Saturday, June 22, 2024

Partial Final Award- Hire payment “without discount” and equitable set-off defence

Several disputes arose under a contract for the vessel’s services off the coast of Nigeria and were referred to arbitration in London. The present award was concerned solely with the discrete issue of the claim for unpaid hire made by the Owners. The Charterers admitted that hire in the sum claimed has not been paid but asserted a defence by way of equitable (or transaction) set-off regarding a sum counterclaimed. The tribunal did not seek finally to determine the merits of the counterclaim – that remained to be determined later — but merely whether it was available as a set-off. If it was, the claim for hire must await determination along with the other issues in the case; if it is not, the hire should have been awarded now, through a Partial Final Award, together with contractual interest.

Part of the relevant charter term stated, ” Payments of Hire, bunker invoices and disbursements for the Charterers’ account shall be received within the number of days stated … in full without discount ..”

One of the Owners’ arguments was that ‘hire was expressly payable “without discount” and thus no set-off was permissible.’

The tribunal rejected this argument and held that:

We think it axiomatic in English law that if parties wish to exclude generally available common law rights, they must do so in clear terms. We do not consider that the term “without discount” has the requisite level of clarity to exclude the right of equitable set-off. There is a variety of well-known contractual phrases which may exclude the right of set-off and “without discount” is not one of them.

The tribunal rejected most of the owners’ arguments (this post does not mention all of the arguments) but, for other reasons, concluded that the defence of equitable set-off was not available as a defence to the claim for hire in this case.

Partial Final Award, 8 January 2016

Note: for more information about the other Owners’ arguments and discussion on the authorities, the reader can check on Jus Mundihttps://jusmundi.com/en/.These awards mostly come into the public domain through enforcement under the NYC 1958.

Readers can check as well the recent decision on hire deductions and anti “set-off provisions” : Fastfreight Pte Ltd v Bulk Trident Shipping Ltd (Re Arbitration Act 1996) [2023] EWHC 105 (Comm) (24 January 2023) (bailii.org)

Related Articles

Latest Articles