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The Falkonera (Court of Appeal)

5th Jun 2014

On 5 June 2014, the Court of Appeal dismissed the appeal of the Owners of Falkonera, a very large crude carrier (VLCC) against the judgment of Mr Justice Eder. David Allen Q.C. and N.G. Casey of 7 King’s Bench Walk acted for the successful respondent Charterers.

Charterers had chartered Falkonera on amended BPVOY4 terms. Under that charterparty, they had the right to order the vessel to perform ship-to-ship (STS) transfers, subject to the Owners’ corresponding right to approve the other vessel nominated to perform the transfer. Owners’ approval was “not to be unreasonably withheld”. In the course of the fixture, Charterers had asked Owners to approve two VLCCs for STS transfers with Falkonera. Owners refused approval; and Charterers had to effect an alternative discharge plan.

At trial, Eder J. held that Owners’ withholding of approval for the nominated VLCCs was unreasonable. He held that the professed reasons for withholding approval – viz. that it would not be possible to develop a satisfactory mooring arrangement between two VLCCs – were groundless and did not justify a refusal. The Owners appealed; but the appeal was dismissed.

Christopher Clarke L.J. gave the leading judgment. He held that the Judge’s conclusion that the withholding of approval was unreasonable was one of fact that he was entitled to reach on the evidence. Owners had not shown that the Judge had misunderstood or misapplied the relevant legal principles; or ignored some relevant consideration; or taken account of some irrelevant consideration; or reached a conclusion that was clearly erroneous or outside the bounds of what it was open to him to decide. He also endorsed the Judge’s finding that, on analysis, Owners’ stated concerns about the difficulties of mooring two VLCCs together formed no reasonable basis for rejecting the nominated vessels.

To view the judgment, please click here.