Tonzip Maritime (Singapore) PTE Ltd v 2 Rivers PTE Ltd

This appeal is brought by the owners of the MV CATALAN SEA (“the Owners”) against the voyage charterers (“the Charterers”) arising from the Owners’ refusal to comply with an order given by the Charterers to lift a cargo of crude oil to be shipped by a Russian oil company.

The Owners contend that they were entitled to refuse that order by reference to a clause in the charterparty on an amended ExxonMobil VOY2005 (“the Charterparty”) which has been referred to in this case as the “EPS Sanctions clause”. Sub-clause C of that clause, which is considered in more detail below, permitted the Owners to refuse to comply with an order “which in the reasonable judgment of the Owners is prohibited by sanctions or will expose the Owners, the vessel or its managers, crew, the vessel’s insurers or reinsurers to sanctions”.

In his careful and closely reasoned judgment (“the Judgment”), the Judge agreed with the Owners that their entitlement under the last part of this clause to refuse an order arose where the Owners held a reasonable apprehension to a risk of sanctions. However, the Judge accepted the Charterers’ submission that no such reasonable apprehension arose on the facts.

The Owners now appeal against that decision, with the leave of the Judge, and also, by way of a subsidiary argument, challenge the Judge’s failure to place reliance on the decision of the General Court of the European Union in Case T-526/21 in Gutseriev v Council (“the EU Decision”) which addressed the sanctioned status of a relevant entity. By way of a Respondent’s Notice, the Charterers challenge the Judge’s construction of the EPS clause and the Judge’s conclusion that the EU Decision was admissible. For reasons set out below, it has not been necessary to rule on the competing arguments in relation to the EU Decision.

With the exception of the evaluation of those facts relevant to the reasonableness of the Owners’ judgment, the facts are not in dispute and we can take them from the Judgment.

By the Charterparty, dated 5 November 2021, the Charterers chartered the Owners’ vessel “CATALAN SEA” (“the Vessel”) to carry a cargo of oil from a Russian black sea port in the Ust Luga to Primorsk range to the Mediterranean (intention Aliaga, Turkey).

The Charterparty included the EPS Sanctions clause, the essential effect of which I have summarised above. It was and remains common ground that “Sanctions” for the purposes of that clause refers, inter alia, to those provisions contained in the UK’s Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”); the Republic of Belarus (Sanctions (EU Exit) Regulations 2019/600; Council Regulation (EC) No 765.2006 of 18 May 2006 concerning restrictive measures in respect of Belarus; and Council Decision 2012/642/CFSP of 15 October 2012 concerning restrictive measures against Belarus. The Judge referred to these measures collectively as “Relevant Sanctions Laws”.

The individuals sanctioned under these measures included Mr Mikhail Gutseriev (“Mr Gutseriev”), a Russian businessman with links to the Lukashenko regime in Belarus. He was sanctioned by the EU on or about 21 June 2021 and by the UK on 9 August 2021.

On or about 22 July 2021, it was reported in the Russian financial newspaper, Kommersant, that Mr Gutseriev had:

The Kommersant article stated that “according to lawyers, it is not yet clear whether the EU will evaluate the Neftis[a] deal as an attempt to circumvent sanctions.” After noting that companies associated with Mr Gutseriev had experienced difficulties selling spot oil shipments after he was sanctioned by the EU, it stated:

“Counterparties of companies that were previously controlled by Mikhail Gutserieve will be able to painlessly complete transactions that were concluded before the date of the introduction of sanctions, explains the head of the legal practice of Grace consulting Ltd Ekaterina Orlova, but in terms of new transactions the situation is ambiguous.

According to her, further cooperation with companies whose shareholders Mikhail Gutseriev left will depend on how the risk management of counterparties interprets the norms of sanctions restrictions, and most importantly how they will be applied by the European and Swiss regulators (that is, banks, through transactions are taking place).

The main question is whether the transfer / sale of shares in controlled companies to relatives by Mikhail Gutseriev will be regarded as actions aimed at circumventing sanctions, the lawyer explains. Lawyers do not have an unambiguous position on this subject in European jurisdictions: some believe that even if persons are affiliated, this does not indicate an unequivocal action in the interests of each other, however there is a conservative position that family members are somehow recognized as acting in the common interest. In this case, EU Council Decision 642 / CFSP of October 15, 2021, is also relevant, which states that the indirect provision of funds to sanctioned persons is unacceptable. Will interaction with companies controlled by persons affiliated with Mikhail Gutseriev be an indirect provision of funds, in each specific case the regulator decides, Ms Orlova notes ….”

By 11 November 2021, the Owners had picked up that the cargo to be loaded under the Charterparty might be shipped by a company called PAO Russneft. On that date, the Owners downloaded a document from Infospectrum, a commercial information provider, about that company (which is an associated company of Neftisa). The document was dated 16 July 2021. It stated that the company was “perceived to be largely controlled by Mikhail Safarbekovich Gutseriev” who had established the company, and referred to Mr Gutseriev’s control of the JSC Safmar Group. A section headed “Recent Developments” stated:

“In its latest annual report, Russneft disclosed that ‘as at 31 December 2020, the person who is able to control the actions of the Company is Mikhail Safarbekovich Gutseriev’. We note that since this point, Mr Gutseriev has been placed on the EU's sanctions list in June 2021, due to his close relations with, and interests in, the Belarus economy. We emphasise that Russneft is not sanctioned. However, the event has had some ramifications for the relationship between Mr Gutseriev and Russneft, as Mr Gutseriev is widely reported as having stood down from the board of the company, with the likely intention of giving the company the freedom to manoeuver in the manner to which it is accustomed.” 

In a section headed “Sanctions Check” the report identified Mr Gutseriev as the “perceived ultimate beneficial owner” and stated that he was on the EU Belarus sanctions list. The report observed of this event:

“We note the EU's decision to impose sanctions on Mr Gutseriev due to his links with Belarus, but we emphasise that Russneft is not sanctioned. Nevertheless, we detect some distance emerging between Russneft and Mr Gutseriev, as he has reportedly stepped down from a direct management role in the company, possibly to limit any impact on Russneft. Russneft remains well-regarded in principle, and its long-term performance appears likely to be unaffected by the sanctions. However, we would strongly recommend that a close monitor is placed on this situation, hence the short Review Period recommendation.”

On 15 November 2021, after Neftisa had been identified as the shipper, the Owners carried out sanctions screening checks on that company and on Mr Gutseriev using Refinitiv World-Check, a platform used by a number of banks and shipowners when managing sanctions issues:

On 17 November 2021, the Vessel arrived at the nominated port of loading, Primorsk, and gave notice of readiness at 00.01 hours. In the Judge’s words, “there was then something of a stand-off” between the Owners and the Charterers, arising from the fact that the Charterers wished to load a cargo to be shipped by Neftisa. The draft bills of lading provided to the Owners in respect of the cargo (which in due course would embody a contract between the Owners and the shipper) identified Neftisa as the shipper. On 17 November 2021, the Charterers confirmed to the Owners that Neftisa were indeed the shippers, and ordered the Owners to load the cargo. The cargo (“the Neftisa Cargo”) was being sold by Neftisa to the Charterers FOB Primorsk under a sale contract dated 12 April 2021, with title and risk passing at the inlet flange of the hose connection of the Vessel's intake pipe at the load port.

It was not in dispute that performance of the carriage of the Neftisa Cargo would have taken place in part within the EU and part within the UK. Two of the Vessel's crew were EU nationals and the Owners’ directors were UK nationals, resident in the EU. As a result, it was accepted that the lifting of the cargo took place within the territorial scope of the Relevant Sanctions Laws.

The Owners refused to load the Neftisa Cargo and called upon the Charterers to provide alternative voyage orders. The Charterers sought to persuade the Owners to change their mind, providing a letter dated 16 November 2021, on Neftisa headed paper, stating that Mr Gutseriev was not a member of the Board of Directors of Neftisa and “[i]n accordance with the legislation of the Russian Federation is not the controlling person of ‘Neftisa’”. This letter was expressed to be “based on information provided by the sole shareholder of …. ‘Neftisa’”, Dolmer Enterprises Ltd. No indication was given as to the form the information took or who had instigated its provision, nor did the letter address the sanctions position otherwise than by reference to the concept of a controlling person under Russian law.

The Charterers also provided copies of legal opinions from the Moscow offices of Herbert Smith Freehills LLP (“HSF”) dated 7 and 12 July 2021 and 17 November 2021 and Baker McKenzie LLP (“BM”) dated 14 July 2021.

The HSF Note on Control dated 7 July 2021 provided as follows:

The HSF Opinion dated 12 July 2021 referred to the advice in the Note of Control of 7 July. It stated that none of the information reviewed for the purposes of that note suggested that Mr Gutseriev controlled Neftisa, and that, by reference to the same information, “the information available to us” did not suggest that the criteria for control under EU sanctions were met. Once again, the opinion was addressed to and stated that it could only be relied upon by Neftisa, and Annex I set out the “limitations and assumptions” in similar terms to Schedule 1 to the 7 July Note on Control.

There was a further short note from HSF dated 17 November 2021 which did not add to the previous two notes. Finally there was an advice in relation to UK sanctions dated 22 November 2021. This stated that “none of the information reviewed for the purposes of the” Note on Control of 7 July 2021 suggested that Mr Gutseriev controlled Neftisa for the purposes of the UK regulations but that “if on the other hand, Neftisa was owned or controlled by Mr M Gutseriev”, the UK regulations would apply. There was a similar provision about reliance being limited to the addressee.

The BM memorandum dated 14 July 2021 was similarly addressed solely to Neftisa for its use, and was also based on “certain key assumptions”. These included the extent of Mr Gutseriev’s shareholding in Neftisa; that Mr Sait-Salam and others “act independently from Mr Mikhail Gutseriev and do not receive any instructions from him” and are not “influenced by Mr Mikhail Gutseriev in the exercise of their voting rights”; and that Mr Gutseriev “does not have any agreements and/or arrangements with Neftisa or other shareholders (whether written or oral) that grant him controlling powers over Neftisa”.

The executive summary expressed the conclusion that, based on the information provided, Neftisa “should not be regarded as a company controlled by Mr Gutseriev for the purposes of EU sanctions”, continuing:

“However, the fact that Mr. Mikhail Gutseriev is the brother of the majority shareholder of Neftisa could suggest that Mr. Mikhail Gutseriev exercises de facto control over Neftisa. Should he exercise de facto control, this would suggest a dominant influence of Mr. Mikhail Gutseriev over Neftisa and a fulfilment of the aforementioned factors (c) - (e), (i) and (j). However, we were informed that this is not the case.

The fulfillment of the criterion of control must be assessed on a case-by-case basis. The EU competent authorities could come to the conclusion that Mr. Mikhail Gutseriev has control over the voting rights indirectly held by Mr. Sait-Salam Gutseriev. However, assuming that the below key assumptions are simultaneously satisfied, Neftisa should not be regarded as a legal entity controlled by Mr. Mikhail Gutseriev.”

The BM memorandum referred to internet sources stating that Mr Sait-Salam Gutseriev was Mr Mikhail Gutseriev’s young brother, and long-time business partner, who “owns large capital and numerous business assets”, with BM stating, “we assume that he is unlikely to be acting as a nominee shareholder acting on behalf of Mr Mikhail Gutseriev.” In a section applying the “control” test, the BM memorandum stated:

“The question of control over Neftisa hinges on the de facto relationship between Mr. Mikhail Gutseriev and his brother Mr. Sait-Salam Gutseriev with respect to the exercise of voting rights in Neftisa. As long as our assumptions (see Section II) are correct, we consider it rather unlikely that Mr. Mikhail Gutseriev would be considered to control Neftisa. However, different interpretation of factual background by the EU authorities regarding presence of control over Neftisa may not be excluded. In particular, if Mr. Mikhail Gutseriev did have influence over the exercise of the voting rights held by Mr. Sait-Salam Gutseriev, the EU Member States' authorities might conclude that Mr. Mikhail Gutseriev has control over Neftisa …”

The Owners have pointed to the fact that the BM memorandum refers to a extract from Neftisa’s shareholders register dated 31 May 2021 which is said to record Mr Sait-Salam’s ownership (i.e. before Mr Gutseriev was made subject to EU sanctions), yet there was no public reference to such a transfer until July 2021, after EU sanctions. The EU Decision records Mr Gutseriev’s submission that the transfer took place on 10 June 2021.

The Charterers refused to provide alternative voyage orders. On 24 November 2021, they sent the Owners an email purporting to cancel the Charterparty on the ground of the Claimant's refusal to load the Neftisa Cargo. Later that same day the Owners replied, stating that the Charterers’ purported cancellation amounted to renunciation of the Charterparty and that the Owners were terminating the Charterparty for repudiatory breach.

Three post-termination events which had occurred by the time of the trial should be noted:

Some of the issues which the Judge had to address are no longer live. The Judge’s conclusions on the three issues which are raised on appeal were as follows.

On the construction of the EPS Sanctions clause, the Judge accepted the Charterers’ submission that the clause should be construed contra proferentem and thus against the Owners. Nonetheless, he held that the Owners did not have to show that complying with the Charterers’ orders was more likely than not to place Owners in breach of Relevant Sanctions Laws, only that they had formed a reasonable commercial judgment that complying with the order created a risk or a danger that Owners would be in breach of sanctions.

The Judge held that the appropriate test was not satisfied for the following reasons (at [132]):

The Judge held that the EU Decision was admissible but did not assist because it did not address the position in November 2021.

At this point it is helpful to set out the EPS Sanctions clause. The clause is in three sections, with this case being principally concerned with the third:

“(A)

THE CHARTERERS HEREBY WARRANT AND REPRESENT TO THE OWNERS THAT NEITHER THE CHARTERERS NOR ANY PERSON OR ENTITY ON WHOSE BEHALF OR UNDER WHOSE DIRECTION THE CHARTERERS ACT OR ASSIST, OR WHO DIRECTLY OR INDIRECTLY OWNS OR CONTROLS THE CHARTERERS, NOR, TO THEIR KNOWLEDGE, ANY PERSON OR ENTITY AT ANY TIME HAVING AN INTEREST IN ANY OF CARGO CARRIED UNDER THIS CHARTERPARTY, ARE DESIGNATED OR SUBJECT TO ANY NATIONAL, INTERNATIONAL OR SUPRANATIONAL LAW OR REGULATION IMPOSING TRADE AND ECONOMIC SANCTIONS, PROHIBITIONS OR RESTRICTIONS (‘SANCTIONS’) AND THAT ENTRY INTO AND PERFORMANCE OF THIS CHARTERPARTY IS NOT AND WILL NOT BE PROHIBITED OR RESTRICTED BY, AND WILL NOT EXPOSE THE OWNERS, THE VESSEL OR ITS MANAGERS, CREW, THE VESSEL'S INSURERS OR RE-INSURERS TO SANCTIONS .

(B)

THE OWNERS HEREBY WARRANT AND REPRESENT TO THE CHARTERERS THAT NEITHER THE OWNERS NOR ANY PERSON OR ENTITY ON WHOSE BEHALF OR UNDER WHOSE DIRECTION THE OWNERS ACT OR ASSIST, OR WHO DIRECTLY OR INDIRECTLY OWNS OR CONTROLS THE OWNERS, ARE SUBJECT TO SANCTIONS AND THAT ENTRY INTO AND PERFORMANCE OF THIS CHARTERPARTY IS NOT AND WILL NOT BE PROHIBITED OR RESTRICTED BY, AND WILL NOT EXPOSE THE CHARTERERS TO SANCTIONS.

(C)

THE OWNERS SHALL NOT BE OBLIGED TO COMPLY WITH ANY ORDERS FOR THE EMPLOYMENT OF THE VESSEL IN ANY CARRIAGE, TRADE, VOYAGE, SHIP-TO-SHIP TRANSFER OPERATION OR OTHER SERVICE WHICH IN THE REASONABLE JUDGEMENT OF THE OWNERS, IS PROHIBITED BY SANCTIONS OR WILL EXPOSE THE OWNERS, THE VESSEL OR ITS MANAGERS, CREW, THE VESSEL'S INSURERS OR REINSURERS TO SANCTIONS . IN THE EVENT THAT SUCH RISK ARISES IN RELATION TO A VOYAGE THE VESSEL IS PERFORMING, THE OWNERS SHALL BE ENTITLED TO REFUSE FURTHER PERFORMANCE AND THE CHARTERERS SHALL BE OBLIGED TO PROVIDE ALTERNATIVE VOYAGE ORDERS”.

There was argument before the Judge as to whether sub-clause (C) should be interpreted by reference to the contra proferentem principle(s) of construction. The Judge accepted the Charterers’ argument that it should, but nonetheless accepted the Owners’ argument as to the interpretation of the clause. The skeletons filed for the appeal addressed that issue, but the oral argument on the appeal proceeded on the agreed basis that, as a clause limiting the Owners’ obligation to follow the Charterers’ orders, sub-clause (C) engaged the principle in Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974] AC 689, namely that, in the absence of clear words, the court should presume that the parties did not intend the contract to derogate from the parties’ normal rights and obligations in a contract of this kind. In these circumstances, it is not necessary for the court to engage with the question of whether sub-clause (C) does engage the Gilbert Ash principle, and the force of the presumption in this particular case if it does.

The key issue is whether the words “expose … to sanctions” are only satisfied by a reasonable judgment by the Owners, on the balance of probabilities, that sanctions are more likely than not to be contravened if the Charterers’ orders are complied with, or whether it is sufficient that the Owners reasonably formed a judgment that there would be a real risk of such a breach of sanctions.

Like Mr Vineall KC, I accept that the appropriate starting point for this enquiry, and in many respects the end point, is the words used in the Charterparty. The word “expose” is used in all three sub-clauses of the EPS Sanctions clause, sub-clauses (A) and (C) being clauses benefiting the Owners, and sub-clause (B) being for the Charterers’ benefit.

Sub-clauses (A) and (B) contemplate that entry into or performance of the Charterparty may either be prohibited or restricted by sanctions or, as an alternative, “expose” the [Owners/Charterers] to sanctions. The former words are concerned with the actual legal effect of the sanctions, and the latter with something else. While Mr Shirley argued that interpreting exposure as “risk” would leave little, if anything, for the words “prohibit” or “restrict” to do, the clauses involve wide, mutual, warranties intended to protect one party against sanctions issues arising from the status of the other party and those associated with the other party. In those circumstances, I do not find it surprising that the parties have sought to address the position in broad terms. In any event, Mr Shirley’s construction, on which the word “exposure” requires a determination on the balance of probabilities that there is or will be a breach of sanctions, raises the same overlap issue, because it is difficult to see what, if anything, the words “and will not expose” add to the words “will not be prohibited or restricted” on that construction.

Sub-clause (C) addresses issues which may arise at two different points in time:

The Owners’ obligation to obey the order when given does not apply if the Owners make one of two reasonable judgments. The first is when the Owners reach a reasonable judgment that compliance with the order is prohibited by sanctions, which I accept involves a reasonable determination that the voyage is more likely than not to trigger the application of sanctions. The second is a reasonable judgment that compliance will “expose” the Owners to sanctions which, as with sub-clauses (A) and (B), clearly involves a judgment as to something else.

However, the terms in which sub-clause (C) addresses the position when the sanctions issue arises after the order has been given, and while it is in the course of being complied with, provide very strong support for the Owners’ construction that “exposure” is used in the sense of “put at risk”. In the context of an order which is already being performed, the sub-clause refers back to the two matters as to which a reasonable judgment will relieve the Owners of their obligation to comply with the order as “such risk”. Given that it is common ground that the same judgment is required both as to whether the Owners are obliged to follow the order when given, and whether they remain obliged to comply with it after it has been given, the Judge was right to conclude that the words “such risk” provide strong support for the Owners’ construction. Mr Shirley argues that the words “such risk” means no more than “those conditions”, and that words “tucked away” at the end of the second sentence cannot be the tail which wags the construction dog. However, those arguments do not in my judgment take sufficient account of the structure of the clause (which contains two equally important provisions addressing the same sanctions issues arising at different points in time), nor give sufficient weight to the fact that the words “such risk” have been used to refer to the subject-matter of the Owners’ reasonable judgment when those same issues arise in a post-order context.

Mr Shirley submitted that the words “such risk” cannot have any relevance to the meaning of the phrase “expose to sanctions” because those words also refer back to the circumstance that compliance with the order is prohibited by sanctions, and it is accepted that this would not be satisfied by a determination as to the existence of a risk alone. However, in my view, when using a single phrase to refer back to the two elements in the earlier part of sub-clause (C), the sub-clause would be expected to use a word which embraced the lowest common denominator of those two alternatives, namely the risk required by the exposure. It could not realistically be argued that this word would not be capable also of covering the situation when the Owners determined that a continuation of the voyage was likely to lead to a sanctions liability, as well as a determination that it gave rise to a real risk of such a liability.

In my view, taken with the other points I have outlined, the language used is sufficiently clear to qualify the Owners’ obligation to follow the Charterers’ orders, notwithstanding any Gilbert-Ash presumption which might arise.

That conclusion derived from the language used is reinforced by a consideration of the commercial context in which sub-clause (C) operates:

In addition to his arguments concerning the language of sub-clause (C) which I have already addressed, Mr Shirley advanced two further arguments, the first by reference to other clauses in the Charterparty, and the second by reference to conclusions reached in other cases on clauses using the word “expose”.

As to the former, he points to the fact that the Charterparty contained other clauses which use the word “expose” but in combination with language which is more suggestive that the clause is concerned with a risk rather than whether something will happen on the balance of probabilities. He argues, in effect, that these clauses show that when the parties wished a particular consequence to follow from the existence of a determination as to risk alone, they used clearer language to achieve that end.

The first of the two clauses relied upon in support of this argument is the BIMCO War Clause for Voyage Charters (“VOYWAR”) 2004, a standard form clause published by the Baltic and International Maritime Council, a market association representing those involves in the maritime industry. This was circulated to the market by BIMCO special circular No 5/2004 which would ordinarily have been admissible in any dispute as to its interpretation.

VOYWAR 2004 is a long, dense and detailed clause addressing the consequences of war and war risks, which spans well over one page of single-spaced text in the Charterparty. Among its provisions:

The second is the “Gulf of Aden Clause”, which is an amended version of a standard form clause produced by Intertanko, a body of tanker industry operators, to address the piracy threat faced by vessels sailing through the Gulf of Aden. This provides that “if the master or owners determine that the vessel, her crew or cargo may be exposed to the risk of acts or piracy” on the normal route, the vessel may deviate. Mr Shirley points to the words “may expose” and “to the risk”.

Where a contract incorporates clauses from different sources (for example different sets of standard terms) with an overlapping area of operation, it will be necessary to read them together and do so in a way which resolves inconsistencies (see e.g. MS Amlin Marine NV v King Trader [2025] EWCA 1387). The clauses on which Mr Shirley relies do not overlap in their field of operation, albeit it may be said that they address hazards with some degree of familial relationship. He is relying on the wording of two standard form clauses which the Charterparty incorporates not to qualify the operation, but to influence the meaning, of a third in its field of operation. Further, this is not a case in which it is possible to approach these aspects of the Charterparty by reference to the actions of the single legal draftsman contemplated by Diplock LJ in Prestcold (Central) Ltd v Minister of Labour [1969] 1 WLR 89, 97who “aims at uniformity in the structure of his draft.” As the same judge noted in Lindsay (WN) & Co Ltd v European Grain & Shipping Agency Ltd [1963] 1 Lloyd’s Rep 437, 443 of the contract before him then:

“As is the case with many standard commercial contracts which have evolved piecemeal over the years, the drafting is not self-consistent, and the nomenclature employed is not uniform. The usual presumption that the same word is used throughout the contract in the same meaning is less strong than in the case of a contract drafted at one time by a single draftsman.”

The position must be a fortiori when comparing three standard form clauses of independent origin incorporated into a single contract. I am not persuaded that it is appropriate to assume consistency of linguistic usage across different market standard clauses, which will frequently have their own interpretative matrix (e.g. the accompanying circulars of the BIMCO clauses), simply because they are incorporated into the same charterparty. This point is well-made in Males LJ’s observation in International Entertainment Holdings Ltd v Allianz Insurance Plc [2024] EWCA Civ 1281, [18]:

“Where a contract shows signs of having been drafted as a coherent whole, it must be construed accordingly, and it is often a reasonable inference that terminology has been used consistently as between the various clauses. But it is commonly the case that insurance policies are not drafted in this way. Rather, as in the present case, they appear to include a selection of different clauses adopted from other contracts, with no attempt to ensure that language is used consistently throughout the policy. This “pick and mix” approach means that the inference of consistent usage has little or no force, and that reference to the same or similar language in other clauses of the policy may shed little light on the meaning of the term in question. As Mr Charles Dougherty KC for the insurer recognised, there is an obvious danger in trying to find coherence between clauses which have been stitched together with no attempt to ensure such coherence.”

In any event, I am unable to find in either the BIMCO 2004 War Clause or the amended Intertanko Gulf of Aden clause any sign that the parties did not intend the word “expose” without more to refer to a risk, still less sufficient to suggest that a clause which later embraces the concept of exposure within the words “such risk” was not intended to do so. Neither of these clauses leads me to doubt the correctness of the conclusion I have reached on the basis of the language of sub-clause (C) and the context of its application.

Mr Shirley also relied on authorities which considered the word exposure in a commercial contract, and the court was taken to three. The clauses were all differently worded, and applied in different contexts. For that reason, their ability to influence the proper construction of sub-clause (C) was limited.

The case on which Mr Shirley placed the most reliance was Mamancochet Mining Ltd v Aegis Managing Agency Ltd [2018] EWHC 2643 (Comm). In that case, a clause in a marine insurance policy relieved the insurers of their obligation to pay an indemnity if doing so “would expose that (re)insurer to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws, or regulations of the European Union, United Kingdom or United States of America.” Teare J at [45] referred to dictionary definitions defining expose as “lay open to something undesirable”, “subject to risk” and “leave without protection”. At [46], he contrasted the concept of being “‘exposed’ to a sanction (in the sense of being laid open to a sanction or left without protection from a sanction) or ‘exposed’ to the risk of being sanctioned (in the sense of being subject to the risk of a sanction).” He noted that the clause did not refer “in terms to being exposed to the risk of a sanction or prohibition”. He was persuaded that the clause only applied where “payment of the claim in question would be conduct which was prohibited by the applicable laws or regulations.”

The clause at issue in Mamancochet did not use the concept of being “exposed to sanctions” as an addition to performance being “prohibited by sanctions”, nor did it equate exposure with “such risk” elsewhere in the clause. The commercial context was also different:

For these reasons, I am not persuaded that the Mamancochet decision requires sub-clause (C) to be construed in the manner for which Mr Shirley contends.

The second case is Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark) [2011] EWHC 2862 (Comm) (“Triton Lark 1”); [2012] EWHC 70 (Comm) (“Triton Lark 2”). A clause in a time charterparty, BIMCO’s CONWARTIME 1993 clause (which is in many respects similar to VOYWAR 2004), entitled the owner not to follow the time charterer’s orders:

“where it appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Master and/or the Owners, may be, or are likely to be, exposed to acts of piracy ….which, in the reasonable judgment of the Master and/or the Owners, may be dangerous or are likely to be or to become dangerous to the Vessel, her cargo, crew or other persons on board the Vessel.”

In Triton Lark 1 Teare J considered the meaning of the words “may be or are likely to be exposed”. At [38] he observed that “exposure to acts of piracy means that the vessel is subject to the risk of piracy or is laid open to the danger of piracy”. He held that the words “may be or is likely to be” were intended to express the same standard of probability. This did not require a judgment that an attack by piracy was more likely than not, but a “real danger” or “serious possibility” ([40]).

The case was restored for further argument after judgment in The Triton Lark I was handed down, because it became apparent that the parties had also been in dispute about the meaning of the words “exposed to acts of piracy”, and whether they required an actual engagement with pirates of some kind, or only a risk of such engagement. In The Triton Lark II at [7], Teare J referred to dictionary definitions of the verb “expose”. Having regard to the terms of the clause (and in particular its reference in certain places to “danger”), Teare J held that the clause required “a real likelihood that the vessel will be exposed to acts of piracy in the sense that the place will be dangerous on account of acts of piracy” ([11]).

The wording in The Triton Lark differs significantly from sub-clause (C), both in the language of “may or is likely to” and the references to danger which Teare J regarded as significant, but also in the respects I have referred to at [52]. I am not persuaded that the decision assists on the construction of the clause in this case.

The final case, and the closest in its commercial context, is Ceto Shipping v Savory Shipping [2025] EWHC 2033 (Comm), a decision handed down on the same day as the Judgment. In that case, Cockerill J had to consider the effect of a provision in a ship management agreement which relieved the managers of their obligations if “in [their] reasonable judgement, it will expose them or [others] to any sanction … imposed by any State”. There was no dispute in that case that this required a determination as to risk, the issue being the level of risk. At [243], Cockerill J rejected the contention that it was necessary to establish a “virtual certainty”, both because “the wording here is not a ‘result’ wording (e.g. that the act would result in the imposition of a sanction)” and because “such a level of certainty would seem inapt to civil commercial events”. Her conclusion that “a serious possibility of sanctions resulting would entitle Delfi to reasonably form the view that the vessel was exposed to sanctions” is consistent with my interpretation of sub-clause (C), as is her view that a requirement of this kind to trigger the clause’s application was more apt to the commercial context.

Finally, Mr Shirley argued that, whatever else might have satisfied sub-clause (C), it was at least necessary for the Owners to show that they positively and reasonably judged that Mr Gutseriev owned or controlled Neftisa. However, there is no warrant for interpreting the words “exposed to sanctions” as requiring an actual determination on the balance of probabilities of one issue relevant to the application of sanctions, with a real risk being sufficient for other matters. Nor is it likely that the parties would have chosen to single out one of the most evidentially obscure and challenging enquiries for a higher level of determination.

For these reasons, I would dismiss Mr Shirley’s cross-appeal against the Judge’s construction of sub-clause (C) of the EPS Sanctions clause, and uphold the Judge’s determination.