Ship dispute steams towards Lords

Roger Pearson reports on limitation clauses in respect of shipping disputes

A House of Lords appeal is to be mounted in a case which will probe the application of limitation clauses in respect of shipping disputes. The case centres on an arbitration decision that a ship's owners, although entitled to indemnity in respect of claims against them were not entitled to a pay-out because an amendment to their claim was 'time barred'.

Triad Shipping Co is fighting to claim indemnity from Stella Chartering and Brokerage over claims which followed a visit by its vessel, 'Island Archon', to Iraq. Stella had chartered the vessel under a time charter party on New York Produce Exchange form. The charter party entitled them to take 'Island Archon' to Iraq. However, in Iraq it became the subject of claims, said by Triad to be false, for loss or damage.

The claims were settled by the vessel's Iraqi agents who then claimed the sums paid from Triad.

Triad then claimed it was entitled to indemnity from Stella. When the matter reached arbitration, the arbitrator agreed that although the charter party contained no express right of indemnity there was an implied right. However, he dismissed the claim on the grounds that an amendment was required and this was time-barred.

In March 1993 the Commercial Court allowed an appeal against that decision and remitted the final award to the arbitrator for reconsideration. That decision was upheld by the Court of Appeal in June 1994. Stella has now been given leave by the House of Lords to challenge the Appeal Court ruling.