English law - The ELLI and the FRIXOS on appeal

Commercial Court judgment is upheld.

On 23rd May 2008 the English Court of Appeal delivered its opinion in the appeal of the ELLI and the FRIXOS.¹ The court upheld the judgement given by Mr. Justice Cooke in the Commercial Court last year,² reported in Gard News issue No. 188.³

The vessels ELLI and FRIXOS were time chartered under the Shelltime 4 form. During the charter international regulations regarding the transportation of certain liquid cargoes came into force which would have a serious commercial effect on the cargoes that could be carried by the vessels if they were not modified in order to comply with those regulations. The question arose as to which party should carry the risk resulting from the change in regulations.

The two matters decided on were: – whether the provisions stating that the vessel shall be “in every way fit” to carry lawfully permitted cargoes meant that the vessel had to be legally fit as well as physically fit, and – whether the owner had been in breach of his obligation with regard to due diligence in order to restore the vessel to a condition required by the terms of the charterparty.

The Court of Appeal confirmed that the provisions in Shelltime 4 clauses 1(b) and 1(c) required the vessel to be legally fit to carry a permitted cargo.

On the second question the Court of Appeal confirmed that the shipowner was in breach of his obligation with regard to due diligence to remedy the deficiency, the question of cost in doing so being irrelevant to the issue. However, the Court of Appeal judgment mentioned that the doctrine of frustration might be available if events occur which render the contract radically different from what the parties intended. This was not the case here.

Footnotes
1 Golden Fleet Maritime Inc and another v. St Shipping [2008] EWCA Civ 584.
2 [2007] EWHC 1890 (Comm).
3 See article “English law – Due diligence to maintain a vessel’s condition”.