“Whilst during the first two weeks of October Tsavliris and I had been hoping that matters would be resolved without the need for legal action, particularly following the meeting on 30th September and the Memorandum obtained as a result, by 13th October there was now clearly no alternative to proceed in a more aggressive manner…”
“As already noted, this view did not find its way into Mr Moloney’s contemporaneous report to his clients. It is manifestly at odds with the expert evidence. It is unwarranted on a fair consideration of the facts. While I have no doubt that the settlement – which Mr Moloney did much to achieve – played a very important role in securing the release of the vessel, I am quite unable to accept that the legal proceedings played no or no material role; to the contrary, I think that the Karachi proceedings did play a material role in securing the release of the vessel. It is striking that even after the settlement was in place, the vessel (together with the other vessels in question) remained unreleased; all the vessels were, however, released following the issue of contempt proceedings…That there had been foot-dragging on the part of the KPT seems unfortunately plain; that both the settlement and the pursuit of legal remedies served to overcome it, is in my judgment established.”
“Redelivery: Dropping off last pilot Fujairah roads after release by charterers or their authorised representative. Period/Trading Limits: Up to 20…days in charterer’s option…for transhipment(s) of up to a full cargo of crude oil from forward and aft sections of crude oil tanker ‘Tasman Spirit’ presently lying aground Keamari channel near Karachi, Pakistan for delivery/discharge to one safe berth(s) always afloat Pakistan/Arabian Gulf range in charterer’s option or mutually agreed safe port(s) or place(s)… Charterers to arrange, provide and pay for permits as required by the Pakistan and other authorities in order that ‘SEA ANGEL’ can perform under this charter. Any taxes and/or dues on hire and/or cargo and/or vessel to be for charterers’ account and to be settled directly by them. Contract: Terms ‘SHELLTIME 4’ time charter party, suitably amended to include the following additional clauses:- [The so-called “rider clause”]: It is agreed and understood that any responsibility, costs and any expenses which may arise following the removal of the crude oil cargo from the crude oil tanker ‘TASMAN SPIRIT’ will be for the account of ‘TASMAN SPIRIT’s’/charterers’ interests. It is further agreed and understood that owners of crude oil tanker ‘TASMAN SPIRIT’/charterers will provide directly to third party guarantees in relation to any potential cargo claim keeping free from liabilities the M/T ‘SEA ANGEL’, her master and owners except as a result of wilful neglect on behalf of owners, master or crew.”
“(i) The Contractor shall be entitled to terminate the services under this SCOPIC clause and the Main Agreement by written notice to the owners of the vessel with a copy to the SCR [the shipowner’s casualty representative] (if any) and any special Representative appointed if the total cost of his services to date and the services to fulfil his obligations hereunder to the property (calculated by means of the tariff rate but before any bonus conferred by clause 5(iii) hereof) will exceed the sum of (a) The value of the property capable of being salved; and (b) All sums to which he will be entitled as SCOPIC remuneration. (ii) The owners of the vessel may at any time terminate the obligation to pay SCOPIC remuneration after the SCOPIC clause has been invoked under sub-clause 2 hereof provided that the Contractor shall be entitled to at least 5 clear days’ notice of such termination. In the event of such termination the assessment of SCOPIC remuneration shall take into account all monies due under the tariff rates set out in Appendix ‘A’ hereof including time for demobilisation to the extent that such time did reasonably exceed the 5 days’ notice of termination. (iii) The termination provisions contained in sub-clause 9(i) and 9(ii) above shall only apply if the Contractor is not restrained from demobilising his equipment by Government, Local or Port Authorities or any other officially recognized body having jurisdiction over the area where the services are being rendered.”
“Sub-clause (iii) provides that the above SCOPIC provisions as to termination shall only apply if the contractor is not restrained by Government, Local or Port Authorities (or any other officially recognised body) having jurisdiction over the area where the services are being rendered. Thus a third party can prevent either of the parties exercising their right to terminate. In that event the services continue and SCOPIC remuneration continues to be earned. Government intervention is commonplace where there is perceived to be a threat to the environment from a particular casualty. This can take the form of the arrest of the casualty, her crew, the salvors’ tug(s), crew(s) and salvage officers unless and until the littoral interests are provided with suitable guarantees in the event of pollution. If no such guarantees are forthcoming the relevant authorities are likely to seek to compel the contractors to continue with their services to the extent necessary to obviate the threat.”
“On occasions Tsavliris salvage tugs were assisting casualties only to find themselves arrested or detained for lengthy periods through no fault on our part.”
“41. The defendants say and, in my judgment, have a realistic prospect of success in arguing that the risk of a vessel being detained by port authorities for security in respect of someone else’s obligations to pay for pollution damage is not reasonably foreseeable.”
“95. What is the true scope of this evidence? As is it seems to me: (i) At least in a case involving pollution or the risk of pollution, perhaps a fortiori in the waters of a state not party to CLC, a salvage contractor is exposed to the risk of governmental intervention and unreasonable detention of its craft or equipment. (ii) Such is the inevitable conclusion to be drawn from the Tsavliris 2003 status statement, even allowing for the element of self-promotion in documents of this nature. This conclusion likewise accords with the industry view, found in SCOPIC clause 9(iii) and, for completeness, with the observations in Brice (set out above) relating to that clause. (iii) If this conclusion is well-founded, it can make no difference in the present context whether the craft or the equipment deployed in the salvage operation are owned by the salvor or chartered in. To the port authority, any such distinction will be a matter of indifference. (iv) The relevant risk is unreasonable detention at the hands of port or other local authorities. While I accept that there is a difference between an unreasonable requirement to remain so as to guard against some asserted (but unfounded) threat and an unreasonable detention to secure a claim against a third party (the casualty interests), these strike me as variants on the same theme – rather than as entirely distinct risks. Could it make all the difference to risk allocation here if the port authority capriciously detained the vessel with a view to prolonging the presence of Tsavliris as opposed to capriciously detaining the vessel to secure a claim against the casualty interests? I do not think so. In both cases, the underlying cause of the detention would be local whims, pressures or “politics”; in both cases, the essence of the matter would be the same: the risk of lengthy and, by definition, unreasonable detention of Tsavliris craft or equipment through no fault on its part. 96. It follows, in my judgment, that nothing in the nature of the detention in the present case leads me to treat it as other than an incident of the salvage operations in which Tsavliris was engaged. Viewed in this light, the risk of unreasonable detention of the vessel at the hands of the KPT must be regarded as, objectively, forming part of the matrix of the charterparty…”
“In commercial and contractual terms, Tsavliris assumed the responsibility of making the arrangements necessary for this sub-contracted vessel to enter Pakistan, operate there, and depart Pakistan; see, apart from cl 7, the various clauses as to permits, taxes and dues found in the fixture recap, set out above.”
“To conclude as of mid-October that the charterparty was frustrated must involve the assumption that either the Pakistani Court could not grant effective relief or that it could not grant effective relief other than after a period of inordinate delay. It is, with respect, a strong thing to make such an assumption with regard to the Court of a friendly foreign state. In my judgment the evidence does not warrant any such conclusion. Plainly, if effective and timely relief could be anticipated, the charterparty could not yet be regarded as frustrated. (i) While, as appeared from their evidence, both Mr Hall and Mr Constantinides had made assumptions as to the speed of Pakistani Court proceedings, neither had any firm basis for their views – other than a caution derived from experience of operating internationally. Certainly, no contemporaneous inquiries had been made of Orr Dignam in this regard. (ii) Against this background, there is no basis for displacing the expert evidence as to Pakistani law and practice, summarised above. While I am unable – at least in the circumstances of this case – to accept the Tsavliris expert’s view that an interim order of a mandatory nature could have been obtained within a “couple of days”, I see no reason to doubt the view of the Claimants’ expert that a timescale of some [4]-6 weeks could be anticipated. Hindsight serves to confirm the realistic nature of this opinion. (iii) Pausing there, the commencement of proceedings in mid- October 2003, whether by Tsavliris or through the Claimants (if tactical considerations suggested a more favourable wind for proceedings in which Tsavliris were not claimants), could accordingly be anticipated to produce an outcome within the timescale contemplated by Mr Constantinides for achieving a commercial settlement. Of course there would be a risk of appeals but the existence of such a risk would not, in my view, have justified the conclusion in mid-October that timely and effective relief was unlikely to be obtained.”
“…it is sufficient to underline a key distinction between that case and this. In Tatem v. Gamboa, there was no prospect of recourse to any court to obtain the release of the vessel. As discussed, here, the Pakistani Court was available.”
“106. Conclusion: I have reached the clear conclusion that Tsavliris, upon whom the burden rests, has not made good its case that there was a frustrating event at any relevant time. There was not so radical or fundamental a change in the obligation assumed by Tsavliris as to establish frustration. In summary: (i) I accept that the KPT’s detention of the vessel resulted in a far more onerous charterparty than Tsavliris had contemplated. By itself, that is insufficient to make good a case of frustration. (ii) I do not accept that prior to about the 13th – 18th October, there was any realistic case of frustration founded on probable delay. Until then, the prospective length of delay was, at best, speculative. (iii) I do accept that as of about the 13th – 18th October, there was a realistic argument to be advanced that the probable length of delay, compared to the unexpired period of the charterparty, meant that the charterparty was frustrated. (iv) However, I regard that important feature of the case as outweighed by other features of the case, especially taken cumulatively: namely, the risk, in the salvage context, of unreasonable port authority detention forming part of the contractual setting; the decision by Tsavliris to opt in the first instance for a negotiated solution; the sphere of responsibility assumed by Tsavliris under the charterparty. (v) Any remaining doubts, in particular as to the prospective extent of the delay, were to my mind, put to rest by the striking feature of the case that, as of about the 13th – 18th October, no attempt had yet been made to invoke the assistance of the Pakistani Court to obtain the release of the vessel. No basis has been established for the necessary premise underlying the Tsavliris case that effective and timely relief could not be anticipated from the Pakistani Court – not least, taking into account the timescale disclosed by considerations as to delay in a salvage context and Tsavliris’s own assumption as to the length of time likely to be required for its preferred commercial solution.”
“…frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do.”
“Frustration of a contract takes place when there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance.”
“In the first place, the doctrine has been developed by the law as an expedient to escape from injustice where such would result from enforcement of a contract in its literal terms after a significant change in circumstances. As Lord Sumner said, giving the opinion of a strong Privy Council in Hirji Mulji v. Cheong Yue Steamship Co. Ltd. [1926] A.C. 497, 510: “It is really a device, by which the rules as to absolute contracts are reconciled with a special exception which justice demands.”… Secondly, in the words of Lord Wright in the Cricklehood Property case [Cricklewood Property and Investment Trust Ltd v. Leighton’s Investment Trust Ltd[1945] AC 221 ] at p. 241: “…the doctrine of frustration is modern and flexible and is not subject to being constricted by an arbitrary formula.”
“The object of the doctrine was to give effect to the demands of justice, to achieve a just and reasonable result, to do what is reasonable and fair, as an expedient to escape from injustice where such would result from enforcement of a contract in its literal terms after a significant change in circumstances…”
“But in others, where the effect of that event is to cause delay in the performance of contractual obligations, it is often necessary to wait upon events in order to see whether the delay already suffered and the prospects of further delay from that cause, will make any ultimate performance of the relevant contractual obligations “radically different,” to borrow Lord Radcliffe’s phrase, from that which was undertaken under the contract. But, as has often been said, business men must not be required to await events too long. They are entitled to know where they stand. Whether or not the delay is such as to bring about frustration must be a question to be determined by an informed judgment based upon all the evidence of what has occurred and what is likely thereafter to occur. Often it will be a question of degree whether the effect of the delay suffered, and likely to be suffered, will be such as to bring about frustration of the particular adventure in question. Where questions of degree are involved, opinions may and often legitimately do differ. Quot homines, tot sententiae. The required informed judgment must be that of the tribunal of fact to whom the issue has been referred. That tribunal, properly informed as to the relevant law, must form its own view of the effect of that delay and answer the critical question accordingly. Your Lordships’ House in Tsakiroglou & Co. Ltd. v. Noblee Thorl G.m.b.H. [1962] A.C. 93, decided that while in the ultimate analysis whether a contract was frustrated was a question of law, yet as Lord Radcliffe said at p. 124 in relation to that case “that conclusion is almost completely determined by what is ascertained as to mercantile usage and the understanding of mercantile men.”
“It is true that in many of the cases there is found the expression “unforeseen circumstances”, and it is argued that “unforeseen circumstances” must mean circumstances that could not have been foreseen. But…it makes very little difference whether the circumstances are foreseen or not. If the foundation of the contract goes, it goes whether or not the parties have made a provision for it.”
“ ‘foreseeability’ will support the inference of risk-assumption only where the supervening event is one which any person of ordinary intelligence would regard as likely to occur, or…the contingency must be ‘one which the parties could reasonably be thought to have foreseen as a real possibility.’ ” ”
“I do not for my part see that these references to justice or injustice introduce any further factor. If the unexpected event produces an ultimate situation which, as a matter of construction, is not within the scope of the contract or would render performance impossible or something radically different from that which was undertaken by the contract, then it is unjust that the contracting party should be held to be still bound by the contract in those altered circumstances. I approach the facts of this case on the footing that the test to be satisfied is that explained by Lord Reid and Lord Radcliffe in the passages set out above.”