Owneast Shipping Ltd v Qatar Navigation QSC

This is an appeal from an award made by the majority of an arbitral tribunal (Sir Anthony Colman, Richard Siberry, QC, Mr Michael Baker-Harber dissenting) in favour of charterers. The majority held that the Owners of the vessel “Qatar Star” - Owneast Shipping Limited (“Owners”) – had wrongfully withdrawn her from the service of the charterers – Qatar Navigation Inc (“Charterers”) for non-payment of hire. Permission to appeal was granted by Teare, J on two points of law on the basis that the question at issue was one of general public importance and the decision at least open to serious doubt.

The vessel had been chartered to the charterers on an amended NYPE form of charter with additional clauses dated 7^th February 2005 for 48 months +/- 2 months at Charterers’ option.

The Charter included the following clauses:

The Charterers’ record of payment was somewhat unsatisfactory. The 34^th semi-monthly payment was due on 24^th August 2006 and the vessel was withdrawn when it was not paid. Of the previous 30 semi-monthly payments, only 12 had been made on or before the due date and 17 had been paid late - on 4 occasions 5 or 6 days late. Only on the 33^rd payment date did the Owners resort to an anti-technicality notice under clause 62, whereupon the Charterers immediately paid.

In the course of discharging a cargo of logs at Kandla during the period 28^th July to 3^rd August 2006 the vessel suffered from the breakdown of 3 out of its 4 cranes. As a result on 1^st August it was ordered off the berth due to delayed working, and thereafter discharged its remaining cargo into barges at its anchorage, completing on 3^rd August. The Charterers sought to make deductions from hire (pursuant to clause 15 of the charterparty) on this account.

The Charterers are registered in Doha, Qatar, and their financial affairs are operated from their head office there. But their commercial operations are managed from their office in Dubai. Based there were Captain Roger Hatch, the Charterers’ Port Captain, who was responsible for the operations of the vessel, and Mr Hamad Al Hitmi, the Charterers’ General Manager. Mr Hamad Al Hitmi reported to Mr Khalifa Bin Ali Hitmi who was located at the Doha Office where he was Deputy Chief, Executive Operations. Mr Hamad Al Hitmi was subject to a financial authorisation limit of $ 13,400. For amounts above that he needed the authority of the Board of Management in Doha.

It is convenient to set out the events leading up to the non-payment by citing the tribunal’s findings:

Clauses such as clause 62 are commonly known as anti-technicality clauses. Their purpose is to avoid a situation where the owners may withdraw the vessel for any breach of the obligation to pay hire on time, however minimal or inconsequential. A clause such as clause 5 is a form of forfeiture clause. An anti-technicality clause provides some measure of relief against a possible forfeiture, no such relief being available under the general law: The Scaptrade [1983] 1 Lloyd’s Rep 146; [1983] 2 Lloyd’s Rep 253. Such clauses may take different forms. Sometimes they simply provide that owners cannot withdraw for non-payment of hire in the absence of a notice threatening withdrawal in the event of continued non payment. The clause in question in the present case is in regular use and requires a notice to be served only in defined circumstances.

The tribunal considered a number of authorities including The Libyaville [1975] 1 Lloyd’s Rep 537; The Rio Sun [1981] 2 Lloyd’s Rep 489; The Afovos [1982] 2 Lloyd’s Rep 469 and [1983] 1 Lloyd’s Rep 335 and Noemijulia SS Co Ltd v Ministry of Food[1961] 1 KB 223. The first three authorities show that the Court looks favourably on anti-technicality clauses and does its best to give effect to them with a view to reducing the technicalities which would otherwise arise in connection with the right to withdraw a ship under a time charter.

The tribunal recorded its unanimous view (which I share) that the clause 62 form of anti-technicality clause is a deeply unsatisfactory provision. It is not well drafted and is obviously impractical since its application depends on facts of which at the relevant time the owners may have no knowledge. An owner who contemplates withdrawing his ship from the service of his charterers will know that he has not been paid. In some cases he will know that the reason why this is so is because the charterers have run out of money. But in many cases he may well be ignorant of the reason why he has not been paid any particular instalment, or part thereof, and of the charterers’ intentions as to payment. He must therefore either serve a notice as a matter of precaution (as Mocatta J in The Libyaville thought that he would probably do) or run the risk that, months or years later, the factual situation is shown to be such that he should have served a notice.

The Tribunal decided that the effect of the authorities to which I have referred was as follows:

The tribunal considered whether the words “where there is absence of intention” to make punctual and regular payment included absence of recklessness as to whether such payment was to be made. The majority decided that the words used should be construed as meaning what a commercial man would understand them to mean. They held that it would never occur to a commercial man that “absence of intention” had any wider meaning than that of deliberate or wilful failure to make punctual and regular payment and that the concept of recklessness as to the consequences of one's conduct could not be within the scope of meaning of "intention” as commonly understood in the context of a time charter.

The first question of law is whether clause 62 applies where the failure to pay any hire by the due date is the result of recklessness on the part of the Charterers.

On the facts the majority of the tribunal found that the dominant cause of the Charterers’ failure to pay was seriously incompetent management on the part of Mr Hamad al Hitmi. This was demonstrated by the lack of urgency in the whole process; and by his insistence that the quantification of the deduction from hire in respect of the breakdown at Khalda had to be completed before the completion of the request to the bank for payment. He took a risk, the Tribunal found, hoping until 24^th August 2006 that the payment could be effected by the end of 24^th August - only to find that the instructions to the bank could not be finalised until too late. He should have realised that, unless the payment request was sent to Doha on 22^nd, the chances of payment arriving on 24^th were negligible. But, the tribunal held, no one acted in the way in which they did with the intention that punctual and regular payment would not be made on 24^th August. But Mr Hamid Al Hitmi realised by 23^rd August that the delay was such that payment on 24^th was impossible.

In short the majority held that this was a case of severe incompetence but not intentional non payment by 24^th August.

The minority arbitrator held that the aim of the clause was to protect Charterers in the event that there is an administrative “glitch”. He held that the clause was wholly for the Charterers’ benefit and should be construed and administered strictly against them and the burden of bringing themselves within it lay on them. He said that he took a different approach to the word “intention” to that of the majority. He did so by an example in the following terms:

He came to the conclusion that a conscious decision was made by Mr Hamad al Hitmi and Captain Hatch to wait for the Kandla discharge Statement of Facts so that the Charterers could make a substantial deduction from hire. He did not accept that seriously incompetent management was the cause of the failure to pay on time. The better view was that Mr Hamad Al Hitmi made (on or by 22^nd August) a conscious decision to wait for the Kandla material and then make the deduction from the 34^th instalment of hire. That decision led to the inevitable late payment and fell within the definition of “intention", notwithstanding disavowal by the witnesses of any intention to pay late. He thought it unfortunate that the Owners did not insist that all three witnesses were tendered for cross-examination so that their evidence could have been tested.

An intention to fail to make payment as set out necessarily means a failure to make a payment which is “punctual and regular”. That is what is set out in clause 5. An intention to pay late would be an intention whose existence precluded the application of clause 62.

Mr Michael Coburn for the Owners submits that the meaning of “intention” depends on the context in which the question arises. Whatever may be the position in the criminal law (which unsurprisingly draws a distinction between intention and recklessness), in the present context intention must have meant to cover conduct such as that of the Charterers. They had by deliberate inaction taken a risk of non payment on time which, once 22^nd August passed, inevitably resulted.

He pointed out that in some areas of the law intention embraces recklessness. In Winfield and Jolowicz on Tort 917^th Ed) the author observes at paras 3-2 to 3-3:

Similarly in Clerk & Lindsell (19^th Ed) there appears the following para:

Given that, in certain circumstances, the law itself recognises that intention may embrace recklessness, there is no obstacle to interpreting intention as doing so in the present context; and good commercial reason to do so. The draftsman cannot have intended that a charterer would be entitled to a warning notice in circumstances such as these. A commercial man would not understand “intention” to be as limited as did the majority, as appears from the minority arbitrator’s different approach. Why, Mr Coburn asked, should a charterer who does not care about punctual payment get a second chance?

These are powerful submissions which were well argued. I do not, however, accept them. It does not seem to me that a commercial man in the position of the parties to this charter would regard the word “intention” as having what seems to me an extended meaning so as to include recklessness. I reach that view for a number of reasons.

Firstly, intention, although it features in many legal contexts, is not a word of legal art. It is an ordinary English word in regular use which has a meaning. Recklessness is also such a word, but with a different meaning. As Lord Hailsham (with whom Lords Fraser, Roskill and Bridge agreed) in R v Lawrence[1982] AC 510, 520F-G:

In R v Mohan [1976] 1 QB 1,10H-11A, the Court of Appeal emphasized that recklessness i.e. acting with knowledge of the likely consequences was not to be “equated with intent”. Similarly the Courts have indicated that intent is not to be equated with, although it may be evidenced by, foresight of a consequence as a virtual certainty.

Secondly, I cannot regard the context in which the word “intention” features as encompassing a broader meaning. There are many examples of statutory or contractual provisions in the commercial field where a clear distinction is made between intent and recklessness.

Thus Article 4 of the 1976 Limitation Convention was adopted from the Warsaw Convention, as amended in The Hague in 1955. The words “or recklessly and with knowledge that damage would probably result” were added by the 1955 amendment for the express purpose of extending the scope of Article 4 in return for higher limits: Goldman v. Thai Airways Ltd. [1983] 1 WLR 1186, 1195A-C (CA) (per Eveleigh L.J.).

In Nugent v. Goss Aviation [2000] 2 Lloyd’s Rep. 222 the Court of Appeal explained that the concept of “recklessness” was plainly different from the concept of “intention”:

The same Warsaw Convention formulation, which distinguishes between (i) intention and (ii) recklessness coupled with actual knowledge of probable damage, has been adopted in numerous shipping conventions in addition to the 1976 Limitation Convention, including:

The International Convention on the Carriage of Hazardous and Noxious Substances by Sea (Schedule 5A to the Merchant Shipping Act 1995), Articles 7(5) & 9(2);

The Convention on the Carriage of Passengers and Luggage by Sea (Schedule 6 to the Merchant Shipping Act 1995), Article 13.

The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (“The Rotterdam Rules”), article 62.

The same formulation has also been adopted in sections 156(1)(b)(ii) and 157(3) of the Merchant Shipping Act 1995 and both the 1998 and 2004 editions of IATA’s Standard Ground Handling Agreements in clauses 8.1, 8.2 and 8.4.

Section 219(1) of the Merchant Shipping Act 1995 distinguishes between causing damage “intentionally” and doing so “recklessly”; and BIMCO’s Cruisevoy 1998 standard form also distinguishes between “reckless conduct” and “wilful breach”: see clauses 22(c) & 22(d).

Mr Coburn observed that these were examples where the draftsman had spelt out that recklessness was included and did not signify that the reference in clause 62 to “intention” did not cover recklessness. I accept that these statutory provisions cannot determine the meaning of words in a commercial contract but they are, in my judgment, a powerful indicator of the recognition in a commercial context, and in relation to relief from liability that might otherwise arise, of the different mental states, and degree of responsibility, represented by intention and recklessness.

Thirdly, I do not derive much assistance from the passages cited from Winfield and Clerk and Lindsell. As to the former whether or not recklessness amounts to intention for the purposes of the law of trespass is more a question relating to the formulation of the ingredients of the tort than one of interpretation and, as footnote 15 to para 3-3 indicates “using “intention” to embrace [subjective recklessness] is a convenient shorthand but open to criticism as being wider than the proper usage”.

Fourthly, in the context of the criminal law, the courts have invariably construed “intention” when appearing in a statute as not including recklessness, and have done so because the natural meaning of the words is different.

Thus section 1(1) of the Criminal Attempts Act 1981 requires proof of an “intent to commit” an offence. The Court of Appeal has repeatedly held that the word “intent” in that section does not include recklessness as to the result. In R. v. Millard & Vernon [1987] Crim. L.R. 393, Mustill L.J. explained that there was “no reason why the statutory requirement of an intent should be diluted by reference to the lower [recklessness] standard required by the substantive offence” of intentionally or recklessly causing property damage. Similarly, the Court of Appeal in R. v. O’Toole [1987] Crim. L. R. 759 (CA), emphasised that there is “no room for a reckless damage to property when the offence itself is an attempt because the attempt must have the necessary intent”.

In respect of conspiracy, section 1 of the Criminal Law Act 1977requires the defendant and at least one other party to the agreement to “intend or know that that fact or circumstance shall or will exist”. The House of Lords in R. v. Saik[2007] 1 A.C. 18 held that nothing short of actual intention or knowledge (as applicable) would satisfy the words “intend or know” in section 1. Lord Nicolls (with whose speech Lord Steyn agreed) explained at p. 37, para 33 that Parliament had clearly distinguished between

The charterparty is not a criminal statute but it is expressly governed by English law. Moreover clause 62 is a restriction on the Owners’ right to withdraw the vessel and any expansion of the meaning of “intention” will extend the rights of owners to withdraw beyond what would otherwise be the case. I respectfully agree with the observation of Mance, J, as he then was in The North Sea [1997] 2 Lloyd’s Rep 324, 328 that since a withdrawal or cancellation clause is a forfeiture clause caution is appropriate in extending its application.

The Owners also submitted that even if recklessness was insufficient to take the Charterers outside the protection of clause 62, it could not be right that only a deliberate and wilful decision to pay late in the sense of that being the Charterers’ aim would fall outside the clause. Intention, they submit must at least encompass awareness that late payment will be the virtually inevitable consequence of a deliberate course of action.

I cannot accept that either. Someone who is aware that something is the virtually inevitable consequence of his action is very likely, but not certain, to be held to have intended that consequence. But, absent a finding of intention, clause 62 cannot be interpreted as if intention was defined as meaning someone who has that awareness and adopts the course of action (or inaction) in question.

In short I agree with the conclusion reached by the tribunal and more economically expressed by them in para 29 of their decision, as summarised in para 12 above.

Whether or not an intention not to make payment on time is established is a question of fact. The majority of the tribunal decided that there was no such intention. The minority member thought that “intention” had a broader meaning than the majority did; although he did not define what that meaning was, other than that it covered what had occurred on the fact of this case.

He was much concerned by the example that he gave (see para 16 above), which he regarded as clearly amounting to intention. In his example it would appear (although it is not entirely clear) that the relevant individual at the charterers knows that instructions must be given to the bank by noon, and with that knowledge makes a conscious decision not to send the instructions. On those facts, as it would seem to me, it would be open to a tribunal to decide that he intended to pay late.

In the present case the majority found that Mr Hamad al Hitmi should have realised that unless a request for payment was sent by 22^nd payment on 24^th was unlikely. They did not find that he knew that there was a particular deadline and with that knowledge consciously decided not to send the instruction so as to meet it. Had they done so they could have found that he intended to delay payment, even if that was not his principal objective. Other tribunals might have reached a different decision on the facts, as the minority member did. The dividing line between serious incompetence and deliberate delay amounting to an intention not to make punctual payment is sometimes thin.

I recognise that if there has to be absence of intention, and recklessness is insufficient, the bar for an Owner will be a high one. Mr Coburn contended that such an interpretation would render the clause unworkable and would mean, in practice, that an owner would probably have to serve a notice in every case except the most obvious. I do not regard these considerations as compelling. Quite apart from the fact that the clause is, in substantial measure, unworkable anyway, the parties could easily have provided that absence of recklessness was necessary if a notice was to be given. I decline, in the context of a clause giving relief against forfeiture, to widen the scope of the limited form of words which the parties have, presumably intentionally, used.

The second question arises in the following circumstances. The Charterers never made any payment at all. But the payment which they were intending to make (but stopped following the Owners’ withdrawal of the vessel) contained a substantial deduction from hire. The Owners contend that this deduction was quite unreasonable and involved an element of double counting such that it was not objectively justifiable, by which they meant that the deduction was not one which could reasonably (even if erroneously) have been made. The Charterers, they submit, had every intention to make such a deduction. Their instructions to the bank were for payment of the hire less the deductions which they had calculated in their own time. Ergo they intended to make a payment which was not “as set out” i.e. a regular payment of hire. There was, therefore an absence of intention to make payment as set out.

An owner may not withdraw a vessel for non-payment of hire if the charterer makes a payment of the hire less a deduction which is (i) bona fide and (ii) reasonable in respect of an item for which there is a right under the charterparty (or by way of equitable set off) to make some deduction, even though the amount which he deducts turns out to have been too much. This appears from what Lord Denning said in The Nanfri [1978] QB 927. By contrast Goff L.J. said referring to equitable set-off:

In The Chrysolovandou Dyo [1981] 1 Lloyd’s Rep 159 Mocatta J followed Lord Denning. See, also The “Kostas Melas” [1981] 1 Lloyd’s Rep 18. The scope of the right to deduct is perhaps not entirely settled but I shall proceed on the basis that what I have said above is the present position.

If, therefore, a charterer who is liable to pay $ 50,000 on a given day pays $ 25,000 instead the owner will, subject to any special provisions of the Charterparty, be able to withdraw his vessel, if the $ 25,000 deduction is either made in bad faith or is unreasonable. If the deduction is reasonable (even though in the event too much) the owner may not withdraw the vessel although he will be entitled to the excess deducted when the amount of that excess is established.

Here, Mr Coburn submits, the Charterers intended to make a deduction which was unreasonable but, because they were also incompetent, failed to make payment of even the lesser sum, based on an objectively unjustifiable deduction, on time. There is no reason why they should get the relief of a warning notice under clause 62, and, thus, an additional three banking days grace, when the late payment they instructed to be made (and but for the withdrawal would have made) was one which would have entitled Owners to withdraw the vessel anyway. Clause 62 may legitimately save them from their dilatoriness in making payment; but it cannot put them in a better position than that in which they would have been in if the payment had gone in on time.

The tribunal, (unanimously) it would appear, held that this argument was untenable for two reasons. The first was expressed in the following terms:

With all due respect to the arbitrators it seems to me that the conclusion they have adopted on this point is, itself, untenable.

Assume a charterer who makes a deduction in bad faith. He is short of money. So he plucks a figure from the air as an entirely spurious calculation (as he well knows) of what he is entitled to deduct. He does so in the hope that, by paying on time something substantially less than the whole of what is due, and asserting some extravagant figure as what he is entitled to deduct, he can stave off withdrawal. Take, then, two scenarios. In the first the payment arrives on time. In the second some slip up at the bank causes the payment not to arrive until 48 hours after the due date. In each case the owners withdraw the vessel 24 hours after the due date.

If the Tribunal be right the withdrawal is valid in the former and wrongful in the latter case. In the former case the charterer has failed to make a regular payment of hire since he has paid hire reduced by a deduction made in bad faith. Since he knows that he is not entitled to make the deduction asserted, there is no absence of intention to fail to make the payment as set out. That is exactly what he intends to do. He is not, therefore, entitled to the benefit of a notice under clause 62.

In the latter case the charterer’s intentions are identical. The only difference is that there was no payment on the due date because of a banking error. It would seem surprising that there should be diametrically opposite results in the two cases.

The Tribunal reached its decision on the basis that the claim was that the Owners withdrew the vessel without giving the necessary clause 62 notice following a failure to pay any hire at all; and that Owners claimed that no notice was required because the cause of that total failure was Charterers’ intention totally to fail to pay. That was indeed part of the Owners’ challenge. They claimed, unsuccessfully, that the Charterers intended not to pay on time and for that reason did not pay anything on time. But they also relied on the fact that Charterers’ intended payment was of hire less an objectively unjustifiable deduction.

The second strand in the tribunal’s reasoning on this point was that the cause of the failure to pay which gave rise to the withdrawal was the intention not to pay anything (on time), the implication being that there must be a causal link between that which gives rise to the right to withdraw (here the non-payment of anything) and the intention whose presence is relied on as ruling out the application of clause 62. Here the intention to pay less had no causative effect on the failure to pay anything at all which arose because of the incompetence of the Charterers.

I do not accept that the phrase “where there is absence of intention to fail to make payment as set out” means that there must be a causative connection between the intention and the failure. The failure must no doubt be due to an error or omission of Charterers’ employees, or their bankers or agents, or must occur for some other reason and, in each case; there must be an absence of intention to fail to make payment as set out. But that absence of intention is a necessary attending circumstance not a required cause. The parties cannot have intended that somebody in the position of the dishonest charterer in my example (or someone who makes a derisory payment of, say, $ 5,000 with no conceivable justification for the $ 45,000 deduction) should be entitled to a notice because, whilst not only being dishonest, he has (in the event) the good fortune that his bank pays late (or that his staff are incompetent so that payment arrives late).

The tribunal also said that the Charterers’ unexpressed intention to make in future an unjustifiable deduction from hire would not make it necessary for Owners to give a clause 62 notice. Whether or not Charterers' intention was expressed or unexpressed seems to me irrelevant. The question is what intention the Charterers had.

Counsel are agreed that none of the authorities cited by the tribunal deals with the first reason on which the tribunal relied, in respect of which they were, in my judgment, in error.

The second reason why the tribunal found against the Owners was that an intention could not be relied on unless the fact and calculation of the deduction was made in bad faith, that is to say in the belief that the Charterers were not entitled to make it. The tribunal concluded that there was no evidence to support the allegation that when Captain Hatch put forward his off-hire or disbursement calculations he was acting in bad faith. In the light of that conclusion they did not decide whether those calculations were unreasonable.

Mr Coburn submits that, in this respect the tribunal has also fallen into error. The Charterers did intend to fail to make payment “as set out” i.e. a payment that was regular as well as punctual. They intended to make a payment which was irregular because, even if made in good faith, it was objectively unjustifiable because the deduction proposed was unreasonable. The amount that was to be paid, and the deduction to be made from the hire otherwise due, was the subject of calculation which took some time. The Charterers intended to make exactly the payment that they instructed their bank to make and no more. There was nothing indeterminate about it.

In this respect he drew my attention to an arbitration award given in February 2003, which is before me in anonymised form. In that case the arbitrators were concerned with a clause similar to clause 62 where the vessel had been withdrawn for underpayment of hire. They held that a deduction from hire which had been made involved calculations which although bona fide were unreasonable. The tribunal said:

A different result was reached in The Libyaville, which does not appear to have been cited in the arbitration referred to in the previous paragraph. In that case a dispute arose as to the maximum number of 40’ long trailers which could be carried on the trailer deck of the vessel. The owners said that it was 17 and the charterers said that it was 16. Agreement was reached that, if it was only 16, then the daily hire would be reduced by 1 ½ %. The charterparty contained a provision for hire and a clause (clause 44) in terms very similar to clause 62.

The first instalment was paid at the full rate. It was then said on behalf of charterers that the trailer deck could only carry 16 trailers. Owners said they expected the next hire payment to be at the full 17 trailer rate. The second instalment of hire was paid at that rate. The charterers, after a survey of the vessel, then said that they would be paying all future instalments at the lower 16 trailer rate and would make a deduction in respect of the hire previously overpaid. The next payment was at the lower rate less the threatened deduction. The owners then served a notice requiring full payment within 2 days. Further communications established charterers’ continuing intention to pay at the lower rate and owners’ objection. The final payment made was at the lower rate. The owners withdrew the vessel without any notice under clause 44. The correct rate was the higher rate.

As is apparent from these facts the charterers had deliberately made payments which were too small despite prior warnings from the owners not to make them. In addition an arbitral tribunal had been appointed to decide the dispute between the parties on the question of how many trailers could be accommodated.

One of the questions of law in the special case was whether the owners were entitled to withdraw the vessel having regard to owners’ failure to give any notice under clause 44. Mocatta J drew certain inferences of fact from the facts found in the special case and a bundle of telexes that had, by agreement, been put before him. One such finding was that the charterers did not intend to fail to make punctual and regular payment. On the contrary they at all times intended to comply with their obligations under the charter. Having made that finding he concluded that the charterers, notwithstanding their deliberate payment at the lower rate, fell within the clause.

Mr John Hobhouse, QC for the owners does not appear to have submitted that the owners did not need to serve a notice if there was an intention to make a payment which was in fact too little. His argument appears to have been that the probability was that the charterers would not have paid any extra if they had received a notice.

Mr Coburn accepts that the Libyaville is inconsistent with the submission that he makes. It is, of course dependent on the findings of fact which Mocatta J made. But it is, also, in my view a decision as to a point of law namely the ambit of a clause not materially different. He submits, rightly, that it is not a decision binding on me and that, in circumstances where the point now raised was never argued, its persuasive authority is less than it might otherwise be.

The relevant question is whether the intention to which clause 62 is directed is an intention to do that which will have the result that an objectively unjustifiable payment is made or an intention to achieve that result i.e., to make a payment which is known to be irregular because the deduction which leads to it is not made bona fide. The distinction is sometimes expressed as the difference between an intention as to conduct and intention as to result.

Whilst I do not regard the matter as wholly free from difficulty it seems to me that if the failure to make punctual and regular payment arises from any of the specified causes, a notice will be required unless the Charterers’ intention was to make a payment which involved a calculation of a deduction that was made in bad faith. I have reached that conclusion for the following reasons.

Firstly, it seems to me that the focus of the relevant part of the clause which, in effect, requires a notice unless the Charterers intended to fail to make a punctual and regular payment, is on the Charterer’s intention with regard to the timing and the regularity of the payment. The Charterers must lack the intention to pay on time or to make a regular payment. The focus is not on whether, when they acted as they did, they did so intentionally. It is, in truth, difficult to imagine a payment of hire the amount of which has been reduced by a deduction which does not involve a deliberate calculation and consequential payment. To adapt the words used by the arbitrators in the 2003 arbitration there must be few cases where charterers do not have “every intention of making the payment they actually made”.

Secondly, the clause in question is one which provides a measure of relief from what could be a most unjust forfeiture. The Court should, in my judgment, be disposed to interpret it, where it properly can, in a manner beneficial to the Charterers.

Thirdly there is substance in Mr Karia’s submission that, for practical purposes, only the construction adopted in The Libyaville would avoid reading clause 62 out of the Charterparty so far as underpayments were concerned. The law already protects Charterers when making what turns out to be an unjustified deduction if it is made reasonably and in good faith. In such a case owners cannot withdraw the vessel. If the Owners’ construction is adopted, no warning notice would be required in the case of a timeous payment, if a deduction was made in good faith but unreasonably, provided that the deduction was deliberate. So clause 62 would add no greater protection. Yet clause 62 was plainly intended to apply to underpayments because it applies if there is a failure to make both a punctual and a regular payment.

Fourthly, and by no means least, there is the decision in The Libyaville itself. It has stood for 35 years. I would hesitate, in such circumstances, to depart from it. If I was convinced that it was wrong I would do so. But in my judgment it is not.

I shall accordingly dismiss the appeal.