Summit Investment Inc v British Steel Corporation (The Sounion) [1987] 1 Lloyd’s Rep 230
The Court of Appeal considered how an old fuel-cost clause applied to a modern vessel’s domestic equipment.
Facts and issue
The dispute concerned the vessel Sounion, chartered on the New York Produce Exchange form. The charterers sought reimbursement for diesel oil used for domestic consumption by the officers and crew.
Clause 20 allocated to the owners the replacement cost of fuel used while the vessel was off hire. It separately covered fuel for cooking, condensing water, and “grates and stoves”. The question was whether that domestic-use provision extended beyond cooking and heating.
Law Teacher writing support
Writing a law essay?
We choose a writer who is an expert in your area of law and qualified to at least the academic level you select. Most of our writers hold a master’s degree or PhD, have teaching experience, or both.
Send us your question and, if you wish, any marking criteria. We’ll write an essay to your instructions.
The decisions
A majority of the arbitrators favoured the broader interpretation. The first-instance court preferred the minority arbitrator’s narrower approach. The Court of Appeal restored the majority’s interpretation.
Reasoning and outcome
The court considered the wording’s historical setting. When the standard form originated in 1913, ships used coal, and grates and stoves served the crew’s domestic needs. The form retained that terminology despite changes in ships and their equipment.
Read in that context, the clause covered fuel for all the crew’s domestic purposes, including air conditioning. The owners’ responsibility was not confined to fuel used in equipment literally described as a grate or stove, or only to cooking and heating.
Law report: The Sounion, [1987] 1 Lloyd’s Rep 230, Court of Appeal.
