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"………….."
Charterparty dated 20th May 2000
"……………"
Charterpartv dated 20th May 2000
REASONS FOR AND FORMING PART OF THE INTERIM FINAL ARBITRATION AWARD
1. This arbitration concerned two bareboat charterparties between the same parties that raised virtually identical issues. Consequently, although it was necessary to publish two separate awards, it was appropriate to provide common reasons.
2. The arbitration was an extremely unusual one. The Owners of the two bareboat chartered vessels alleged that they were entitled to terminate the bareboat charterparties and repossess the vessels on the grounds that, inter alia, the charterparties were fraudulent and the Charterers had failed to pay hire. It was the Charterers' case that they had repeatedly tried to pay hire in accordance with the provisions contained in the charterparties, but their remittances were returned by the Owners' bank. Far from accepting that they had failed to perform their charterparty obligations, it was the Charterers' case that it was the Owners who had wrongfully interfered in their use of the vessels and terminated the perfectly legal charterparties without proper justification.
3. The facts underlying the allegations of both parties were often far from straightforward. I received voluminous submissions and supporting documentation from the London solicitors acting on behalf of the Charterers and the Istanbul representative of the Owners. However, the documentation that was adduced in evidence was not always comprehensive. Sometimes a whole run of correspondence was not adduced in evidence or sometimes only part of a document was disclosed. However, the parties were anxious that I should proceed to my award on the basis of the documentary evidence and submissions that had been adduced. Having worked my way through the documents several times, I was satisfied that I could properly identify the crucial events that had occurred, even if the motivation of the parties was not always clear or explicable. Given the fact that the main events between the parties could be identified, I concluded that I should properly proceed to my awards, even if there were some marginal matters that were not completely explained by the documentation. In order to maximise the information available to me, I considered it appropriate to take into account documents served late in the proceedings (and arguably out of time). I also took into account letters that had not been correctly numbered in the record of outgoing correspondence at the Owners, ………………. Shipping, although that did not necessarily mean that I considered that the letters bound the company - that was a separate issue that had to be considered in each case.
4. Both the "………….." and the "……….." were built in Russia in 1987. They are single deck bulk carriers, each with a total deadweight of 1,750 metric tons.
5. On 26th September 1997 bareboat charterparties on amended Barecon 89 forms were concluded in respect of both vessels by …………… Shipping Co. as owners and …………….. Ltd. as bareboat charterers (the "…………… charterparties"). The rate of hire under both charterparties was US$382.00 per day. The vessels should have been redelivered under those charterparties in November 2001.
6. On 20th May 2000 bareboat charterparties on amended Barecon 89 forms were concluded in respect of both vessels by the Respondents, ………….. Shipping Co., as owners, and the Claimants, …………. Shipping Ltd., as bareboat charterers, (the "………. charterparties"). The charterparties were for 5 years at a daily hire rate of US$300.00. Delivery was to be on 24th May 2000, in other words some 5 months before the expiry of the ………… charterparties. For the sake of convenience, the relevant parties will generally be referred to as "……………. Shipping", "………….." and "…………….".
7. The charterparties dated 20th May 2000 were signed on behalf of the Owners, ……………. Shipping, by a Mr. Tryakhov. He had been appointed on 22nd May 1998 as the temporary administrator of ………….. Shipping. By a decision dated 23rd October 1998 the Perm Regional Arbitration Court confirmed his appointment as external administrator. This was based on a petition by ………..Shipping Co. for the bankruptcy of …………… Shipping.
There was considerable debate in the submissions about the powers of Mr. Tryakhov and whether he had authority to conclude the ……… charterparties and/or whether ………… could reasonably have assumed that he had authority to conclude the charterparties on behalf of the ……… Shipping. It seems that at the time there was also considerable antagonism between Mr. Tryakhov and the ………… Shipping Board of Directors. He replaced them when he was appointed as the external administrator on 23rd October 1998 and, as explained in paragraph 12 below, they in turn were reinstated and terminated his authority on 2nd June 2000 after the bankruptcy proceedings had been discontinued. The legality of the …….. charterparties was dealt with in a letter/fax of 18th May 2000 sent by Mr. Tryakhov to Mr. V.A. Kuvalin of ……….. A free translation of the letter/fax reads:-
"Further to your enquiry regarding ownership of m/v "…." and "……." and also possible claims after termination of external administration of "………… Shipping Company" I would like to inform you as follows.
During the investigation of a criminal case brought by Public Prosecution Office of Perm region against Antonov M.A. In respect of a large fraud it was established that m/v "……." and "………" belonged to "………. Shipping Company". This fact was carefully concealed by Antonov M.A on the pretext of the above vessels supposedly being transferred to companies called "……………" and "………" as a contribution to their authorised capital. The right of ownership of these vessels by "……….. Shipping Companies" is confirmed by the relevant documents. Therefore, the forthcoming signing of bareboat charter agreements on the agreed terms is absolutely lawful.
Besides, I would like to inform you that Ural transport public prosecutor has presented petitions to invalidate the transfer of m/v "……." and "……." as a part of authorised capital of "………." and "………….". The case will be heard on 2-6 October 2000 in Perm regional Arbitration Court, Russia".
9. The administration under the applicable bankruptcy legislation was apparently successful because in a decision dated 29th May 2000 the Perm Regional Arbitration Court approved an amicable agreement between ………… Shipping and its creditors. It discontinued the bankruptcy petition and confirmed that the administrator should continue to fulfil his obligations until a new manager had been appointed.
10. The Charterers, …….., relied upon a fax of 20th May 2000 which they alleged Mr. Tryakhov had sent to …………. The fax read, in free translation,:-
"Dear Mikhail Yakovlevich!
Due to the termination of the contracts between JSC "Shipping company "…….. shipping" and ……… Shiping Ltd. in respect of the mv "……." and mv "……." dated 26/09/97 resulted from non-payment of the bareboat charter party hire, please make all necessary arrangements to deliver the aforesaid vessels to Messrs "…….. Shipping Ltd." (Head office: 11 Kondili Str., 16675 Glyfada, Athens, Greece ph.:01 8982201, fax: 01 898 2241) till 24/05/2000."
11. ……….. Shipping challenged the authenticity of the fax, pointing out that it was not included in their official register of outgoing letters and the size of the stamp and the place of the signature were not the usual ones.
12. On 2nd June 2000 there was a meeting of the Board of Directors of ……….. Shipping. The minutes recorded the appointment of Mr. Kirchanov as the acting director general and the termination of the authority of Mr. Tryakhov.
13. The Charterers, …….., adduced in evidence a protocol of delivery and acceptance in respect of the "………." which read:-
"Hereby I, Master of mv Vera M. Pissmeny, acting on behalf of Messrs ………… Shipping Ltd., disponent owners of mv ………, flag of Russian Federation, acting in accordance with the instructions of the vessel's registered owners Messrs ……. Shipping Co. of Perm, Russia has delivered the vessel to Messrs ……..Shipping Ltd., the vessel's new disponent owners in accordance with the bareboat charter party dated 20/05/2002 between Messrs ……. Shipping Co. and Messrs ………..Shipping Ltd.
Signed and sealed onboard mv ……. 20/06/2000.
Accepted on behalf of ……….Shipping Ltd.:
Signature of A. Donets
Stamp of …….. Shipping Ltd. Delivered by: [Stamp of the "……….." and a signature]"
14. The protocol of delivery and acceptance in respect of the "…………" read:-
"Hereby I, Michael Vulfovich, acting on behalf of Messrs ………. Shipping Ltd., disponent owners of mv ………, flag of Russian Federation, acting in accordance with the instructions of the vessel's registered owners Messrs ………. Shipping Co. of Perm, Russia has delivered the vessel to Messrs ………… Shipping
Ltd., the vessel's new disponent owners in accordance with the bareboat charter party dated 20/05/2002 between Messrs ………… Shipping Co. and Messrs ………… Shipping Ltd.
Signed and sealed onboard mv ………… 20/06/2000.
Delivered : [Stamp of …………… Shipping and a signature]
Accepted: [Signature of the master
Stamp of the "…………"]"
15. By a fax of 6th June 2000 Accord advised that they had taken delivery of the "……….." on that day and of the "…….." on 2nd June 2000. They asked for invoices for hire payment in order to settle them in accordance with the terms of the charterparty. On 8th June Mr. Tryakhov faxed a hire invoice to ……. in Athens in respect of hire for the "…….." from 2nd June to 2nd July 2000 in the amount of US$9,000 and in respect of hire for the "……." from 6th June to 6th July 2000 in the amount of US$9,000.
16. On 9th June …….. tried to remit US$9,000 in respect of the "……….." and on 16th June they tried to remit US$9,000 in respect of the "……….". However, both remittances were returned at the request of the beneficiary bank. A further unsuccessful attempt to remit hire in respect of the "…….." was made on 23rd June. A complete set of correspondence was not adduced in evidence, but there were messages from ………. querying why the hire payments were not being accepted. In response to a letter dated 22nd June (which was not adduced in evidence), Mr. Tryakhov, on the same date, sent a letter/fax to Mr. Kuvalin of Accord. He said that Mr. Kirchanov, acting on behalf of the acting general director of ………… Shipping, had performed an illegal operation by returning the money for the "……….". He concluded the fax:-
"Once again I confirm the validity of the bareboat charter agreement dated 24.05.2000 [presumably a typographical error for 20.05.2000] made between ……… Shipping Limited and ………….. Shipping Co. and signed by me in the capacity as the external administrator of …………. Shipping Co."
17. By a fax of 28th June and a telex of 30th June ……….. asked for correct bank details to which the hire should be remitted. In a fax of 4th July Mr. Kirchanov, signing himself as director general of …………. Shipping, advised ………….. that ownership of the two vessels had been transferred to ……………. (in the case of the "…………") and ………….(in the case of the "………..") as the share capital of ………….. Shipping in those two companies. He advised that the management of the vessels had been carried out by ……………….. Shipping & Management Company Limited. He declared that the agreement signed by ……….. with …………. ……….. could not be accepted by ……………
…………. because Mr. Tryakhov had no right to dispose of assets which were not the property of …………………. He suggested a meeting to resolve matters. …………'s response was that they considered the charterparties with them to be legal and binding.
18. On 11th July 2000, …………. Shipping gave a wide power of attorney to Mr. Todor Vassilev for three years to act on its behalf in virtually all matters. He received similar powers of attorney from ………… Shipping Co. Ltd. and …………… Shipping Co. Ltd. In a telex of 26th July addressed to ………., Mr. Vassilev advised them of his authority and copies of the relevant documents were faxed by him to …………..
19. In his telex of 26th July Mr. Vassilev alleged that the bareboat charterparties signed by Mr. Tryakhov were not valid; if ………… wanted to use the vessels, they would have to negotiate new charterparties and in the meantime repairs could not be carried out. (Under the terms of the bareboat charterparties, the repair costs could then have been recovered from the Owners). ………… protested that they were willing to pay hire but they insisted that the original invoice on 6th June would have to be cancelled and a fresh invoice issued.
20. A stand-off then ensued. Mr. Vassilev, on behalf of ………… Shipping, instructed the Russian Maritime Register of Shipping not to inspect the vessels without confirmation from ……… Shipping. The "………." was declared to be withdrawn from the service of the ……….. on 28th October and was arrested in Varna, Bulgaria by ………….. Shipping Co. Ltd. on 30th November 2000. The crew were eventually paid off by ………….. Shipping. Other claims had to be settled and the vessel had to be put into a seaworthy condition to be given permission by the Russian Maritime Register of Shipping for a single passage in ballast to a place of repairs.
21. The "………." was also declared to be withdrawn from the service of ………. on 15th November and was detained in Piraeus on 19th November 2000. Although the arrest was not upheld, Kama River Shipping secured a prohibition on any repairs being carried out pending their arbitration proceedings Apart from the crew, other claimants had to have their claims settled before the vessel was eventually able to sail for repairs.
22. It was ……….. Shipping's case that they were entitled to withdraw the vessels because of the failure of ………. to pay hire, properly maintain the vessels and insure them. They claimed more than US$600,000 in respect of unpaid hire, damages while ……….. denied them possession of the vessels and sums that had to be paid to suppliers and crew members who were exercising liens on the vessel.