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ACQ 2016-1

Real Case 9: Marine Arbitration

We assist the Shipowner in investigating the background of the Charterers and the terms of the charterparty and bill of lading, and would recommend certain special clauses to be included in the charterparty and bills of lading to fully protect the Shipowners’ position.

We have acted for Shipowners carrying cement cargoes to Korea in advising them how to preserve their rights against Charterers for the demurrage incurred at Korea waiting for a berth. We have served arbitration notice on Charterers, prepared the points of claim and appointed the arbitrator, by which time the Charterers had agreed to settle a major portion of the claim, which the shipowner had accepted. There are cases which are not settled amicably and we have handled for our clients “full blown" arbitration proceedings in Hong Kong. London, Singapore and China. The Defence Club for the Greek shipowners assisted members to recover US$87,000 in alleged outstanding hire from China associated time charters based in Hong Kong.

We acted for the time charterers. The Defence Club communicated with the charterers and on account of charterers’ failure to settle they instructed a large London international maritime law firm to pursue the charterers. The lawyers for the Defence Club commenced arbitration proceedings in London against charterers. The Charterers wished for an amicable settlement on the grounds they considered the owners were partly at fault in not following the charterers’ instructions in the manner of stowage of the cargoes which were destined for various ports. On account the cargoes were not stowed in accordance with charterers’ instructions, substantially increased handling and discharge costs had to be incurred by charterers at the various ports. We examined the charterer’s case and advised the charterers had a reasonable good counterclaim for the master’s actions in not acceding to the charterers’ instructions and also there was a speed and consumption claim, which the charterers should lodge in the amount of US$123,000 and thus deducting the owners’ claim for outstanding hire, the net claims in charterers’ balance would be US$ 64,000.

Charterers instructed us to persuade the claimant owner to agree to a drop hands settlement. The owner’s lawyers rejected this proposal and continued with the arbitration proceedings. We selected and appointed our arbitrator and examined and prepared the charterers’ statement of defence. There were several rounds of reply submissions, exchange of expert witness statements before the tribunal considered the pleadings. We were confident of success based on the contents of the pleadings exchanged. The tribunal published the award which the owner’s defence Club paid for and collected. The tribunal’s award was made in favour of the charterers, and the charterers’ counterclaim for the full US$123,000 was upheld, and there was a reduction in the owners’ claimed amount for outstanding hire. In addition all our legal costs, costs of the proceedings were held by the tribunal to be payable by the owners’ defence Club.

Our clients were overjoyed as they stood to receive in excess of USD 64,000 in accordance with our advices, calculations and recommendations to counterclaim. In particular our clients were the respondent party being claimed in this instance, when our clients had earlier hoped the best solution would be for drop hands settlement.