Jaya Offshore Pte Ltd v World Marine Co Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 21 November 1996
• Neutral Citation: [1996] SGHC 272
• Docket Number: Originating Motions Nos 37 and 38 of 1995
• Date: 21 November 1996
• Year: 1996
• Published date: 19 September 2003
• Plaintiff Counsel: Steven Chong and Thyaparan Kathiravel (Drew & Napier)
• Citation: [1996] SGHC 272
• Defendant Counsel: Scott Thillagaratnam and Jude Benny (Joseph Tan Jude Benny & Scott)
• Court: High Court (Singapore)
• Subject Matter: Arbitration,Award,Distinction between 'one-off' and standard clauses,s 28(2) Arbitration Act (Cap 10),Recourse against award,Leave to appeal against award,Appeal under Arbitration Act,Principles applicable

The applications

These motions sought leave to appeal against an award made by a panel of two arbitrators appointed pursuant to an arbitration agreement. At the conclusion of the hearing, I allowed the application in OM 37 by Jaya Offshore Pte Ltd (Jaya), but denied that in OM 38 by World Marine Co Ltd (WMC). WMC has appealed against my decision.

The facts

Jaya were the owners of a tugboat (the Java Regent) and a barge (the Petrogas Bali). In late 1990, WMC sought a tug and a barge for the transport of timber from Russia to Japan. One Katada of a shipbroking firm was approached by WMC to obtain these vessels. Sometime in February 1991, Katada met in Singapore with one Khong, the executive director of Jaya, for the hire of suitable vessels; the Petrogas Bali (the barge) and the Java Regent (the tug) were thought suitable. Negotiations followed and an agreement was reached in mid-April 1991. Two separate charterparty forms for the vessels were used; Supplytime (a time charterparty form) for the tug, and Barecon A (a demise form) for the barge.

By early September 1991, the tug and barge had completed three voyages transporting logs from Russia to Japan. On the fourth and last voyage, the vessels sailed on 22 November 1991 from Dekastri in Russia to Toyama, Japan, the barge carrying about 23,000 logs. About two days later, that is on 26 November, the towing connection failed, and the barge with her cargo, drifted. It eventually went aground at Rishiri Island and logs were washed overboard.

A salvage company was hired by Jaya together with the consignees to prevent further loss of cargo, retrieve logs washed overboard and secure the barge and its cargo. The wreck had also to be removed. All this was done by about July 1992. Atlhough Jaya demanded that WMC take over the salvage operation, WMC did not do so. Various sums were expended by Jaya in the operations, including compensation to various parties affected by the grounding and the logs washed overboard.

A dispute arose as to the liabilities of the parties, and they submitted it to arbitration. Before the arbitral award is examined, it is necessary first to set out the relevant provisions of the charterparties that were in issue in particular touching on insurance.

(I) The insurance provisions

A number of insurance provisions are relevant.

A The barge charterparty (Barecon A, as modified)

The charterparty had various boxes to be filled in. The relevant ones are boxes 28 and 30:

28 Insurance (marine and war risks) (state value according to cl 11(e)) [and state if cl 11 applies] ...

Value $800,000

Clause 11 applies.

30 Additional insurance cover for charterer`s account limited to cl 11(b) ...

Excess P & I over and above hull value of barge for charters account

Clause 11 reads, in its material portions:

(a) During the charter period the vessel shall be kept insured by charterers at their expense against marine, war and Protection and Indemnity risks in such form as owners shall in writing approve, which approval shall not be unreasonably withheld. Such marine, war and P and I insurances shall be arranged by charterers to protect the interest of both owners and charterers and `approved mortgagees` (if any) and charterers shall be at liberty to protect under such insurances the interests of any managers they may appoint. All insurance policies shall be in the joint names of owners and charterers as their interests may appear ...

(b) If the conditions of the above insurances permit additional insurance to be placed by the parties, such cover shall be limited to the amount for each party set out in Box 29 and Box 30 respectively ...

(e) For the purpose of insurance coverage against marine and war risks under the provisions of sub-cl (a) of this clause, the value of the vessel is the sum indicated in Box 28.

Clause 17 reads:

In the event of the vessel becoming a wreck or obstruction to navigation the charters shall indemnify the owners against any sums whatsoever which the owners shall become liable to pay and shall pay in consequence of the vessel becoming a wreck or obstruction to navigation.

Additional clauses were appended to both charterparties. The relevant clause is additional cl 2:

Owner will insure tug and barge for trading in Japan/USSR including basic P & I cover up to hull values of tug/barge. P & I cover over and above hull of value of tug/barge to be charterers [sic] account.

Additional cl 3 is reproduced for better understanding of the context:

Damages to tug/barge due to wear and tear shall be for owner`s account. However, other damages caused by accidents attributable to charterer`s negligence to be for charterer`s account.

B The tug charterparty

The tug charterparty provided simply:

4(A) The owners shall provide and pay for ... insurance ...

Additional cll 2 and 3 were also applicable to the tug charterparty.

C The P & I terms

The P & I cover arranged was subject to a co-assured clause, which reads:

Notwithstanding the fact that World Marine Co Ltd are named in their capacity as charterers are co-assured in this certificate of entry, the cover of the Association will only extend insofar as they may be found liable to pay in the first instance for liabilities which are properly the responsibility of the owner of the insured vessel and nothing herein contained shall be construed as extending cover in respect of any amount which would not have been recoverable from the Association by the owner had such a claim been made or enforced by him.

(II) The seaworthiness provisions

Various obligations were prescribed under the Supplytime form, which covered the tug. One of these, cl 14(b), provided that all towage performed by the tug would be subject to the 1986 edition of the United Kingdom Standard Towage Conditions (the Towage Terms). Clauses 3, 4(a),(b) and (c) of the Towage Terms provide as follows:

3 Whilst towing or whilst at the request, express or implied, of the hirer, rendering any service other than towing, the master and crew of the tug or tender shall be deemed to be the servants of the hirer and under the control of the hirer and/or his servants and/or his agents, and anyone on board the hirer`s vessel who may be employed and/or paid by the tugowner shall likewise be deemed to be servant of the hirer and the hirer shall accordingly be vicariously liable for any act or omission by any such person so deemed to be the servant the hirer.

4 Whilst towing, or whilst at the request, either expressed or implied of the hirer rendering any service of whatsoever nature other than towing:

(a) The tugowner shall not (except as provided in cll 4(c) and (e) hereof) be responsible for or be liable for:

(i) damage of any description done by or the tug or tender; or done by or to the hirer`s vessel or done by or to any cargo or other thing on board or being loaded on board or intended to be loaded on board the hirer`s vessel or the tug or tender or to or by any other object or property;or

(ii) loss of the tug or tender of the hirer`s vessel or of any cargo or other thing on board or being loaded on board or intended to be loaded on board the hirer`s vessel or the tug or tender or any other object or property;or

(iii) any claim by a person not a party to this agreement for loss or damage of any description whatsoever;

arising from any cause whatsoever, including (without prejudice to the generality of the foregoing) negligence at any time of the tugowner his servants or agents, unseaworthiness, unfitness or breakdown of the tug or tender, its machinery, boilers, towing gear, equipment, lines, ropes or wires, lack of fuel, stores, speed or otherwise; and

(b) The hirer shall [except as provided in cll 4(c) and (e)] be responsible for, pay for and indemnify the tugowner against and in respect of any loss or damage and any claims of whatsoever nature or howsoever arising or caused, whether covered by the provision of cl 4(a) hereof or not, suffered by or made against the tugowner and which shall include, without prejudice to the generality of the foregoing, any loss or damage to the tug or tender of any property of the tugowner even if the same arises from or is caused by the negligence of the tugowner his servants or agents.

(c) The provisions of cll 4(a) and 4(b) hereof shall not be applicable in respect of any claims which arise in any of the following circumstances:

(i) All claims which the hirer shall prove to have resulted directly and solely from the personal failure of the tugowner to exercise reasonable care to make the tug or tender seaworthy for navigation at the commencement of the towing or other service. For the purpose of this clause the tugowner`s personal responsibility for exercising reasonable care shall be construed as relating only to the person or persons having the ultimate control of the tugowner`s business and to any servant (excluding the officers and crew of any tug or tender) to whom the tugowner has specifically assigned the particular duty of exercising reasonable care and shall not include any other servant of the tugowner or any agent or independent contractor employed by the tugowner.

The arbitration

After about 18 days` of arbitration, spread out over eight months in 1993, the arbitrators held that Jaya`s claim succeeded, and that WMC`s counterclaim (that Jaya should be liable for failure to effect P & I insurance to cover WMC`s charterers` risks) succeeded in part. WMC were ordered to pay 70% of Jaya`s costs, and each side was to bear the costs of the appointment of the arbitrators.

I The arbitral award

A number of issues were raised in the arbitral award, not all of which are relevant to this application. The arbitrators considered whether:

(a) Jaya had an obligation to arrange insurance to cover WMC`s risks or interests as charterers, or conversely whether WMC had such an obligation as to...