms provided that the vessels were to be fit to carry dirty petroleum products such as fuel oil, they were to have on board certificates and documents required by the applicable law, and they were to comply with all applicable conventions, including specifically the amended Marine Pollution Convention.

The authorities established no principle of law that the terms of a time charter as to seaworthiness or fitness to carry the cargo related only to the vessel’s physical condition and could never extend to legal fitness to carry the cargo. It was all a question of fact and construction of the individual charterparties.

The wording of the clause requiring relevant documents to be on board was curious. To carry fuel oil the vessels needed, as from April 2005, an exemption under regulation 13H(5). It was a document required at a particular time. The opening words of the clause, however, looked to the date of the vessel’s delivery under the charter.

There was thus an inconsistency between the opening words and the words “required from time to time” in the body of the clause. Precedence should be given to the words in the body rather than those in the introducing phrase on the basis that the particular should prevail over the general. That would be enough to resolve the appeal in favour of the charterers.

The first two paragraphs of clause 52 led to the same conclusion. Clause 52 warranted that the vessel was eligible under applicable conventions, laws and regulations for trading to and from ports specified in the charterparty, and had on board all certificates and required documents. The warranty explicitly applied to the future and expressly referred to the Marine Pollution Convention as amended and extended.

Without the regulation 13H(5) exemption, the vessels did not comply with the Convention because they were designated fit to carry dirty petroleum products but could not do so unless they had the relevant exemption for double-sided vessels. Thus on any view there was a breach of clause 52 because the vessels were unable to obtain that exemption.

The Master of the Rolls and Lord Justice Lawrence Collins agreed.

Solicitors: Stephenson Harwood; Clyde & Co LLP.

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