The Sea Angel [2007] EWCA Civ 547;
[2007] 2 All ER (Comm) 634; [2007] 2 Lloyd’s Rep 517; [2007] All ER (D) 99 (Jun)
CONTRACT, SALVAGE, FRUSTRATION, CHARTER, DELAY, PORT AUTHORITIES SEIZING VESSEL, RISK OF DETENTION, CHANGE OF CIRCUMSTANCES,
DELAY WITH DELIVERY
Facts
The Sea Angel was a vessel used by Tsavliris to assist in the salvage operations concerning the Tasman Spirit – a tanker loaded with light crude oil, which on 27 July 2003 grounded in or near the approaches of the port of Karachi. On 13 August the Tasman Spirit broke into two, which resulted in a major pollution incident. On 30 July, Tsavliris entered into a contract with the owners of the Tasman Spirit to salve the casualty. The salvage contract contained a compensation, protection and indemnity clause. To fulfil their obligations under the contract, Tsavliris engaged a number of sub-contracted craft, including the Sea Angel, whose task was to act as a shuttle tanker, lightening the Tasman Spirit and carrying oil from her to a larger tanker. Tsavliris chartered the Sea Angel from the claimants on 25 August for up to 20 days. The Sea Angel was delivered to service on 26 August and had to be returned by 15 September at the port of Fujairah. It was impossible to return the Sea Angel because the authorities in Karachi had refused to issue it with the certificate showing that the vessel owed no port fees. In the end, the Sea Angel was returned on 1 January 2004. Tsavliris did not pay any hire fees for the Sea Angel after 18 September 2003. The claimants took legal action to recover the hire fees. The Queen’s Bench ruled in favour of the claimants. Tsavliris appealed to the Court of Appeal.
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Issues
(1) Was there a frustration of the contract by the detention of the Sea Angel in Karachi?
(2) Were the defendants or the plaintiffs to bear the risk of delay due to detention by government authorities?
Decision/Outcome
The Court of Appeal dismissed Tsavliris’s appeal. Rix LJ explained that frustration required consideration of the contract and its context, the parties’ assumptions about risk, the supervening event and the likely effect on future performance. The length of delay alone did not decide the question.
(1) The purpose of the charter had been performed and there was no radical or fundamental change in the circumstances to establish frustration.
(2) The supervening event came at the very end of the charter, so the effect of the detention on the performance of the charter was purely a question of the financial consequences of the delay, which would fall on one party or the other, depending on whether the charter was binding or not.
(3) The charter placed the general risk of delay on Tsavliris, which remained liable for hire until redelivery unless an off-hire exception applied. No such exception was relied on. The salvage terms also showed that detention by authorities was a risk known in the industry.
