Web alert: The Nicolaos A – the terms in a fixture note will normally take precedence over a pro-forma charter

In this case[1] the owner agreed to charter their ship to the charterer for roughly eight months, back in 2008. The fixture recap stated: ‘Arbitration to be held in Hong Kong. English Law to be applied.’ Additionally, it included (by use of the words ‘all other terms and conditions as per Gencon 1994’) clause 19 of the Gencon form. This provides for English law and London arbitration, unless an alternative forum is expressly stated elsewhere in the charter. There was no such provision (except for that mentioned above) in this fixture note, as to law and jurisdiction.

During the charter the ship carried steel products from China to Jebel Ali, where a dispute subsequently arose over the short landing of cargo. So as to recover the settled cargo claim, the owner subsequently commenced arbitration proceedings in London against their charterer. The charterer in turn claimed the London arbitration, and the appointment of a sole arbitrator, as invalid and in so doing attempted to set aside the Award given in the owner’s favour.

Whilst the London arbitrator disagreed, on appeal, the English High Court allowed the appeal and set aside the Award. In so doing, the judge in this case stated that clause 19 of the Gencon form was incompatible with the clause in the fixture recap and, therefore, should be ignored.

Thus, if a member wishes to have their charterparties and other contracts subject to arbitration in one jurisdiction, but subject to the legal proceedings of another, this can be done but it needs to be made expressly clear in the agreement between the parties. Members also should pay special attention to the terms in their fixture negotiations and, especially if no signed charterparty exists, ensure they are happy with these fixture terms. This is because they will normally take precedence over any conflicting terms in the pro-forma.

 

This article intends to provide general guidance on the issues arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. Members requiring further information on this topic should direct their enquiries to either their usual contact at the club, or to the authors of this article.

Defence cover is, by its very nature, discretionary in that the club must be satisfied as to the merits and quantum of the claim in question and the likelihood of achieving a successful outcome, if it is to lend support. 

--------------------------------------------------------------------------------

[1] [2015] EWHC 194 (Comm)​