ENE KOS V PETROLEO BRASILEIRO SA (PETROBRAS) (THE "KOS")

[2009] EWHC 1843 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Andrew Smith, 23 July 2009

Charterparty (time) - Vessel withdrawn by owners for failure to pay hire - Claims against charterers for use of ship and bunkers while cargo remained on board and unloading - Causation of loss - Costs - Claim for expenses in maintaining a bank guarantee - Meaning of "costs of or incidental to proceedings"

 By a charterparty on Shelltime 3 form dated 2 June 2006, the claimant owners chartered the VLCC M/T Kos to the defendant time charterers for 36 months, 15 days molcopt. The market rate of hire, according to owners, for such a vessel at the time was US$155,407 per day. The charterers failed to pay hire for the ship and she was lawfully withdrawn from service by the owners. Charterers made arrangements to have the cargo offloaded but there was a delay of 2.64 days until the cargo was fully offloaded. In the meantime, charterers extracted a bank guarantee from owners in respect of a claim for damages for wrongful withdrawal, owners undertaking not to arrest the vessel or her sisterships, not to initiate proceedings other than in London and to pay sums to be agreed for wrongful withdrawal up to a ceiling amount. In these proceedings, owners sought compensation for sums in respect of: (i) the detention or use of the ship while the charterers' cargo remained on board after the ship was withdrawn; (ii) bunkers consumed while the charterers' cargo remained on board after the ship was withdrawn; (iii) bunkers consumed in unloading cargo; and (iv) expenses incurred in providing and maintaining a bank guarantee upon the charterers' assertion that the withdrawal was wrongful so that they were entitled to security for their claim.