London Arbitration 5/23

In London Arbitration 4/23, a dispute arose between charterers and owners regarding cargo discharge instructions leading to this counterclaim. The charterers asserted that they instructed the owners not to unload cargo, for they were exercising a lien on the cargo to recover US$3,705,033 owed by sub-charterers. Owners proceeded to unload the cargo, which charterers claimed invalidated the lien.  Charterers claimed a breach of the charter and sought damages equal to the lien amount.

The owners argued that per standard time charter agreements, the charterers essentially controlled the ship’s operations, including cargo discharge. They denied receiving any instructions, asserting that the bills of lading – which compelled cargo delivery to receivers – did not support the charterers’ lien claim. The owners also contended that the charterers failed to provide evidence of their losses.

During the arbitration, the charterers were directed to present a comprehensive response to the owners’ counterclaim defense, including legal arguments, documents, and witness statements. However, the charterers missed the deadline, prompting the arbitrator to order them to reply within six days. The charterers remained unresponsive, and the arbitrator proceeded with the award based on available information.

The arbitrator concluded that the charterers’ counterclaim lacked merit. The charterers’ communication to the owners, which they argued was an instruction to hold cargo, was deemed insufficient.  Charterers’ email read as follows:

“The charterers have a receivable of USD 19.8M /- from the sub charters. Charterer’s numerous attempts to recover the receivables has not yielded results. Owners’ decision to suspend operation and not discharge the cargo to protect owners and charterers interests may be a prudent decision. The charterers shall confirm once the payment from sub charterers have been received by the charterers. Above without prejudice. Charterers rights reserved.”

The arbitrator ruled that this message did not constitute an instruction or order to owners.  He also upheld the owners’ position that the bills of lading did not support the charterers’ lien, finding no breach of contract by the owners. Finally, without any evidence of loss presented by the charterers, the arbitrator dismissed the counterclaim.  

The charterers’ counterclaim failed due to unclear instructions, the lack of a valid lien, and insufficient evidence of losses. The arbitrator ordered the charterers to cover owners’ costs for the partial award of London Arbitration 4/23 and costs for this arbitration as well, plus interest on both amounts.