Singapore Arbitration 3/23

Please note: The SCMA published a redacted version of the award, with certain identifying factors removed to preserve anonymity of the parties, their legal representations, and the tribunal.

The arbitration arose from a dispute over a trip charter dated December 22nd, between the claimant and the respondent for the shipment of coal from Indonesia to Thailand. The charterparty specified two voyages with laycans of March 1-5 and March 6-10. The Owner failed to nominate vessels for these shipments, leading to a breach of the charterparty. 

The governing law of the charterparty was English law, and the dispute was to be resolved by arbitration in Singapore, and using the Singapore Chamber of Maritime Arbitration Rules (3rd Edition, 2015) as per Box 25 and Rider Clause 33 of the charterparty. 

Box 25 of the charterparty provided as follows:

Any dispute arising under this Charter Party shall be referred to Arbitration in Singapore in accordance with the latest arbitration act. English law to apply.” 

Rider Clause 33 of the charterparty provided as follows:

This Charter Party to be Governed by English Law.

General Average/Arbitration if any to be settled in Singapore & English Law to apply.

If any dispute or difference should arise under this Contract, same to be referred to arbitration held in Singapore by in accordance with the Singapore Chamber of Maritime Arbitration Rules.

This Charter Party shall be governed by and construed in accordance with English law and any dispute arising out of this Charter Party shall be referred to arbitration in Singapore in accordance with the Singapore Chamber of Maritime Arbitration Rules or any statutory modifications or re-enactment thereof for the time being in force. Unless the parties agree upon a sole arbitrator, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint a third arbitrator, the decision of the three-man tribunal thus constituted or any two of them, shall be final. On the receipt by one party of the nomination in writing of the other party’s arbitrator, that party shall appoint their arbitrator within fourteen days, failing which the decision of a single arbitrator appointed shall be final.

For disputes where the total amount claimed by either party does not exceed the amount stated in Box 25** the arbitration shall be conducted in accordance with the Small Claims Procedure of the Singapore Chamber of Maritime Arbitration Rules Association.”

Efforts to resolve the dispute between January 17th and February 25th were unsuccessful. On February 25th, the Charterer notified the owner of the breach and terminated the charterparty. Subsequently, the Charterer executed substitute charterparties for vessels to deliver the shipments, with laycans of March 1-9 and March 6-15, respectively.

The Owner eventually admitted breached of charterparty basis the violation of Clause 24, and thus, the arbitration was only for the damages payable by the owner and the interest on damages.

Clause 24 of the charterparty provided as follows:

Clause 24 Vessel’s and/or Owners’ qualifications


Charterers to declare/narrow down 5 days spread laycan 15 days prior to first day of narrowed Laycan.

Nomination clause:

Not less than ten (10) days prior to first day of laycan, Owners shall submit to Charterers a ‘Nomination Notice’ of the performing Vessel or similar substituted Vessel and schedule in the application.

… Should the Owners failed (sic) to nominate the Vessel as per agreed, then Owners shall be responsible to Charterers for all direct/subsequence (sic) cost occurred. …”

After the Charterer’s original amount for damages was claimed, the Owner argued that the charterer failed to mitigate losses by delaying the charter of substitute vessels. However, the tribunal rejected this, stating that the charterer reasonably terminated the charterparty on February 25th after unsuccessful negotiations. The tribunal found that the choice of substitute vessels was reasonable and the owners failed to prove otherwise.

Once it was decided that the charterer properly mitigated their losses, the owner claimed damages should be based on the charterparty rate, while the charterer insisted on calculating the damages based on the actual amount of cargo loaded. The tribunal rejected both parties’ proposals. Instead they applied the “minimum performance” principle, determining that damages should be based on the least liability for the party in breach. The tribunal found the Owner was liable for freight only for the cargo it was obliged to load as per the charterparty.

The charterers sought interest at 5.33% per annum from the date of payment for each substitute vessel. The owner proposed 4-5% per annum basis the interest rate on London Arbitrations. Based on Section 20 of the Singapore International Arbitration Act 1994, the tribunal applied a default interest rate of 5.33% on judgment debts.

Partial Award

The case was resolved on May 10th, with the question of costs deferred to a later date. The final award directed the Owner to pay US$6XX,XXX.XX in damages as well as interest on the respective sums due from 10 March and 16 March. All questions of costs and disbursements were reserved for a future award.

The commentary in this arbitration emphasizes the importance of considering the “minimum performance” rule and the need to mitigate losses in assessing damages. It also underscores that the law of the seat governs interest in arbitration cases.