Torvald Klaveness A/S v. Arni Maritime Corp., (1994) 175 N.R. 358 (HL)

• Case Date: October 27, 1994
• Jurisdiction: Canada (Federal)
• Citations: (1994), 175 N.R. 358 (HL)

Torvald Klaveness A/S v. Arni Maritime (1994), 175 N.R. 358 (HL)

MLB headnote and full text

Torvald Klaveness A/S (respondent) v. Arni Maritime Corporation (appellant)

Indexed As: Torvald Klaveness A/S v. Arni Maritime Corp.

House of Lords

Lord Templeman, Lord Ackner, Lord Mustill,

Lord Slynn of Hadley and Lord Woolf

October 27, 1994.

Summary:

The Ship Gregos was chartered by Arni Maritime Corp. (the owners) to Torvald Klaveness A/S (the charterers). The char­terers were to redeliver the vessel to the owners on or before March 18, 1988. On February 9, 1988, the charterers decided to change their final voyage plans and the ship was to pick up and carry a load of iron ore. However, uncontrollable delays in shipping traffic prompted the owners to warn the charterers that if their plans to pick up the iron ore were adhered to, the vessel could not be redelivered on time. On February 25, 1988, the owners advised the charterers that they declined to carry the iron ore and sought revised orders for the final voyage. No such orders were given and a dispute arose over whether the February 9th order remained valid. The parties entered into a without prejudice agreement whereby the voyage would be completed with an arbitra­tor to subsequently determine if the owners were justified in refusing to allow the voy­age, and if so, to calculate damages. Pur­suant to the agreement, the ship completed its voyage and was redelivered to the owners eight days late. The matter then proceeded to arbitration.

The arbitrator found in favour of the owners, holding that they were entitled to substantial damages. The arbitrator's award was upheld ([1992] 2 Lloyd's Rep. 40). The charterers appealed.

The Court of Appeal, in a decision report­ed [1993] 2 Lloyd's Rep. 335, allowed the appeal and remitted the matter to the arbi­trator for reconsideration. The owners ap­pealed.

The House of Lords allowed the appeal and restored the arbitrator's award.

Shipping and Navigation - Topic 946

Charter of ships - The charterparty - Time charter - Final voyage - Ship charterers were to redeliver a ship to its owners by March 18, 1988 - On February 9 the charterers changed their final voyage plan to pick up iron ore - At this point timely redelivery was possible - However, un­controllable shipping delays intervened before the ore could be picked up - On February 25, the owners, worried about late delivery, declined to carry the ore and sought revised orders - No such orders were given - A dispute arose over whether the February 9 order remained valid - The House of Lords held that the date for judging the validity of a charterer's order was "primarily at least, the time when performance falls due" - Here the correct date was February 25 - By then the order, which was originally permissible, had become illegitimate - See paragraphs 20 to 24.

Shipping and Navigation - Topic 947

Charter of ships - The charterparty - Time charter - Redelivery - [See Shipping and Navigation - Topic 946 and Shipping and Navigation - Topic 948 ].

Shipping and Navigation - Topic 948

Charter of ships - The charterparty - Time charter - Breach - A shipowner declined to perform a charterer's order respecting a final voyage which would result in late redelivery of the ship to the owner - The charterer persisted - The voyage was completed under protest and the ship was redelivered late - The House of Lords held that the charterer's order became invalid, but the giving of the invalid order did not automatically entitle the shipowner to consider itself discharged (i.e., the invalid order did not constitute a repudiatory breach of contract) - The court held, however, that the charterer's persistence in performance after the order became invalid evidenced an intention to no longer be bound by the charter constituting an an­ticipatory breach, entitling the owners to treat the contract as ended - See para­graphs 25 to 31.

Cases Noticed:

Hyundai Merchant Marine Co. v. Gesuri Chartering Co. (The Peonia), [1991] 1 Lloyd's Rep. 100 (C.A.), refd to. [paras. 13, 26].

Marbienes Compania Naviera S.A. v. Ferrostaal A.G. (The Democritos), [1976] 2 Lloyd's Rep. 149 (C.A.), refd to. [para. 16].

Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corp. of India (The Kanchenjunga), [1989] 1 Lloyd's Rep. 354 (C.A.), refd to. [paras. 26, 30].

Batis Maritime Corp. v. Petroleos del Mediterraneo S.A. (The Batis), [1990] 1 Lloyd's Rep. 345 (C.A.), refd to. [paras. 26, 30].

Federal Commerce & Navigation Co. v. Molena Alpha Inc. (The Nanfri), [1979] A.C. 757 (H.L.), refd to. [para. 27].

Bunge Corp. v. Tradax Export S.A., [1981] 1 W.L.R. 711 (H.L.), refd to. [para. 28].

Compagnie Commerciale Sucres et Denrees v. Czarnikow (C.) Ltd. (The Naxos), [1990] 1 W.L.R. 1337 (H.L.), refd to. [para. 28].

Alma Shipping Corp. of Monrovia v. Mantovani (The Dione), [1975] 1 Lloyd's Rep. 115 (C.A.), refd to. [para. 30].

Authors and Works Noticed:

Davenport, B.J., and White, M., Article, [1994] L.M.C.L.Q. 154, generally [para. 31].

Counsel:

Peter Gross, Q.C., and David Goldstone, for the appellants;

Kenneth Rokison, Q.C., and Timothy Young, for the respondents.

Agents:

Ince & Co., for the appellants;

Sinclair Roche & Temperley, for the re­spondents.

This appeal was heard on June 27, 28 and 29, 1994, before Lord Templeman, Lord Ackner, Lord Mustill, Lord Slynn of Hadley and Lord Woolf of the House of Lords. The decision of the court was given on October 27, 1994, including the following opinions:

Lord Templeman - see paragraphs 1 to 4;

Lord Ackner - see paragraph 5;

Lord Mustill - see paragraphs 6 to 32;

Lord Slynn of Hadley - see paragraph 33;

Lord Woolf - see paragraph 34.