IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (QBD)
Claim No. CL-2024-000487
IN THE MATTER OF AN ARBITRATION CLAIM
— and —
IN THE MATTER OF THE ARBITRATION ACT 1996
B E T W E E N:
THALASSA SHIPPING & LOGISTICS SA Claimant / Respondent to this Application
— and —
KORINTHIAN MARITIME HOLDINGS LTD. Defendant / Applicant
RESPONDENT'S NOTICE OPPOSING THE APPLICANT'S APPLICATION TO SET ASIDE AND/OR REMIT THE AWARD PURSUANT TO SECTIONS 68 AND 69 OF THE ARBITRATION ACT 1996
This Notice is filed in response to the application dated 19 August 2024 filed by Harkness Whitford & Co. (SRA No. 614823), of 12 Fetter Lane, London EC4A 1JP, on behalf of Korinthian Maritime Holdings Ltd. (a company incorporated in the Republic of Cyprus, registered at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus; Registration No. HE 387421) (the "Applicant" or "KMH"), seeking to set aside and/or remit LCIA Award No. 224718 dated 28 June 2024 (the "Award") pursuant to sections 68 and/or 69 of the Arbitration Act 1996 (the "Act").
1. INTRODUCTION AND SUMMARY
1.1 This is the Respondent's Notice filed by Thalassa Shipping & Logistics SA ("TSL" or the "Respondent") in opposition to the application dated 19 August 2024 (the "Application") by which Korinthian Maritime Holdings Ltd. ("KMH" or the "Applicant") seeks to set aside and/or remit the Final Award issued on 28 June 2024 by the tribunal constituted under LCIA Case Reference No. 224718 (the "Award"), pursuant to sections 68 and/or 69 of the Arbitration Act 1996 (the "Act").
1.2 The Award was rendered by a distinguished tribunal comprising Sir Malcolm Fenton-Clarke (Presiding Arbitrator, appointed by the LCIA Court), Professor Athena Drakopoulos (Co-Arbitrator, nominated by TSL as Claimant in the arbitration), and Dr. Henrik Dalmqvist (Co-Arbitrator, nominated by KMH as Respondent in the arbitration). Ms. Fiona Beckett served as Tribunal Secretary throughout the proceedings. The tribunal conducted a full evidentiary hearing over ten days, received extensive written and oral submissions from both parties, and issued a detailed, fully reasoned Final Award running to 287 pages.
1.3 The Award ordered KMH to pay to TSL the total sum of £108,600,000, broken down as follows:
(a) Damages for wrongful early redelivery of M/V *Aegean Fortuna*: £42,300,000;
(b) Outstanding hire and damages for M/V *Crimson Horizon*: £28,150,000 (comprising £4,280,000 in outstanding hire arrears and £23,870,000 in loss of bargain damages);
(c) Restitution of fabricated off-hire deductions for M/V *Volga Spirit*: £2,740,000;
(d) Loss of profit and market differential damages across all three charters: £16,480,000;
(e) Pre-award interest at a rate of 5.25% per annum simple from the various breach dates to the date of the Award: £6,780,000;
(f) Costs: £12,150,000 (comprising LCIA administrative and tribunal costs of £3,240,000 and TSL's legal costs of £8,910,000, both allocated 85% to KMH and 15% to TSL).
1.4 The Award further provides for post-award interest at the rate of 5.25% per annum simple on all unpaid sums from 29 June 2024 until the date of payment.
1.5 TSL's position in summary is as follows: The Application is wholly without merit. KMH's grounds under both section 68 and section 69 of the Act fail, individually and collectively, to meet the high thresholds required by statute and established authority. The Application constitutes nothing more than a thinly disguised attempt to re-argue the merits of the case before this Court, dressed up in the language of serious irregularity and error of law. In substance, KMH seeks to have this Court revisit the tribunal's findings of fact — a course that is impermissible under either section of the Act. The Application should be dismissed in its entirety, with costs awarded to TSL on an indemnity basis.
1.6 It is to be noted that this Court (Mr. Justice Ashworth) has already granted permission to enforce the Award as a judgment of the Court under section 66 of the Act, by order dated 2 August 2024. A worldwide freezing order in the sum of up to £108,600,000 was granted ex parte on 16 July 2024 and continued with modifications following an inter partes hearing on 30 July 2024. An interim third-party debt order was made against Meridian Trust Bank Ltd. on 5 August 2024 and made final on 3 September 2024, resulting in the garnishment of £18,720,000. Parallel enforcement proceedings have been commenced by TSL in Cyprus, Singapore, and the United Arab Emirates. These enforcement steps reflect the urgency of TSL's position and the very real risk of asset dissipation by KMH and its subsidiaries.
1.7 This Notice should be read together with:
(a) TSL's skeleton argument in opposition to the set-aside application, filed contemporaneously with this Notice;
(b) the first witness statement of Nikolaos Papadimitriou dated 14 July 2024, filed in support of the section 66 application and the worldwide freezing order application, together with its exhibits (including the Award and the three charter-party agreements);
(c) the Award itself (LCIA Award No. 224718, dated 28 June 2024); and
(d) the costs submissions filed by TSL in these proceedings.
1.8 TSL's full arguments are developed in its skeleton argument. This Notice sets out the essential factual and legal basis upon which the Application should be dismissed.
2. BACKGROUND FACTS
2.1 The Parties
2.1.1 Thalassa Shipping & Logistics SA ("TSL") is a Société Anonyme organised under the laws of the Hellenic Republic, with its registered offices and principal place of business at 14 Akti Miaouli, 4th Floor, Piraeus 185 35, Greece (Tax Identification No. EL-801456729). TSL was founded in 1987 by the Papadimitriou family and has since grown to become a substantial participant in the international dry-bulk and liquid-bulk shipping markets. As at the date of this Notice, TSL operates a diversified fleet of 34 vessels, comprising bulk carriers, tankers, and container feeders, and recorded annual revenues of approximately €620 million for the financial year ended 31 December 2023. TSL is privately held, with 72% of its equity held by the Papadimitriou Family Trust and the remaining 28% held by Aegean Capital Partners SA, a Greek-registered investment vehicle. TSL's senior management team includes Mr. Nikolaos Papadimitriou (Chairman and Chief Executive Officer), Ms. Elena Stavridis (Chief Financial Officer), Captain Dimitrios Kouretas (Head of Chartering and Operations), and Ms. Ioanna Christodoulou (General Counsel).
2.1.2 Korinthian Maritime Holdings Ltd. ("KMH") is a private limited company incorporated in the Republic of Cyprus under Registration No. HE 387421, with its registered office at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. KMH operates as a vessel-owning and chartering company, controlling a fleet of approximately 18 dry-bulk carriers through a network of single-purpose vehicle subsidiaries incorporated in various jurisdictions, including the British Virgin Islands, Singapore, and Cyprus. KMH is beneficially owned by the Volkov family through a chain of BVI and Cypriot holding structures. The estimated pre-dispute net asset value of the KMH group was approximately USD $280 million. The ultimate beneficial owner and de facto director of KMH is Mr. Andrei Volkov. Other key individuals include Mr. Sergei Volkov (director), Ms. Marina Kazakova (Chief Financial Officer), and Mr. Alexei Demidov (Director of Fleet Operations). As set out in the evidence filed in support of the worldwide freezing order, the KMH group has engaged in a pattern of asset dissipation since the Award was issued, a matter to which TSL returns below at Section 6.
2.2 The Charter-Party Agreements
2.2.1 The dispute underlying the Award arose out of three separate time charter-party agreements entered into between TSL (as charterer) and KMH (as disponent owner) in respect of three dry-bulk vessels:
(a) M/V *Aegean Fortuna* (IMO No. 9784521): a Supramax Bulk Carrier of 58,200 DWT, registered under the flag of the Republic of the marshall Islands. The registered owner of the vessel is Dnepr Shipholding Inc., a BVI-incorporated single-purpose vehicle within the KMH group. The time charter-party in respect of this vessel was signed on 15 March 2019 (the "Aegean Fortuna Charter").
(b) M/V *Crimson Horizon* (IMO No. 9801334): a Handymax Bulk Carrier of 37,500 DWT, registered under the flag of the Republic of Liberia. The registered owner of the vessel is Korinthian Bulkers (Singapore) Pte. Ltd., a Singapore-incorporated subsidiary of KMH. The time charter-party in respect of this vessel was signed on 22 January 2020 (the "Crimson Horizon Charter").
(c) M/V *Volga Spirit* (IMO No. 9756892): a Panamax Bulk Carrier of 76,400 DWT, registered under the flag of the Republic of Cyprus. The registered owner of the vessel is Dnepr Shipholding Inc. The time charter-party in respect of this vessel was signed on 10 June 2021 (the "Volga Spirit Charter").
2.2.2 Each of the three charter-party agreements is governed by English law. Each contains an arbitration clause providing for disputes to be resolved by arbitration under the Rules of the London Court of International Arbitration ("LCIA"), with the seat of arbitration in London, England. TSL entered into each of these charters in reliance upon KMH's representations as to its financial standing and operational capacity, and in the context of a long-standing commercial relationship between the parties dating back to 2017.
2.2.3 KMH was the disponent owner of each vessel. TSL was the time charterer. The combined annual hire payable under the three charters exceeded £28 million, representing a significant portion of TSL's chartering commitments during the relevant period.
2.3 KMH's Repudiatory Breaches
2.3.1 Beginning in mid-2022, KMH engaged in a pattern of repudiatory breach across all three charter-party agreements. The tribunal found, after extensive consideration of the evidence, that KMH's conduct was deliberate and coordinated, apparently motivated by a desire to take advantage of a rising dry-bulk market by freeing its vessels from below-market charter rates.
2.3.2 The breaches found by the tribunal may be summarised as follows:
(a) M/V *Aegean Fortuna* — Wrongful Early Redelivery: KMH wrongfully redelivered M/V Aegean Fortuna to TSL on 18 June 2022, approximately 14 months before the contractual redelivery date. The tribunal found that KMH's purported justifications for early redelivery — including alleged vessel deficiencies and alleged force majeure events — were without foundation and had been fabricated after the event to provide a veneer of contractual justification for what was, in substance, a deliberate repudiation of the charter. The tribunal awarded TSL damages of £42,300,000 in respect of this breach, calculated at the rate of approximately £3,021,429 per month for the 14 months of the unexpired charter period, representing the difference between the contractual hire rate and the available market rate for a comparable substitute vessel.
(b) M/V *Crimson Horizon* — Failure to Pay Hire and Repudiation: KMH failed to pay hire in respect of M/V Crimson Horizon from 1 July 2022 onwards. Hire arrears of £4,280,000 accrued before TSL exercised its contractual right to withdraw the vessel on 15 September 2022. The tribunal found that KMH's failure to pay hire was deliberate and constituted a repudiatory breach of the Crimson Horizon Charter. TSL accepted the repudiation and withdrew the vessel. The tribunal awarded TSL the outstanding hire arrears of £4,280,000 together with loss of bargain damages of £23,870,000, reflecting the difference between the contract rate and the market rate for the unexpired term of the charter, for a total of £28,150,000.
(c) M/V *Volga Spirit* — Fabricated Off-Hire Deductions: KMH made a series of off-hire deductions from the hire payable under the Volga Spirit Charter, totalling approximately £2,740,000, over the period from January 2022 to August 2022. The tribunal found, on the basis of contemporaneous documentary evidence and the cross-examination of KMH's Director of Fleet Operations, Mr. Alexei Demidov, that these deductions were not supported by genuine off-hire events and had been fabricated by KMH's operations team, apparently at the direction of senior management. The tribunal ordered restitution of the full amount of £2,740,000.
2.3.3 In addition to the vessel-specific awards summarised above, the tribunal awarded TSL loss of profit and market differential damages across all three charters in the further sum of £16,480,000, together with pre-award interest calculated at 5.25% per annum simple from the various breach dates to the date of the Award in the sum of £6,780,000.
2.4 The LCIA Arbitration
2.4.1 TSL filed its Request for Arbitration with the LCIA on 14 November 2022, commencing LCIA arbitration No. 224718.
2.4.2 The tribunal was constituted on 8 February 2023, comprising:
(a) Sir Malcolm Fenton-Clarke, as Presiding Arbitrator, appointed by the LCIA Court;
(b) Professor Athena Drakopoulos, as Co-Arbitrator, nominated by TSL; and
(c) Dr. Henrik Dalmqvist, as Co-Arbitrator, nominated by KMH.
2.4.3 Ms. Fiona Beckett was appointed as Tribunal Secretary.
2.4.4 Following constitution of the tribunal, the arbitration proceeded through the usual stages of an LCIA reference: the exchange of statements of case (including TSL's Statement of Claim, KMH's Statement of Defence and Counterclaim, TSL's Reply and Defence to Counterclaim, and KMH's Reply to Defence to Counterclaim); disclosure of documents; the exchange of factual witness statements and expert reports; and pre-hearing preparation including the agreement of a List of Issues.
2.4.5 The evidentiary hearing took place over ten hearing days from 11 September 2023 to 22 September 2023, at the International Dispute Resolution Centre ("IDRC") in London. Both parties were fully represented by their respective solicitors and counsel throughout the hearing. TSL called factual witnesses including Mr. Nikolaos Papadimitriou, Captain Dimitrios Kouretas, and Ms. Elena Stavridis. KMH called factual witnesses including Mr. Alexei Demidov and Ms. Marina Kazakova. Both parties also called expert witnesses on matters of market rates, vessel valuation, and quantum. All witnesses were subject to cross-examination.
2.4.6 Following the hearing, both parties filed extensive post-hearing submissions and costs submissions. The tribunal deliberated and issued the Final Award on 28 June 2024. The Award is a comprehensive, detailed, and fully reasoned document running to 287 pages, addressing each of the claims, defences, and counterclaims raised by the parties.
2.4.7 It is noteworthy that KMH raised no complaint regarding the conduct of the proceedings at any point during the arbitration. KMH did not apply for any adjournment, nor did it raise any objection to the procedure adopted by the tribunal. KMH participated fully and without reservation in every stage of the proceedings.
2.5 Enforcement Proceedings
2.5.1 Since the issuance of the Award, TSL has taken active steps to enforce it. These proceedings may be summarised as follows:
(a) TSL filed its application to enforce the Award under section 66 of the Act on 15 July 2024, under Claim No. CL-2024-000487 in this Court.
(b) Permission to enforce the Award as a judgment of the Court was granted by Mr. Justice Ashworth on 2 August 2024.
(c) A worldwide freezing order in the amount of up to £108,600,000 was granted ex parte by this Court on 16 July 2024, in light of compelling evidence of a real risk that KMH and its subsidiaries would dissipate assets so as to frustrate enforcement. The freezing order was continued with modifications following an inter partes hearing on 30 July 2024.
(d) An interim third-party debt order was made against Meridian Trust Bank Ltd., of 50 Lombard Street, London EC3V 9EA, on 5 August 2024, and a final third-party debt order was made on 3 September 2024, resulting in the garnishment of £18,720,000 held in accounts maintained by KMH and its subsidiary, Korinthian Bulkers (Singapore) Pte. Ltd., at that institution.
(e) Parallel enforcement proceedings have been commenced in the following jurisdictions: (i) Cyprus (Case No. 2247/2024, Nicosia District Court, filed 9 August 2024); (ii) Singapore (Originating Summons No. 872/2024, Singapore High Court, filed 14 August 2024); and (iii) the United Arab Emirates (Case No. 1893/2024, Dubai Court of First Instance, filed 22 August 2024).
2.5.2 KMH has not made any voluntary payment towards the Award since its issuance on 28 June 2024. In this context, KMH filed its Application to set aside and/or remit the Award on 19 August 2024 — the Application now opposed by this Notice.
3. THE LEGAL FRAMEWORK FOR CHALLENGE
3.1 Section 68 — Serious Irregularity
3.1.1 Section 68(1) of the Arbitration Act 1996 provides:
"A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award."
3.1.2 Section 68(2) further provides:
"Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—
(a) failure by the tribunal to comply with section 33 (general duty of the tribunal);
(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67);
(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;
(d) failure by the tribunal to deal with all the issues that were put to it;
(e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;
(f) uncertainty or ambiguity as to the effect of the award;
(g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;
(h) failure to comply with the requirements as to the form of the award; or
(i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award."
3.1.3 The categories of serious irregularity set out in section 68(2)(a) to (i) are exhaustive. An applicant must bring its challenge within one or more of the specified categories. The court has no general residual discretion to set aside or remit an award on grounds of irregularity falling outside section 68(2).
3.1.4 Critically, even where an irregularity falling within one of the specified categories is established, the court may only intervene where it is satisfied that the irregularity "has caused or will cause substantial injustice" to the applicant. This is a demanding test. As the Departmental Advisory Committee on Arbitration Law stated in its Report on the Arbitration Bill (1996) at paragraph 280:
"The test of 'substantial injustice' is intended to be applied by way of support for the arbitral process, not by way of interference with that process. Thus it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the court to take action."
3.1.5 The courts have consistently held that section 68 sets an extremely high threshold for intervention. In Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, [2006] 1 AC 221, Lord Steyn described section 68 as "designed as a long stop, available only in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected." In RAV Bahamas Ltd v Therapy Beach Club Inc [2021] UKPC 8, the Privy Council re-emphasised that section 68 is concerned with "due process" rather than the correctness of the tribunal's decision on the merits.
3.1.6 The requirement of substantial injustice means that the applicant must demonstrate that, but for the irregularity complained of, the tribunal might well have reached a different conclusion on a matter material to the outcome. A mere possibility that a different result might have been reached is insufficient; the applicant must demonstrate that the irregularity had a material impact on the outcome. See Bandwidth Shipping Corp v Intaari [2007] EWCA Civ 998, [2008] 1 Lloyd's Rep 7 at [42]–[44]; Terna Bahrain Holding Co WLL v Al Shamsi [2012] EWHC 3283 (Comm), [2013] 1 Lloyd's Rep 86 at [85]–[87].
3.1.7 Section 68 is not a vehicle for challenging the tribunal's findings of fact, its evaluation of the evidence, or the conclusions it drew from the material before it. As Colman J held in Petroships Pte Ltd of Singapore v Petec Trading and Investment Corp of Vietnam [2001] 2 Lloyd's Rep 348 at [20], "to allow section 68 to be used to mount a challenge to findings of fact reached by the tribunal would be wholly inconsistent with the policy underlying the 1996 Act." The court will not re-try the case or substitute its own assessment of the evidence for that of the tribunal.
3.2 Section 69 — Appeal on a Point of Law
3.2.1 Section 69(1) of the Act provides:
"Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings."
3.2.2 An appeal under section 69 may be brought only with the permission of the court (section 69(2)(b)), unless all other parties agree to the appeal. No such agreement exists in this case. TSL does not consent to any appeal by KMH.
3.2.3 Section 69(3) sets out the conditions that must be met before the court may grant permission to appeal:
"Leave to appeal shall not be granted unless the court is satisfied—
(a) that the determination of the question will substantially affect the rights of one or more of the parties,
(b) that the question is one which the tribunal was asked to determine,
(c) that, on the basis of the findings of fact in the award—
(i) the decision of the tribunal on the question is obviously wrong, or
(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and
(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question."
3.2.4 The conditions set out in section 69(3)(a) to (d) are cumulative: all must be satisfied before permission to appeal may be granted. The threshold is deliberately high, reflecting the policy of the Act to promote finality in arbitration and to limit judicial intervention.
3.2.5 The question must be one of law — not of fact, and not of mixed fact and law. The application of settled legal principles to the facts of a particular case is a question of mixed fact and law, and is not amenable to appeal under section 69. See Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1982] AC 724 at 738 (Lord Diplock); Bunge SA v Nidera BV [2015] UKSC 43, [2015] 3 All ER 1082 at [42] (Lord Sumption).
3.2.6 Where the question is characterised as one of law, the court must be satisfied either that the tribunal's decision is "obviously wrong" or, if the question is one of "general public importance," that the decision is "at least open to serious doubt." The "obviously wrong" test imports a high degree of confidence that the tribunal erred; it is not sufficient that the court might have reached a different view. A decision is "obviously wrong" only where no reasonable arbitrator, properly directing himself as to the law, could have reached the decision in question. See CMA CGM SA v Beteiligungs-Kommanditgesellschaft MS "Northern Pioneer" Schiffahrtsgesellschaft mbH & Co [2002] EWCA Civ 1878, [2003] 1 WLR 1015 at [11]–[15].
3.2.7 It is to be noted that the parties' arbitration agreements incorporate the LCIA Rules. This does not amount to an exclusion agreement for the purposes of section 69(1) of the Act: see Shell Egypt West Manzala GmbH v Dana Gas Egypt Ltd [2009] EWHC 2097 (Comm), [2010] 2 Lloyd's Rep 15. However, the fact that the parties elected to resolve their dispute by LCIA arbitration before an experienced tribunal is a factor weighing against the grant of permission to appeal: see section 69(3)(d) and the court's discretion to consider whether it is "just and proper" to intervene.
3.3 General Principles
3.3.1 The overriding policy of the Arbitration Act 1996, as set out in section 1, is:
*(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; and
(c) in matters governed by this Part the court should not intervene except as provided by this Part.*
3.3.2 Section 1(c) enshrines the principle of minimal curial intervention. This principle is of particular importance in the context of international commercial arbitration, where the parties have chosen to submit their dispute to the judgment of experienced arbitrators rather than the courts, and where the finality of the arbitral award is essential to the efficient functioning of international commerce.
3.3.3 The court will be especially reluctant to intervene where, as here:
(a) the tribunal comprised three experienced and distinguished arbitrators — Sir Malcolm Fenton-Clarke (a former High Court judge and leading international arbitrator), Professor Athena Drakopoulos (a professor of international commercial law and experienced maritime arbitrator), and Dr. Henrik Dalmqvist (a maritime lawyer of longstanding international repute, nominated by KMH itself);
(b) the proceedings were conducted in accordance with the LCIA Rules, with full procedural safeguards, including a ten-day evidentiary hearing with live witness testimony and cross-examination;
(c) the Award is a comprehensive, fully reasoned document of 287 pages, addressing each claim, defence, and counterclaim in detail; and
(d) neither party raised any procedural complaint during the course of the arbitration.
3.3.4 In these circumstances, the presumption of finality attaching to the Award is at its strongest, and the burden on KMH to displace that presumption is correspondingly heavy. As Thomas LJ observed in Bandwidth Shipping Corp v Intaari [2007] EWCA Civ 998 at [36], "the more thorough the arbitral process, the more reluctant the court should be to intervene."
4. KMH'S GROUNDS UNDER SECTION 68 — TSL'S RESPONSE
4.1 Summary of KMH's Section 68 Grounds
4.1.1 In its Application filed on 19 August 2024, KMH raises three grounds of challenge under section 68 of the Act:
(a) Ground 1: An alleged failure by the tribunal to deal with all the issues that were put to it, contrary to section 68(2)(d) of the Act;
(b) Ground 2: An alleged failure by the tribunal to comply with its general duty under section 33 of the Act, constituting an alleged breach of procedural fairness and a denial of KMH's right to be heard, contrary to section 68(2)(a) of the Act; and
(c) Ground 3: An alleged excess of jurisdiction or other irregularity in the conduct of the proceedings, said to fall within section 68(2)(b) and/or section 68(2)(i) of the Act.
4.1.2 TSL addresses each of these grounds in turn below. None of them has any merit, and none of them, even if established (which is denied), caused or will cause substantial injustice to KMH.
4.2 Response to Ground 1: Alleged Failure to Deal with All Issues (Section 68(2)(d))
4.2.1 KMH contends that the tribunal failed to address certain of its defences and counterclaims in the Award, thereby failing to deal with "all the issues that were put to it" within the meaning of section 68(2)(d) of the Act. In particular, KMH alleges that the tribunal failed adequately to address: (i) its defence of force majeure in relation to the early redelivery of M/V Aegean Fortuna; (ii) its set-off and counterclaim for alleged deficiencies in the condition of M/V Crimson Horizon; and (iii) its defence that the off-hire deductions for M/V Volga Spirit were legitimately made under the contractual off-hire clause.
4.2.2 This ground is entirely without merit.
4.2.3 First, the Award is a comprehensive document running to 287 pages. It contains detailed reasoning addressing each of the claims, defences, and counterclaims raised by the parties. The tribunal expressly addressed and rejected each of KMH's principal defences on each of the three charters:
(a) In relation to M/V Aegean Fortuna, the tribunal addressed KMH's force majeure defence at paragraphs 187 to 224 of the Award. The tribunal found, after careful analysis of the relevant contractual provisions, the factual evidence, and the legal submissions of both parties, that the events relied upon by KMH did not constitute force majeure events within the meaning of the charter, and that in any event KMH had failed to comply with the contractual notice requirements. The tribunal further found (at paragraphs 215–218) that KMH's purported force majeure notices had been drafted after the decision to redeliver had already been taken, and were designed to provide retrospective justification for a commercially motivated breach. This was a finding of fact based on the contemporaneous documentary evidence, including internal KMH emails disclosed during the arbitration.
(b) In relation to M/V Crimson Horizon, the tribunal addressed KMH's set-off and counterclaim for alleged vessel deficiencies at paragraphs 248 to 279 of the Award. The tribunal found that KMH had failed to adduce sufficient evidence to support its allegations of vessel deficiency, noting that KMH's own surveyor, Captain Nikolai Petrov, had given evidence that was inconsistent with the contemporaneous survey reports. The tribunal dismissed the counterclaim in its entirety.
(c) In relation to M/V Volga Spirit, the tribunal addressed the construction and application of the off-hire clause at paragraphs 295 to 337 of the Award. The tribunal found that the off-hire clause required, as a precondition to the exercise of the right to deduct, the occurrence of a qualifying off-hire event as defined in the charter, together with timely notification and supporting documentation. The tribunal found that KMH had failed to establish the occurrence of any qualifying off-hire event, and that the deductions were, on the evidence, fabricated — a finding based principally on the cross-examination of Mr. Alexei Demidov and the absence of any corroborating contemporaneous documentation.
4.2.4 Second, even if any issue or argument raised by KMH was not expressly addressed in the Award (which TSL does not accept), this would not amount to a failure to deal with an "issue" within the meaning of section 68(2)(d). The authorities draw a clear distinction between an "issue" — meaning an essential issue that the tribunal was required to determine in order to decide the case — and an "argument" or "point" — meaning a particular line of reasoning or subsidiary contention advanced in support of a party's case on an issue. The tribunal is required to deal with all essential issues, but it is not required to address every argument or point raised by the parties. See Petrochemical Industries Co (KSC) v The Dow Chemical Company [2012] EWHC 2739 (Comm), [2012] 2 Lloyd's Rep 691 at [16]–[24] (Flaux J, as he then was); Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd's Rep 83 at [56] (Thomas J, as he then was).
4.2.5 In Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 (Comm), [2005] 2 Lloyd's Rep 508, Aikens J (as he then was) stated at [10]:
"An 'issue' in the context of section 68(2)(d) means something which is a key or essential issue in the case, as opposed to a point which is merely a step in the reasoning leading to a conclusion on such an issue."
4.2.6 The tribunal addressed and resolved every essential issue in the case. To the extent that KMH's complaint is that the tribunal did not accept or expressly discuss every subsidiary argument advanced by KMH's legal team, that complaint falls far short of the threshold required under section 68(2)(d). A tribunal is entitled to focus its reasoning on the matters it considers material and determinative, and is not required to produce a judgment that addresses every point raised in the parties' submissions.
4.2.7 Third, and in any event, even if (contrary to TSL's primary case) there were any failure to deal with an issue, KMH has failed to demonstrate that such failure caused or will cause it substantial injustice. KMH's defences were considered and rejected on their merits. There is no basis for supposing that, had the tribunal addressed any particular argument at greater length, the outcome would have been different. The evidence overwhelmingly supported the tribunal's findings.
4.3 Response to Ground 2: Alleged Procedural Unfairness (Section 68(2)(a))
4.3.1 KMH contends that it was denied a fair opportunity to present its case, in alleged breach of the tribunal's duty under section 33 of the Act, and that this constitutes a serious irregularity within section 68(2)(a).
4.3.2 This ground is, with respect, unarguable.
4.3.3 The procedural history of the arbitration conclusively demonstrates that KMH was given every reasonable opportunity to present its case. The following matters are particularly pertinent:
(a) Tribunal constitution: The tribunal was constituted on 8 February 2023. KMH nominated Dr. Henrik Dalmqvist as its co-arbitrator. KMH raised no objection to the constitution of the tribunal, and no challenge was brought against any member of the tribunal at any stage.
(b) Written submissions and evidence: A full exchange of written pleadings, witness statements, expert reports, and documentary evidence took place over the course of the arbitration, in accordance with the procedural timetable established by the tribunal. KMH filed comprehensive written submissions at every stage, including a detailed Statement of Defence and Counterclaim, a Reply to Defence to Counterclaim, witness statements from its factual witnesses (Mr. Alexei Demidov, Ms. Marina Kazakova, and others), expert reports on market rates and vessel valuation, and extensive post-hearing submissions.
(c) Evidentiary hearing: A ten-day evidentiary hearing was held from 11 September 2023 to 22 September 2023 at the IDRC, London. Both parties presented witness and expert evidence and conducted full cross-examination of the opposing party's witnesses. KMH's counsel (instructed by Harkness Whitford & Co.) cross-examined each of TSL's witnesses, including Mr. Nikolaos Papadimitriou, Captain Dimitrios Kouretas, and Ms. Elena Stavridis. KMH's own witnesses were likewise subject to cross-examination by TSL's counsel.
(d) Representation: KMH was represented throughout the arbitration by solicitors and counsel of its choice (Harkness Whitford & Co.). KMH's legal representatives participated fully in all procedural stages, including case management conferences, the exchange of submissions and evidence, the evidentiary hearing, and post-hearing submissions.
(e) No procedural complaints: At no stage during the arbitration did KMH raise any complaint of procedural unfairness or any objection to the procedure adopted by the tribunal. KMH did not apply for any adjournment, did not request additional hearing time, did not object to the admission or exclusion of any evidence, and did not apply to the tribunal for any procedural relief. KMH's failure to raise any contemporaneous objection is telling, and is particularly significant in light of section 73 of the Act, which provides that a party who participates in arbitral proceedings without timely objection may lose the right to object.
4.3.4 The tribunal discharged its duties under section 33 of the Act with scrupulous care. Section 33(1) provides:
"The tribunal shall—
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of its opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined."
4.3.5 Both limbs of section 33(1) were satisfied. Each party was given a full and reasonable opportunity to put its case and to challenge the case of its opponent. The procedures adopted were appropriate to the complexity and value of the dispute. There is no basis whatsoever for alleging a breach of the tribunal's duty under section 33.
4.3.6 What KMH is in substance complaining about is not that it was denied a fair hearing, but that the tribunal did not accept its evidence and arguments. That is a complaint about the outcome of the arbitration, not about the process. The fact that a party is disappointed with the result does not give rise to a claim of procedural unfairness. As Popplewell J (as he then was) stated in Terna Bahrain Holding Co WLL v Al Shamsi [2012] EWHC 3283 (Comm) at [85]:
"It is not unfair for a tribunal to reject evidence or arguments which it does not find persuasive. A finding that a witness is not credible is not, without more, evidence of a breach of section 33."
4.3.7 KMH's allegation of procedural unfairness amounts to no more than dissatisfaction with the tribunal's adverse findings of fact — particularly the tribunal's findings that KMH's force majeure defence was fabricated, that its counterclaim for vessel deficiencies was unsupported by the evidence, and that its off-hire deductions were not genuine. These are findings of fact that were open to the tribunal on the evidence, and they are not reviewable under section 68.
4.4 Response to Ground 3: Alleged Excess of Jurisdiction or Other Irregularity
4.4.1 To the extent that KMH raises any ground relating to an alleged excess of jurisdiction by the tribunal (section 68(2)(b)) or any residual irregularity in the conduct of the proceedings (section 68(2)(i)), TSL's response is as follows.
4.4.2 No jurisdictional objection was raised or preserved. Each of the three charter-party agreements contained an LCIA arbitration clause governed by English law with the seat of arbitration in London. KMH participated in the arbitration from its commencement to its conclusion without raising any jurisdictional objection. KMH nominated Dr. Henrik Dalmqvist as its co-arbitrator, filed comprehensive written submissions and evidence, participated in the ten-day evidentiary hearing, and filed post-hearing submissions. At no point did KMH challenge the tribunal's jurisdiction or reserve any right to do so.
4.4.3 In these circumstances, any jurisdictional challenge has been waived by operation of section 73 of the Act, which provides:
"(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection—
(a) that the tribunal lacks substantive jurisdiction, ...
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection."
4.4.4 KMH has not suggested, and could not plausibly suggest, that the grounds of any jurisdictional objection were not known to it at the time it participated in the proceedings. The arbitration clauses were contained in charter-party agreements to which KMH was a party. The scope of the tribunal's mandate was defined by the parties' statements of case and the agreed List of Issues. There is no basis for any claim that the tribunal exceeded its jurisdiction.
4.4.5 As to any alleged irregularity in the conduct of the proceedings falling within section 68(2)(i): this is a residual category that the courts have emphasised is to be construed narrowly and applied only in exceptional circumstances. KMH has not identified any specific irregularity that falls outside the other categories in section 68(2) and is not otherwise captured by Grounds 1 or 2 above. To the extent that this ground is relied upon by KMH as a catch-all, it adds nothing to the Application and should be dismissed.
4.5 No Substantial Injustice
4.5.1 For the avoidance of doubt, and in addition to TSL's responses to each of KMH's individual grounds set out above, TSL submits that even if any irregularity were established (which is denied in the strongest terms), KMH has wholly failed to demonstrate that the irregularity caused or will cause substantial injustice.
4.5.2 The tribunal's findings on both liability and quantum were supported by extensive evidence, including:
(a) the documentary evidence of the charter-party terms, hire payment records, redelivery notices, off-hire notifications, and contemporaneous correspondence between the parties;
(b) the factual witness evidence of witnesses from both sides, tested by cross-examination over ten hearing days;
(c) the expert evidence on market rates, vessel valuation, and the quantification of loss, including competing expert reports from both parties' appointed experts; and
(d) the internal KMH documents disclosed during the arbitration, which provided direct evidence of KMH's commercial motivations for its breaches.
4.5.3 The damages awarded by the tribunal were calculated on conventional English law principles and were well within the range supported by the evidence:
(a) The damages of £42,300,000 for the wrongful early redelivery of M/V Aegean Fortuna reflected the difference between the contractual hire rate and the market rate for the unexpired period of 14 months, calculated at approximately £3,021,429 per month. This was squarely within the range supported by both parties' expert evidence on market rates.
(b) The total award of £28,150,000 for M/V Crimson Horizon comprised the outstanding hire arrears of £4,280,000 (an undisputed arithmetical calculation) and loss of bargain damages of £23,870,000, calculated on the same conventional basis.
(c) The restitution of £2,740,000 in fabricated off-hire deductions for M/V Volga Spirit represented the exact amount of the deductions that the tribunal found to have been improperly made.
(d) The loss of profit and market differential damages of £16,480,000 across all three charters were calculated by reference to the evidence of TSL's chartering expert and were within the range put before the tribunal.
(e) The pre-award interest of £6,780,000 was calculated at 5.25% per annum simple — a conventional rate — from the various breach dates to the date of the Award.
4.5.4 There is simply no basis for contending that but for any alleged irregularity, the tribunal might well have reached a materially different conclusion. The Award reflects the tribunal's thorough and considered assessment of the evidence, and KMH has failed to identify any respect in which a different procedural approach might have led to a different outcome.
5. KMH'S GROUNDS UNDER SECTION 69 — TSL'S RESPONSE
5.1 Summary of KMH's Section 69 Grounds
5.1.1 In its Application, KMH identifies three alleged errors of law upon which it seeks permission to appeal under section 69 of the Act:
(a) Alleged Error 1: That the tribunal applied the wrong legal test in finding that KMH's early redelivery of M/V Aegean Fortuna on 18 June 2022 constituted a repudiatory breach of the charter;
(b) Alleged Error 2: That the tribunal erred in the measure of damages it applied in assessing the loss of bargain claim for M/V Crimson Horizon, resulting in the award of £28,150,000; and
(c) Alleged Error 3: That the tribunal erred in its construction of the off-hire clause in the Volga Spirit Charter and in its characterisation of the off-hire deductions as "fabricated."
5.1.2 TSL addresses each of these grounds below. None of them meets the threshold for the grant of permission to appeal under section 69(3) of the Act.
5.2 No Permission Should Be Granted
5.2.1 The threshold under section 69(3) of the Act is not met in respect of any of KMH's alleged grounds of appeal.
5.2.2 As a matter of generality, each of KMH's alleged "errors of law" is, in substance, a challenge to the tribunal's application of well-settled legal principles to the particular facts of this case. Such challenges raise questions of mixed fact and law, which are not amenable to appeal under section 69. The distinction between a pure question of law and a question of mixed fact and law is fundamental to the operation of section 69, and the courts have consistently held that the application of established legal principles to the facts of a particular case falls on the "mixed" side of the line: see The Nema [1982] AC 724 at 738; Bunge SA v Nidera BV [2015] UKSC 43 at [42].
5.2.3 Even if any of KMH's grounds were properly characterised as raising a question of law (which is denied), the tribunal's decision on each alleged question is not "obviously wrong." The tribunal correctly identified the applicable legal principles in relation to repudiatory breach, the measure of damages for breach of a time charter, and the construction of off-hire clauses, and applied those principles to the facts as it found them. There is no basis for concluding that no reasonable arbitrator, properly directing himself as to the law, could have reached the conclusions reached by this tribunal.
5.2.4 Nor does any question of "general public importance" arise. The legal principles in issue are well established and have been the subject of extensive judicial and arbitral authority over many decades. This is not a case in which the development of the law requires the intervention of the court.
5.2.5 Having regard to all the circumstances, including the parties' agreement to resolve their dispute by LCIA arbitration before an experienced tribunal, it would not be just and proper for the court to grant permission to appeal under section 69(3)(d). The parties chose arbitration precisely because it offers finality and confidentiality; to permit an appeal on the grounds advanced by KMH would be to undermine the very purpose for which the parties selected this dispute resolution mechanism.
5.3 Response to Alleged Error 1: Legal Test for Repudiatory Breach (M/V *Aegean Fortuna*)
5.3.1 KMH contends that the tribunal applied the wrong legal test in finding that KMH's early redelivery of M/V Aegean Fortuna on 18 June 2022 — some 14 months before the contractual expiry date — constituted a repudiatory breach of the Aegean Fortuna Charter.
5.3.2 This contention is without foundation.
5.3.3 The tribunal correctly identified and applied the established English law test for repudiatory breach of a time charter-party. At paragraphs 152 to 186 of the Award, the tribunal considered the relevant authorities in detail, including Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, The Nanfri [1979] AC 757, The Gregos [1995] 1 Lloyd's Rep 1, and Grand China Logistics Holding (Group) Co Ltd v Spar Shipping AS [2016] EWCA Civ 982, [2016] 2 Lloyd's Rep 447. The tribunal stated the applicable legal principles clearly and accurately: a party commits a repudiatory breach of a time charter by redelivering the vessel substantially before the contractual redelivery date without lawful justification.
5.3.4 The tribunal's finding that redelivery 14 months early, without any lawful basis, constituted a repudiatory breach is not merely defensible — it is, with respect, the only conclusion reasonably open on the facts. A redelivery 14 months before expiry is not a marginal or borderline case; it represents a fundamental departure from the contractual bargain.
5.3.5 KMH's real complaint is not that the tribunal applied the wrong legal test, but that the tribunal rejected KMH's factual justifications for early redelivery. In particular, KMH is dissatisfied with the tribunal's findings that: (i) the events relied upon by KMH did not constitute force majeure events within the meaning of the charter; (ii) KMH had failed to comply with the contractual notice requirements for force majeure; and (iii) KMH's force majeure notices were fabricated after the event. These are findings of fact, squarely within the tribunal's domain, and are not reviewable by this Court under section 69.
5.3.6 Permission to appeal should be refused in respect of this ground.
5.4 Response to Alleged Error 2: Assessment of Damages (M/V *Crimson Horizon*)
5.4.1 KMH contends that the tribunal erred in the measure of damages it applied in respect of M/V Crimson Horizon, resulting in the combined award of £28,150,000 (comprising £4,280,000 in outstanding hire arrears and £23,870,000 in loss of bargain damages).
5.4.2 This contention is also without foundation.
5.4.3 The tribunal correctly applied the conventional measure of damages for repudiatory breach of a time charter under English law. That measure is well established: the innocent party is entitled to recover the difference between the contract rate and the market rate for the unexpired term of the charter, together with any outstanding hire arrears. This measure was stated by the House of Lords in The Elena D'Amico [1980] 1 Lloyd's Rep 75 and has been consistently applied in subsequent authorities, including The Elbrus [2010] EWHC 1504 (Comm) and Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] EWHC 718 (Comm).
5.4.4 The tribunal applied this measure at paragraphs 235 to 247 of the Award. The loss of bargain damages of £23,870,000 were calculated by reference to the market evidence presented at the hearing, including the competing expert evidence of both parties' market rate experts. The tribunal preferred the evidence of TSL's expert, Mr. James Galbraith of Thackeray Software, over that of KMH's expert, and explained its reasons for doing so at paragraphs 241 to 245 of the Award. This was a quintessential factual assessment — the evaluation and weighing of competing expert evidence — and is not a matter of law susceptible to appeal under section 69.