Background
The dispute arose under a time charter on an amended NYPE form for the carriage of wheat from Ghent to Nigeria. Upon arrival at Warri, the vessel was unable to berth and was required to wait offshore. During the waiting period, the Master became concerned about the risk of piracy in the Gulf of Guinea and decided to sail to Lagos. The vessel subsequently returned to Warri approximately three days later. The charterparty incorporated the BIMCO Piracy Clause for Time Charter Parties 2013. However, the parties had expressly deleted sub-clauses 81(a) and (b), which would ordinarily entitle owners to refuse to proceed to, enter or remain in an area exposed to piracy risks. The parties retained clause 81(c), which permits owners to take "reasonable preventative measures" to protect the vessel, crew and cargo. The dispute centred on whether the Master's decision to leave the Warri anchorage and proceed to Lagos fell within the scope of clause 81(c), such that the vessel remained on hire during the period of absence.The key issues
The appeal required the Court to consider a broader question of contractual interpretation: to what extent can the deletion of part of a standard form clause affect the interpretation of the wording that remains?The charterers argued that the deliberate deletion of clauses 81(a) and (b) demonstrated a clear intention to remove the owners' ability to refuse to remain in an area due to piracy concerns.
They contended that clause 81(c) could not be interpreted so broadly as to recreate rights that the parties had expressly chosen to remove.
The appeal therefore focused on whether clause 81(c) entitled owners to leave an area because of piracy risks while keeping the vessel on hire, notwithstanding that:
- clauses 81(a) and (b) had been deleted; and
- the parties had specifically agreed alternative waiting arrangements for Port Harcourt and Calabar, but had made no equivalent provision in relation to Warri.
Decision
The High Court rejected the charterers' appeal and upheld the tribunal's decision. In doing so, the Court emphasised the well-established principle that arbitration awards should be read in a fair, reasonable and commercial manner. The Court reiterated that it should not approach awards with a "meticulous legal eye" in an effort to identify errors, but should instead begin with the assumption that the tribunal has correctly applied the law and reached a sound commercial result. The Court concluded that the tribunal had reached the correct outcome as follows:(a) Deleted wording could not be used to create ambiguity
First, the Court held that the retained wording of clause 81(c) was clear and unambiguous when read on its own terms. As a matter of contractual construction, a court should generally interpret the wording that remains in the contract before considering the significance of any deleted provisions. Where the retained wording is unambiguous, reference to deleted wording is unnecessary and therefore impermissible. Applying that approach, the Court held that clause 81(c) clearly entitled owners to take reasonable preventative measures against piracy risks. Because the clause was not ambiguous, the deletion of clauses 81(a) and (b) could not be relied upon to narrow the ordinary meaning of the remaining clause.(b) The deletion did not restrict reasonable preventative measures
The Court also considered the position on the alternative assumption that the deleted provisions could properly be taken into account. Even on that basis, the Court held that the deletion of clauses 81(a) and (b) did not justify a restrictive interpretation of clause 81(c). The removal of those provisions did not mean that all preventative measures had to be confined to the immediate area of risk. Clause 81(c) continued to allow owners to take reasonable steps to protect the vessel from piracy, and those steps could include temporarily relocating the vessel away from the danger area where circumstances justified doing so. On the facts, the Master's decision to sail from Warri to Lagos in response to the piracy threat was a reasonable preventative measure within the scope of clause 81(c). Accordingly, the vessel remained on hire throughout the relevant three-day period.Comment
The judgment is significant for two reasons:First, it serves as a reminder that the deletion of provisions from a standard form contract will not necessarily dictate the interpretation of the wording that remains. Unless the surviving wording is genuinely ambiguous, courts are unlikely to rely on deleted clauses to alter its ordinary meaning.
Secondly, the decision reinforces the Commercial Court's pro-arbitration approach. Challenges under section 69 of the Arbitration Act remain difficult to sustain, particularly where the tribunal's reasoning is commercially coherent and the award can be read fairly as reaching a legally sustainable result.
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