Navigator Spirit SA v Five Oceans Salvage SA, Court of Appeal - Commercial Court, May 15, 2018, [2018] EWHC 1108 (Comm)

Resolution Date:May 15, 2018
Issuing Organization:Commercial Court
Actores:Navigator Spirit SA v Five Oceans Salvage SA

Neutral Citation Number: [2018] EWHC 1108 (Comm)

Case No: CL-2017-000731




Royal Courts of Justice

Rolls Building, 7 Rolls Buildings

Fetter Lane, London EC4A 1NL

Date: 15/05/2018

Before :


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Between :

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Michael Davey QC (instructed by Holman Fenwick Willan LLP) for the Claimant

Simon Kverndal QC (instructed by Clyde & Co LLP) for the Defendant

Hearing date: 27 April 2018

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Mr. Justice Teare :

  1. This is an application by Navigator Spirit SA, the owners of the vessel FLAG METTE, to set aside an award of Jeremy Russell QC, the arbitrator appointed by the Council of Lloyd's to hear appeals under the Lloyd's Open Form of Salvage Agreement (``LOF''). The grounds of the application are that there was a serious irregularity in the conduct of the appeal arbitration within the meaning of section 68 of the Arbitration Act 1996. The defendant to this arbitration application is Five Oceans Salvage SA, a salvage company, which was the claimant in the arbitration. I shall refer to Navigator Spirit SA as the Owners and to Five Oceans Salvage SA as the Salvors.

  2. It is alleged by the Owners that the appeal arbitrator took into account dangers which had neither featured in the ``Grounds of Appeal'' nor in the appeal hearing. In the law of salvage the dangers facing a casualty have always been an important factor to take into account when assessing salvage remuneration. The assessment of salvage remuneration is now governed by Article 13 of the Salvage Convention 1989 and ``the nature and degree of the danger'' is one of the criteria there listed to be taken into consideration. As a matter of analysis dangers are assessed by considering what would or might have happened to the casualty in the absence of assistance. That is a necessarily hypothetical exercise. Once the dangers are assessed on that basis (leading to the conclusion that there was, for example, a risk of grounding of a high or a low order) it is customary to consider the question of alternative assistance, that is; was there available assistance from those other than the actual salvor who might have salved the casualty from the dangers facing her? Consideration of both dangers and alternative assistance enables the tribunal to reach a realistic view of the casualty's predicament. Before addressing the alleged serious irregularity in the present case it is necessary to summarise the events giving rise to the salvage claim and the course of the first instance arbitration and arbitration on appeal.

    The events giving rise to the salvage claim

  3. In December 2016 FLAG METTE, a newly built Kamsarmax bulk carrier of 229m in length and 80,784 dwt, was in the course of her second laden voyage from Kamsar in Guinea to Stade in Germany, laden with a cargo of standard metallurgical bauxite.

  4. At 0518 on 20 December the vessel's automated systems shut down the main engine when the vessel was in the northern sector of the Bay of Biscay about 30 miles south west of the Ushant Traffic Separation Scheme (``the TSS''). She broadcast a Pan Pan message in which she advised that her main engine was stopped and she requested other vessels to keep clear. The casualty's AIS status was changed to Not Under Command and Not Under Command lights were displayed. Contact was established with the Salvors who mobilised their salvage tug RED SEA FOS from her salvage station in Madeira but also made enquiries as to the availability of the salvage tug ABEILLE BOURBON which might have been able to assist the casualty more speedily than the Salvors' own tug. At 1030 those on board the casualty were able to restart the main engine and the casualty resumed her voyage. RED SEA was instructed to return to Madeira.

  5. At 1333 the main engine was again shut down. At this time the casualty was in the north east lane of the TSS. Another Pan Pan call was made, her AIS status was changed to Not Under Command and Not Under Command shapes were displayed. But at 1437 the main engines were restarted and the voyage resumed. At 1530 the Owners advised the casualty to proceed to Brest so that the problem with the main engines could be investigated. Shortly afterwards the casualty left the north east going lane of the TSS in order to join the south west going lane. At about 1630 LOF was agreed with the Contractors. At 1650 ``Ushant traffic'' informed the managers that tug assistance would be required for the casualty to ``reach Brest''. At 1720 the main engines again shut down as the casualty was about to enter the south west going lane. All vessels in the vicinity were advised that the casualty was Not Under Command. But at 1826 the engines were restarted. At 1830 the authorities required the casualty to anchor in Douarnenez Bay, about 70 km from Brest by road. At 1922 the main engines again shut down but were restarted at 1945. In the meantime, at 1730, the Salvors had sub-contracted the assistance of ABEILLE BOURBON. The casualty could only proceed at slow ahead and entered the south west lane of the TSS. At 2030 ABEILLE BOURBON left Brest for the casualty.

  6. At 0210 on 21 December the tug came up with the casualty and made fast and the tow to Douarnenez Bay commenced. At 1448 the casualty dropped anchor in the bay, the tow line was cast off and the tug departed for Brest.

  7. On 22 December the arrival of a MAN service engineer was awaited. Another tug, BREMEN FIGHTER, was sub-contracted to assist the casualty to Stade.

  8. On 23 December the MAN service engineer arrived. After making investigation he attributed the main engine problems to poor assembly and loose wiring. Repairs were completed.

  9. On 24 December BREMEN FIGHTER arrived and escorted the casualty during sea trials. At 1830 the casualty was cleared for departure and she got underway at full speed, escorted by BREMEN FIGHTER. Further engine problems were experienced on 25 December but on 26 December the casualty was able to continue her voyage without further assistance and the services under LOF were terminated at 1200. On 28 December the casualty was safely alongside at Stade.

    The first instance arbitration

  10. Salvage was claimed and the assessment of the sum due was referred to arbitration, Lionel Persey QC being appointed arbitrator by the Council of Lloyd's. At this first instance arbitration the Salvors contended for two dangers. The first was that the casualty was temporarily immobilised and in need of assistance from professional salvors. The second was that the casualty was subject to a low order risk of collision had she attempted to transit the English Channel unassisted. The arbitrator held that the casualty was intermittently immobilised but at risk of becoming temporarily immobilised. She was in need of tug assistance which would inevitably be provided on salvage terms. He held that the casualty would have required tug assistance to be permitted to enter Brest or to anchor. With regard to the suggested risk of collision the arbitrator rejected such danger. He said:

    ``It is plain from the contemporaneous correspondence that the managers had very prudently decided that the vessel should proceed to Brest and that the assistance of a MAN service engineer was required before the vessel could proceed to destination. The instruction to make for Brest was given before LOF was concluded. There is no evidence to suggest that either the master or the managers would have been foolhardy enough to contemplate a Channel transit in the absence of assistance.''

  11. Having considered alternative assistance (which would have been the tugs which in fact performed the services on a sub-contracted basis), the services (well-performed but relatively straightforward), the out of pocket expenses (over $265,000), the status of the salvors (``first rank of international professional salvors'', ``four substantial tugs on salvage station'', ``deserving of considerable encouragement, particularly in the present market''), the salved fund (over $22m.), the guidance of Steel J. in The Voutakos [2008] 2 Lloyd's Reports 516 and the provisions of Article 13 of the Salvage Convention 1989 the arbitrator considered that a fair and encouraging award was $825,000 together with an agreed currency uplift of 3.76%.

    The arbitration on appeal

  12. The Salvors were not content with that award and appealed pursuant to the provisions of LOF. Jeremy Russell QC was appointed by the Council of Lloyd's to act as the appeal arbitrator.

  13. The LOF procedural rules provide at paragraph 8 for grounds of appeal to be given. That rule was commented upon by a previous appeal arbitrator as recorded in the LOF Digest Update of 11 June 2007. It was said that they should not amount to a full and detailed written argument. Those settling them should be ``as economical as possible in stating their challenges to an arbitrator's award, consistent always with giving adequate notice of the points to be taken''.

  14. In the present case the Salvors' grounds of appeal alleged that the arbitrator had erred in two respects, the first of which was as follows:

    ``He wrongly rejected the second danger put forward by the Contractors on the basis that the Managers had decided to order the vessel to Brest and had given that instruction prior to conclusion of the LOF. In doing so he failed to consider the consequences of his findings that the casualty would have required tug assistance to be permitted to enter Brest or to anchor and that the ABEILLE BOURBON was the only tug available to provide rapid assistance to the casualty. Had he given proper consideration to the absence of any alternative assistance he would have had to conclude that it was probable that the casualty would have had to contemplate a Channel transit, however dangerous, because she had no alternative.''

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