Oil Tanker Freed from Anchor as High Court Breaks Commercial Deadlock

The high seas may be wild and uncontrollable, but they are not lawless. In one case that proved the point, the High Court broke a commercial impasse that had left an oil tanker drifting at anchor thousands of miles from her home port for almost a year.

The owners of the vessel claimed to be owed about $7.7 million in hire charges by the owners of her cargo, 50,000 metric tons of crude oil. The dispute reached a head as the vessel came to anchor off a Caribbean island and her owners arrested her cargo, in exercise of a contractual lien enshrined in the relevant charterparty.

The vessel had remained immobile for about 10 months, with her owners continuing to bear the costs of keeping her afloat and paying and feeding her crew. The dispute had been placed before a panel of arbitrators in London, but that process and the enforcement of any award would take a considerable time, during which the vessel and her crew would remain in limbo.

In those circumstances, and with the permission of the arbitrators, the ship’s owners applied to the High Court under Section 44 of the Arbitration Act 1996 for an order that her cargo be sold. The claim was resisted by the cargo owners on the basis that the cargo was not perishable and was not itself the subject of the arbitration proceedings.

In granting the order sought, however, the Court found that there were good reasons for directing a speedy sale of the cargo. With hire charges mounting at a rate of $29,000 per day, the vessel had been redundant for months and was likely to remain so for many more unless the Court intervened. Converting her cargo into money would enable her redeployment and would cause little or no prejudice to the cargo owners in the arbitration.