London Arbitration 10/25
The vessel was time-chartered by the claimant owners to the respondent charterers under a fixture recap incorporating a proforma charterparty. The charterparty contained BIMCO’s standard arbitration clause, which in turn provided that disputes below US$50,000 were to be referred to the LMAA Small Claims Procedure (SCP). Clauses 17 and 94 confirmed English law and London arbitration.
The claim totaled US$8,474.81, divided into two heads: bank charges deducted from hire payments, and a charterers’ deduction for alleged breach of employment orders relating to the vessel’s route. Owners duly filed their claim submissions, but charterers failed to submit a defense despite reminders and extensions. The arbitrator proceeded on the basis of owners’ documents alone.
The charterers made 11 hire remittances. Each was subject to deductions for bank charges before crediting to owners’ account, totaling US$241.90.
The arbitrator found that it was for charterers to ensure that hire was received in full by the owners, free of bank charges. Any deductions by intermediary or receiving banks remained the charterers’ responsibility. Owners proved the charges, and the claim succeeded in full.
The larger dispute concerned charterers’ deduction from hire in respect of the vessel’s routing decision. On a voyage from Hong Kong to Fangcheng, the master decided not to transit the Hainan (Qingzhou) Strait. His reasons were threefold:
- Navigation risks: radar and anchoring were prohibited, while the Strait was congested with fishing vessels and gear, raising risks of collision and entanglement.
- Official guidance: Chinese authorities recommended navigation east of Taiwan rather than through the Strait.
- Prior incidents: vessel managers had reported earlier cases of entanglement with nets affecting their vessels.
Charterers argued that the vessel should have taken the Strait route and treated the master’s refusal as a breach of employment orders, placing the vessel off-hire.
The arbitrator rejected charterers’ position. Navigational decisions are within the master’s discretion and cannot be overridden by charterers’ orders provided the master acts reasonably. The reasons advanced amply justified the decision, which was prudent and responsible. Clause 75 of the charterparty confirmed the master’s right to make such decisions.
Additionally, any claim charterers might have advanced for loss was time-barred under the Hague Rules, as no suit had been commenced within 12 months of final discharge. In any case, it appeared charterers suffered no actual loss. Their deduction from hire was unjustified.
The owners’ claim succeeded in full for US$8,474.81. Charterers were ordered to pay this sum with interest at 7% per annum, compounded quarterly, running from six weeks after redelivery until payment in full. Owners were also awarded their costs: £6,000 in legal costs and £5,350 in SCP and administrative fees, with compound interest at 7% from the relevant dates of award or payment.