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Ocean Victory – Supreme Court Judgment

10th May 2017

Dominic Kendrick QC and Gavin Geary were instructed on behalf of the successful time charterers in this appeal to the Supreme Court.

The Ocean Victory was lost whilst leaving Kashima in a strong northerly gale. The vessel left the port due to difficulties at berth caused by long waves. At first instance, the Judge held that port was unsafe, and awarded damages of about $160 million to the owners. The Court of Appeal reversed the Judge’s findings. Following a three day hearing, the Supreme Court has now upheld the Court of Appeal’s decision.  The decision covered three main points.

First, the Supreme Court agreed with the Court of Appeal as to the meaning of “abnormal occurrence” in the classic test for a safe port.  “Abnormal occurrence” is not a term of art. The rare concurrence of two individually not rare events (strong northerly gale and long waves) was an abnormal occurrence for which charterers were not responsible, even if each event separately may have been characteristic of the port. The test is to be directed at a single unitary question: was the simultaneous coincidence of the two critical features an abnormal occurrence, or a characteristic of the port?

Second, the claim against time charterers was advanced by assignees of demise charterers, in respect of the demise charterers’ alleged liability to owners for the loss of the vessel in breach of a safe port undertaking. By a majority, the Supreme Court held that the Barecon demise charter excluded rights of recourse between owners and demise charterers, in favour of an insurance-funded solution. The parties to the demise charter had agreed to look to the required hull insurance and not to each other in the event of a total loss. As such, demise charterers had no liability to owners for such losses which they could pass on to time charterers.

Finally, the Supreme Court addressed the question of the application of the Limitation Convention where a charterer seeks to limit against an owner in respect of loss or damage to the vessel itself.  This was a point not open and not run below.  The Supreme Court held that the Court of Appeal in The CMA Djakarta was correct, and there was no right to limit in those circumstances.

To view the judgment please click here.