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10 Jul 2019

Stephenson Harwood secures Court of Appeal victory

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Law firm Stephenson Harwood LLP has successfully represented Ark Shipping Company LLC in a dispute arising out of the interpretation of a clause in the industry-standard, BARECON 89 charterparty.

In Ark Shipping Company LLC v Silverburn Shipping (IOM) LTD, the Court of Appeal held that the obligation on a bareboat charterer to “keep the Vessel with unexpired classification of the class…and with other required certificates in force at all times”, in Clause 9 (Maintenance and Operation) of the Barecon 89 was not a condition, but an innominate term.

The arbitral Tribunal originally held that the requirement to keep a vessel with unexpired class was analogous to the maintenance obligation and therefore an innominate term. Reversing the Tribunal’s decision and allowing the ship owners’ appeal, the High Court ruled that the obligation was a condition noting that this carried "clear and important advantages in terms of certainty". The Court of Appeal today (Wednesday 10 July 2019) reinstated the Tribunal’s original decision by confirming that the relevant provision in Clause 9 is, in fact, an innominate term and not a condition.

In a considered judgment by Gross LJ, the Court of Appeal reaffirmed the need to strike “the right balance” when determining whether a contractual term is a condition or an innominate term (Spar Shipping v Grand China Logistics [2016] EWCA Civ 982; [2016] Lloyd’s Rep 447. Approaching the construction of the charterparty “iteratively” (Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173) the Court was satisfied that the term lacked the hallmarks of a condition and should be regarded as innominate.

Today’s judgment also further demonstrates the Court's reluctance to classify contractual terms as conditions where the risk of disproportionate consequences outweighs the advantages of commercial certainty.

The Stephenson Harwood team advising Ark Shipping Company LLC was led by partner Menelaus Kouzoupis, who was assisted by associates Hyun Woo Kang and Margaux Harris, all based in London.

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KEY CONTACT

Menelaus Kouzoupis

Menelaus Kouzoupis
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T:  +44 20 7809 2318 M:  Email Menelaus | Vcard Office:  London

Hyun Woo Kang

Hyun Woo Kang
Associate

T:  +44 20 7809 2929 M:  +44 7702 118 806 Email Hyun Woo | Vcard Office:  London

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