PROGRESS BULK CARRIERS LTD v TUBE CITY IMS LLC (THE "CENK K")

[2012] EWHC 273 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Cooke, 17 February 2012

Charterparty - Economic duress - Repudiatory breach - Offer by owners to substitute the vessel - Pressure of owners for waiver of all claims by charterers - Charterers agreeing under protest - Meaning of "illegitimate pressure" - Whether charterer's settlement agreement is voidable by duress

This was an appeal of the owners (of Cenk K) against an arbitration award. The owners concluded a charterparty with the charterers including an agreed laycan which gave no right to substitute the vessel. The identity of the performing vessel was important to the receivers of the charterers whose approval was required under the sale contract entered into between them and the charterers if the vessel was to be substituted. The sale contract provided for a final shipment date. After the charterparty was concluded, the owners indicated they would like to substitute the agreed vessel for another with a later laycan. Without informing the charterers, they fixed Cenk K to another charterer and that was subsequently discovered by the charterers. The owners then conceded to the harterers that they made a mistake and would find an alternative vessel and compensate them. The owners proposed a substitute vessel and the charterers conveyed its details to their receivers seeking an extension of shipment date. The receivers stated they would agree if there was a reduction of US$8 pmt in the price agreed. The charterers held the owners responsible for this loss which they would suffer. The owners offered a discount of US$2 pmt. The charterers informed the owners that they accepted the substituted vessel with a US$2 discount for the cargo but reserved their rights in respect of damages arising out of the owners' breach of the charterparty. The sale contract with the receivers was accordingly amended and a later shipment date was agreed. The same day owners requested the charterers to waive all their claims arising out of the nomination of the substitute vessel outside the contractual laycan and its late arrival. The charterers replied they were forced to accept the owners' terms under protest. The matter was brought to arbitration by the charterers and the arbitral tribunal decided that the charterers' settlement agreement was voidable by economic duress. The owners appealed.