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CALDERWOOD & HARKNESS LLP 45 Moorgate London EC2R 6AR United Kingdom

Telephone: +44 (0)20 7936 4400 Facsimile: +44 (0)20 7936 4401 www.calderwoodharkness.com

14 August 2024

BY FIRST CLASS POST AND EMAIL

Richard Harkness Esq. Senior Partner Harkness Whitford & Co. 12 Fetter Lane London EC4A 1JP United Kingdom

Your Ref: RH/CW/KMH-7892 Our Ref: SE/HB/PG/TSL-KMH-ENF

OPEN CORRESPONDENCE

Re: LCIA Arbitration No. 224718 — Thalassa Shipping & Logistics SA v. Korinthian Maritime Holdings Ltd. — Commercial Court Claim No. CL-2024-000487 — Your Client's Threatened Challenge to the Award

Dear Mr. Harkness,

1. Introduction

We write on behalf of our client, Thalassa Shipping & Logistics SA ("TSL"), the award creditor, in response to your letter dated 8 August 2024, written on behalf of your client, Korinthian Maritime Holdings Ltd., a company registered in Cyprus under Registration No. HE 387421, with its registered office at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus ("KMH").

In your letter, you indicate that KMH intends to make an application to set aside or otherwise challenge the Final Award dated 28 June 2024 (the "Award") issued by the Tribunal in LCIA Arbitration No. 224718 under sections 68 and 69 of the Arbitration Act 1996 (the "Act"). We note the grounds upon which you say such an application will be based.

TSL's position, which we set out in detail below, is that the threatened challenge is entirely without merit. The purpose of this letter is to put you and your client squarely on notice of that position and of the costs consequences that will inevitably flow from the pursuit of an application that, in TSL's view, has no realistic prospect of success. This letter is open correspondence and, as stated below, TSL will refer to it on the question of costs in any proceedings arising from KMH's threatened application.

2. Background to the Award

We set out below a brief summary of the relevant background, which is well known to your client and to you.

The Award was rendered on 28 June 2024 by a tribunal comprising:

(a) Sir Malcolm Fenton-Clarke (Presiding Arbitrator, appointed by the LCIA Court);

(b) Professor Athena Drakopoulos (co-arbitrator, nominated by the Claimant, TSL); and

with Ms. Fiona Beckett serving as Tribunal Secretary (collectively, the "Tribunal").

The arbitration arose from three time charter-party agreements entered into between TSL (as disponent owner) and KMH (as charterer) between 2019 and 2021, in respect of the following vessels:

(i) M/V Aegean Fortuna (IMO 9784521), subject to a time charter dated 12 March 2019;

(ii) M/V Crimson Horizon (IMO 9801334), subject to a time charter dated 4 September 2020; and

(iii) M/V Volga Spirit (IMO 9756892), subject to a time charter dated 22 January 2021,

each governed by English law and containing arbitration clauses providing for LCIA arbitration with a London seat (the "Charter-Parties").

The dispute was referred to arbitration by TSL's Request for Arbitration dated 15 November 2022. The Tribunal was constituted on 6 February 2023. Following full written submissions, a comprehensive disclosure exercise, and extensive factual and expert witness evidence from both parties, the Tribunal heard the matter over ten hearing days, from 11 September 2023 through 22 September 2023, at the International Dispute Resolution Centre in London. Post-hearing briefs were exchanged on 20 November 2023 and reply post-hearing briefs on 18 December 2023. The Tribunal declared proceedings closed on 15 January 2024.

The Award, which runs to 347 pages (excluding appendices), found KMH liable for the following sums:

In addition, the Tribunal ordered KMH to pay costs of £12,150,000, comprising £3,240,000 in respect of the LCIA's administrative costs and the Tribunal's fees, and £8,910,000 in respect of TSL's legal costs and disbursements. The Tribunal allocated 85% of the total costs to KMH, reflecting the near-complete success of TSL's claims and the manner in which KMH conducted the arbitration proceedings. The total sum due under the Award, inclusive of costs, is therefore £108,600,000.

Post-award interest accrues at the rate of 5.25% per annum (simple) on the unpaid amount of £96,450,000 from 29 June 2024.

3. Response to the Threatened Section 68 Challenge (Serious Irregularity)

Your letter identifies certain alleged "serious irregularities" under section 68 of the Act as the basis for an application to set aside the Award. We address each of the grounds identified in turn. TSL's position is that none of them comes close to meeting the high threshold established by the courts for a successful section 68 challenge.

As you will be aware, section 68 is concerned with due process. It is not a mechanism for a disappointed party to re-argue the merits of the dispute. The applicant must demonstrate both (a) that a serious irregularity falling within the categories set out in section 68(2) has occurred, and (b) that such irregularity "has caused or will cause substantial injustice" to the applicant. The courts have repeatedly emphasised that this is a high threshold, that section 68 is designed as a "long stop" available only in extreme cases, and that the section is not to be used as a back door to an appeal on the merits: see Lesotho Highlands Development Authority v. Impregilo SpA [2005] UKHL 43 at [28] (Lord Steyn); RAV Bahamas Ltd v. Therapy Beach Club Inc [2021] EWCA Civ 867 at [44]–[46]; Terna Bahrain Holding Company WLL v. Al Shamsi [2012] EWHC 3283 (Comm) at [85] (Popplewell J, as he then was).

3.1 Alleged Procedural Unfairness (Section 68(2)(a))

Your letter alleges that the Tribunal failed to act fairly as between the parties and/or that KMH was denied a fair opportunity to present its case. This allegation is, with respect, untenable and is contradicted by the record.

KMH participated fully in the arbitration proceedings throughout. KMH was represented at all material times by experienced counsel, including Catherine Whitford of your firm, and by a substantial legal team that included, we understand, three further partners, two associates, and a paralegal team from Harkness Whitford & Co. KMH availed itself fully of the procedural timetable — which was agreed by the parties and the Tribunal in successive procedural orders — to file extensive written submissions. KMH filed a Statement of Defence and Counterclaim running to 182 pages, a Rejoinder of 94 pages, and a skeleton argument for the hearing of 76 pages, in addition to post-hearing briefs and reply post-hearing briefs.

At the evidentiary hearing itself, KMH called four factual witnesses and two expert witnesses. Each of those witnesses gave evidence in chief and was cross-examined at length by counsel for TSL. KMH's counsel had the full opportunity to — and did — cross-examine each of TSL's factual and expert witnesses. KMH's counsel made extensive oral submissions, including a full day of closing oral argument. At no point during the arbitration proceedings did KMH, or its legal representatives, raise any complaint or objection regarding the fairness of the procedure, the adequacy of the time allocated, or the Tribunal's conduct of the proceedings.

In these circumstances, there is simply no foundation for an allegation that KMH was denied a fair opportunity to present its case, or that the Tribunal acted other than fairly as between the parties. The fact that the Tribunal ultimately preferred the evidence and submissions advanced by TSL does not constitute a procedural irregularity; it constitutes a result on the merits with which KMH disagrees. That is not what section 68 is for.

3.2 Alleged Failure to Deal with All Issues (Section 68(2)(d))

Your letter further alleges that the Tribunal failed to deal with all the issues that were put to it. This ground is equally without merit.

The Award, as noted above, runs to 347 pages. It addresses each of the three Charter-Parties in turn. For each Charter-Party, the Tribunal set out the relevant factual background, the competing positions of the parties, the applicable legal principles, and its findings and reasoning. The Tribunal dealt expressly and in detail with each of KMH's principal defences, including the contention that the early redelivery of M/V Aegean Fortuna was not repudiatory, the contention that hire was not due under the M/V Crimson Horizon charter because of alleged unseaworthiness, and the contention that the off-hire deductions in respect of M/V Volga Spirit were genuine. The Tribunal rejected each of these defences, giving detailed reasons for doing so.

It is well established that a tribunal is required to deal with the essential issues in the arbitration, not with every argument or every subsidiary point raised by the parties. As Males J (as he then was) stated in Petrochemical Industries Co (KSC) v. The Dow Chemical Co [2012] EWHC 2739 (Comm) at [18], the duty under section 68(2)(d) is a duty to deal with each issue, not with each argument or each point. A tribunal may reject a particular defence or line of argument without necessarily addressing every sub-point or subsidiary factual contention advanced in support of it. To hold otherwise would impose upon arbitral tribunals an impossible and wholly unrealistic burden and would be contrary to the policy of the Act, which is to uphold finality of awards.

Having reviewed the grounds identified in your letter, it is apparent that what KMH characterises as a "failure to deal with all issues" is, in reality, a disagreement with the weight the Tribunal attached to certain items of evidence and with the conclusions the Tribunal drew from the evidence. That is a complaint about the merits of the Award, not about the procedure by which it was reached, and it does not give rise to a valid challenge under section 68.

3.3 Other Alleged Irregularities

Your letter makes certain additional, and somewhat opaque, references to other categories of serious irregularity. We note those references but observe that, insofar as the grounds have been articulated in your letter, TSL does not identify any irregularity — let alone one causing substantial injustice. TSL reserves the right to respond in full to any further or more particularised grounds that KMH may seek to advance, but does so without any concession that such grounds exist or have any merit.

4. Response to the Threatened Section 69 Challenge (Appeal on Point of Law)

Your letter also threatens a challenge to the Award under section 69 of the Act, on the basis that the Tribunal is said to have erred on one or more questions of English law.

We make the following preliminary observations.

First, section 69 of the Act requires either the agreement of all other parties to the reference, or leave of the court, as a condition precedent to an appeal on a question of law. TSL does not agree to any appeal. Accordingly, KMH will be required to seek the leave of the court under section 69(2)(b), and any such application must satisfy the stringent criteria set out in section 69(3).

Second, leave to appeal will only be granted if the court is satisfied that:

(a) the determination of the question of law concerned will substantially affect the rights of one or more of the parties (section 69(3)(a));

(b) the question is one which the tribunal was asked to determine (section 69(3)(b));

(c) on the basis of the findings of fact in the award, either (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 (section 69(3)(c)); and

(d) 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 (section 69(3)(d)).

These are cumulative requirements, and each must be satisfied before leave will be granted. The courts have emphasised that the section 69 threshold is deliberately high and that leave is sparingly granted, in order to preserve the finality of arbitral awards and to give effect to the bargain the parties struck when they agreed to resolve their disputes by arbitration: see The Nema [1982] AC 724 at 743 (Lord Diplock); CMA CGM SA v. Beteiligungs-KG MS "Northern Pioneer" Schiffahrtsgesellschaft mbH & Co [2002] EWCA Civ 1878 at [11]–[13]; Dallah Real Estate & Tourism Holding Co v. Ministry of Religious Affairs of the Government of Pakistan [2010] UKSC 46 at [30].

Third, and in any event, the Tribunal's application of English law to the disputes arising under the Charter-Parties was entirely orthodox. In particular:

(i) The Tribunal correctly identified and applied the legal test for repudiatory breach in the context of the wrongful early redelivery of M/V Aegean Fortuna, following established principles set out by the House of Lords in Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 and the Supreme Court in Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982.

(ii) The Tribunal's calculation of loss-of-bargain damages followed the conventional "difference in value" method, assessing the charterer's liability by reference to the difference between the contractual rate and the market rate at the date of acceptance of the repudiatory breach, consistently with the authorities, including The Elena D'Amico [1980] 1 Lloyd's Rep 75.

(iii) The Tribunal's treatment of the off-hire deductions for M/V Volga Spirit was based on a close analysis of the relevant charter-party provisions and the factual evidence before it, and reflected a proper application of the principles governing off-hire clauses as discussed in The Berge Sund [1993] 2 Lloyd's Rep 453 and NYK Bulkship (Atlantic) NV v. Cargill International SA (The Global Santosh) [2016] UKSC 20.

(iv) The Tribunal's computation of pre-award interest followed the approach conventionally adopted in London arbitrations and was consistent with section 49 of the Act and the applicable contractual provisions.

Fourth, it is evident from your letter that the substance of KMH's complaint is not directed at any identifiable error of law but rather at the Tribunal's findings of fact and, in particular, at the Tribunal's assessment of the factual witnesses, the Tribunal's evaluation of the documentary evidence, and the Tribunal's preference for the opinions expressed by TSL's expert witnesses over those advanced by KMH's experts. These are quintessentially findings of fact. It has been repeatedly and authoritatively stated by the courts that section 69 does not provide a mechanism for challenging findings of fact, and that a party seeking leave to appeal may not dress up a challenge to the tribunal's factual findings as a question of law: see Geogas SA v. Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd's Rep 215 at 228 (Steyn LJ, as he then was); Kershaw Mechanical Services Ltd v. Kendrick Construction Ltd [2006] EWHC 727 (TCC) at [50].

TSL is confident that any application by KMH for leave to appeal under section 69 will be refused.

5. Enforcement Proceedings Will Continue

We confirm the following:

(a) Permission to enforce the Award as a judgment of the High Court was granted by Mr. Justice Ashworth on 2 August 2024, pursuant to section 66 of the Act, in Commercial Court proceedings Claim No. CL-2024-000487. The order was duly served on KMH.

(b) A Worldwide Freezing Order (the "WFO") was granted by Mr. Justice Ashworth on 16 July 2024, on a without-notice basis, restraining KMH from dealing with, disposing of, or diminishing the value of its assets worldwide up to the value of £108,600,000. That order was continued with modifications at the return date hearing before Mrs. Justice Goldsmith on 30 July 2024, following a contested hearing at which KMH was represented by your firm. The WFO remains in full force and effect.

TSL has filed, and will continue vigorously to pursue, enforcement proceedings in multiple jurisdictions, as is its right as the holder of a final and binding arbitral award rendered under the LCIA Rules. Enforcement proceedings are being advanced in, among other jurisdictions, Cyprus, Singapore, and the United Arab Emirates.

We wish to make clear to your client that the filing of any application to set aside or challenge the Award under sections 68 or 69 of the Act will not operate as an automatic stay of enforcement. There is no such provision in the Act. To the extent that KMH seeks a stay of enforcement pending the determination of any such application, any such application will be vigorously opposed by TSL, and TSL reserves its right to continue enforcement in England and Wales and in all other relevant jurisdictions in parallel with, and irrespective of, any challenge proceedings.

6. Costs Consequences

We put you and your client on clear notice as to the costs consequences of pursuing the threatened application.

If KMH proceeds with a set-aside or challenge application on the grounds outlined in your letter of 8 August 2024, TSL will oppose it in the strongest terms and will seek its costs of resisting the application on the indemnity basis. TSL's position is that the pursuit of a meritless challenge to a final arbitral award, in circumstances where the evident purpose of the application is to delay enforcement and to provide cover for the further dissipation of assets, is conduct that falls squarely within the category of cases in which the court may properly reflect its disapproval in the costs order.

We remind you that the court has already had before it substantial evidence of KMH's systematic dissipation of assets in the period following the issuance of the Award — evidence which was the basis upon which the WFO was granted. That conduct forms part of the wider context in which the court will assess KMH's motives in bringing any challenge, and it is a matter that TSL will draw to the court's attention on the question of costs.

This letter is open correspondence. It will be referred to and relied upon by TSL in connection with any costs application arising from KMH's threatened challenge. We invite you to bring this letter to the attention of your client and to ensure that your client is fully apprised of the potential costs exposure.

7. Compliance with the Worldwide Freezing Order

We take this opportunity to remind you that the WFO made by Mr. Justice Ashworth on 16 July 2024 and continued by Mrs. Justice Goldsmith on 30 July 2024 remains in full force and effect. The WFO requires KMH to disclose all of its assets worldwide with a value exceeding £25,000 within seven days of service of the order.

TSL reserves all of its rights in the event of any breach of the WFO, including the right to seek sanctions for contempt of court. Any person who knowingly assists in a breach of the WFO may also be held to be in contempt of court and may be imprisoned, fined, or have their assets seized.

We also wish to express TSL's concern that the threatened set-aside application should not be used as a vehicle or pretext for further delay in KMH's compliance with the asset disclosure obligations imposed by the WFO, or for the further dissipation of assets. TSL will scrutinise KMH's conduct in this regard carefully and will not hesitate to bring any concerns to the attention of the court.

8. Demand for Payment

We reiterate the demand first made in our letter of 8 July 2024 for immediate payment by KMH of the full amount of the Award and costs, being £108,600,000, together with post-award interest accruing at the rate of 5.25% per annum (simple) on the sum of £96,450,000 from 29 June 2024 until the date of payment.

As at the date of this letter, post-award interest has accrued in the approximate sum of £645,000 and continues to accrue at the rate of approximately £13,875 per day.

KMH's continued failure to satisfy the Award, considered together with the evidence of deliberate asset dissipation already before the court, only underscores the urgency and necessity of immediate payment. We remind you that the Award is final and binding under the LCIA Rules and that the filing of any challenge application does not relieve KMH of its obligation to satisfy the Award in full. No challenge has yet been filed; no stay has been granted or even applied for. The Award is presently enforceable, and payment is due.

9. Conclusion

In light of the matters set out above, we invite you and your client to reconsider seriously the threatened application. The grounds identified in your letter do not, in TSL's view, disclose any basis for a successful challenge under either section 68 or section 69 of the Act. The pursuit of such an application will result in significant further costs liability for your client, which TSL will seek to recover on the indemnity basis.

TSL remains willing to engage in discussions regarding the satisfaction of the Award, including as to the timing and mechanics of payment, but any such discussions must be on the basis that they are entirely without prejudice to TSL's enforcement rights and to its right to pursue enforcement in all relevant jurisdictions without limitation. Any proposals for settlement should be directed to the undersigned.

We confirm that this letter constitutes open correspondence and may be referred to the court on any question of costs or on any other matter as TSL considers appropriate.

We look forward to hearing from you.

Yours faithfully,

CALDERWOOD & HARKNESS LLP

By: ________

Samuel Eklund Partner

Direct Line: +44 (0)20 7936 4472

Email: s.eklund@calderwoodharkness.com

Copies to:

Catherine Whitford, Partner, Harkness Whitford & Co. — by email (c.whitford@harknesswhitford.com)

Ioanna Christodoulou, General Counsel, Thalassa Shipping & Logistics SA — by email (i.christodoulou@thalassasl.com)

Hannah Brinkley, Calderwood & Harkness LLP — internal

Head of Claim	Amount
Wrongful early redelivery of M/V Aegean Fortuna	£42,300,000
Outstanding hire and damages for M/V Crimson Horizon	£28,150,000
Restitution of fabricated off-hire deductions for M/V Volga Spirit	£2,740,000
Loss of profit / market differential damages	£16,480,000
Pre-award interest at 5.25% per annum (simple)	£6,780,000
Total Award	£96,450,000

CALDERWOOD & HARKNESS LLP 45 Moorgate London EC2R 6AR United Kingdom
Telephone: +44 (0)20 7936 4400 Facsimile: +44 (0)20 7936 4401 www.calderwoodharkness.com
14 August 2024
BY FIRST CLASS POST AND EMAIL
Richard Harkness Esq. Senior Partner Harkness Whitford & Co. 12 Fetter Lane London EC4A 1JP United Kingdom
Your Ref: RH/CW/KMH-7892 Our Ref: SE/HB/PG/TSL-KMH-ENF
OPEN CORRESPONDENCE
Re: LCIA Arbitration No. 224718 — Thalassa Shipping & Logistics SA v. Korinthian Maritime Holdings Ltd. — Commercial Court Claim No. CL-2024-000487 — Your Client's Threatened Challenge to the Award
Dear Mr. Harkness,
1. Introduction
We write on behalf of our client, Thalassa Shipping & Logistics SA ("TSL"), the award creditor, in response to your letter dated 8 August 2024, written on behalf of your client, Korinthian Maritime Holdings Ltd., a company registered in Cyprus under Registration No. HE 387421, with its registered office at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus ("KMH").
In your letter, you indicate that KMH intends to make an application to set aside or otherwise challenge the Final Award dated 28 June 2024 (the "Award") issued by the Tribunal in LCIA Arbitration No. 224718 under sections 68 and 69 of the Arbitration Act 1996 (the "Act"). We note the grounds upon which you say such an application will be based.
TSL's position, which we set out in detail below, is that the threatened challenge is entirely without merit. The purpose of this letter is to put you and your client squarely on notice of that position and of the costs consequences that will inevitably flow from the pursuit of an application that, in TSL's view, has no realistic prospect of success. This letter is open correspondence and, as stated below, TSL will refer to it on the question of costs in any proceedings arising from KMH's threatened application.
2. Background to the Award
We set out below a brief summary of the relevant background, which is well known to your client and to you.
The Award was rendered on 28 June 2024 by a tribunal comprising:
(a) Sir Malcolm Fenton-Clarke (Presiding Arbitrator, appointed by the LCIA Court);
(b) Professor Athena Drakopoulos (co-arbitrator, nominated by the Claimant, TSL); and
(c) Dr. Henrik Dalmqvist (co-arbitrator, nominated by the Respondent, KMH),
with Ms. Fiona Beckett serving as Tribunal Secretary (collectively, the "Tribunal").
The arbitration arose from three time charter-party agreements entered into between TSL (as disponent owner) and KMH (as charterer) between 2019 and 2021, in respect of the following vessels:
(i) M/V Aegean Fortuna (IMO 9784521), subject to a time charter dated 12 March 2019;
(ii) M/V Crimson Horizon (IMO 9801334), subject to a time charter dated 4 September 2020; and
(iii) M/V Volga Spirit (IMO 9756892), subject to a time charter dated 22 January 2021,
each governed by English law and containing arbitration clauses providing for LCIA arbitration with a London seat (the "Charter-Parties").
The dispute was referred to arbitration by TSL's Request for Arbitration dated 15 November 2022. The Tribunal was constituted on 6 February 2023. Following full written submissions, a comprehensive disclosure exercise, and extensive factual and expert witness evidence from both parties, the Tribunal heard the matter over ten hearing days, from 11 September 2023 through 22 September 2023, at the International Dispute Resolution Centre in London. Post-hearing briefs were exchanged on 20 November 2023 and reply post-hearing briefs on 18 December 2023. The Tribunal declared proceedings closed on 15 January 2024.
The Award, which runs to 347 pages (excluding appendices), found KMH liable for the following sums:
In addition, the Tribunal ordered KMH to pay costs of £12,150,000, comprising £3,240,000 in respect of the LCIA's administrative costs and the Tribunal's fees, and £8,910,000 in respect of TSL's legal costs and disbursements. The Tribunal allocated 85% of the total costs to KMH, reflecting the near-complete success of TSL's claims and the manner in which KMH conducted the arbitration proceedings. The total sum due under the Award, inclusive of costs, is therefore £108,600,000.
Post-award interest accrues at the rate of 5.25% per annum (simple) on the unpaid amount of £96,450,000 from 29 June 2024.
3. Response to the Threatened Section 68 Challenge (Serious Irregularity)
Your letter identifies certain alleged "serious irregularities" under section 68 of the Act as the basis for an application to set aside the Award. We address each of the grounds identified in turn. TSL's position is that none of them comes close to meeting the high threshold established by the courts for a successful section 68 challenge.
As you will be aware, section 68 is concerned with due process. It is not a mechanism for a disappointed party to re-argue the merits of the dispute. The applicant must demonstrate both (a) that a serious irregularity falling within the categories set out in section 68(2) has occurred, and (b) that such irregularity "has caused or will cause substantial injustice" to the applicant. The courts have repeatedly emphasised that this is a high threshold, that section 68 is designed as a "long stop" available only in extreme cases, and that the section is not to be used as a back door to an appeal on the merits: see Lesotho Highlands Development Authority v. Impregilo SpA [2005] UKHL 43 at [28] (Lord Steyn); RAV Bahamas Ltd v. Therapy Beach Club Inc [2021] EWCA Civ 867 at [44]–[46]; Terna Bahrain Holding Company WLL v. Al Shamsi [2012] EWHC 3283 (Comm) at [85] (Popplewell J, as he then was).
3.1 Alleged Procedural Unfairness (Section 68(2)(a))
Your letter alleges that the Tribunal failed to act fairly as between the parties and/or that KMH was denied a fair opportunity to present its case. This allegation is, with respect, untenable and is contradicted by the record.
KMH participated fully in the arbitration proceedings throughout. KMH was represented at all material times by experienced counsel, including Catherine Whitford of your firm, and by a substantial legal team that included, we understand, three further partners, two associates, and a paralegal team from Harkness Whitford & Co. KMH availed itself fully of the procedural timetable — which was agreed by the parties and the Tribunal in successive procedural orders — to file extensive written submissions. KMH filed a Statement of Defence and Counterclaim running to 182 pages, a Rejoinder of 94 pages, and a skeleton argument for the hearing of 76 pages, in addition to post-hearing briefs and reply post-hearing briefs.
At the evidentiary hearing itself, KMH called four factual witnesses and two expert witnesses. Each of those witnesses gave evidence in chief and was cross-examined at length by counsel for TSL. KMH's counsel had the full opportunity to — and did — cross-examine each of TSL's factual and expert witnesses. KMH's counsel made extensive oral submissions, including a full day of closing oral argument. At no point during the arbitration proceedings did KMH, or its legal representatives, raise any complaint or objection regarding the fairness of the procedure, the adequacy of the time allocated, or the Tribunal's conduct of the proceedings.
In these circumstances, there is simply no foundation for an allegation that KMH was denied a fair opportunity to present its case, or that the Tribunal acted other than fairly as between the parties. The fact that the Tribunal ultimately preferred the evidence and submissions advanced by TSL does not constitute a procedural irregularity; it constitutes a result on the merits with which KMH disagrees. That is not what section 68 is for.
3.2 Alleged Failure to Deal with All Issues (Section 68(2)(d))
Your letter further alleges that the Tribunal failed to deal with all the issues that were put to it. This ground is equally without merit.
The Award, as noted above, runs to 347 pages. It addresses each of the three Charter-Parties in turn. For each Charter-Party, the Tribunal set out the relevant factual background, the competing positions of the parties, the applicable legal principles, and its findings and reasoning. The Tribunal dealt expressly and in detail with each of KMH's principal defences, including the contention that the early redelivery of M/V Aegean Fortuna was not repudiatory, the contention that hire was not due under the M/V Crimson Horizon charter because of alleged unseaworthiness, and the contention that the off-hire deductions in respect of M/V Volga Spirit were genuine. The Tribunal rejected each of these defences, giving detailed reasons for doing so.
It is well established that a tribunal is required to deal with the essential issues in the arbitration, not with every argument or every subsidiary point raised by the parties. As Males J (as he then was) stated in Petrochemical Industries Co (KSC) v. The Dow Chemical Co [2012] EWHC 2739 (Comm) at [18], the duty under section 68(2)(d) is a duty to deal with each issue, not with each argument or each point. A tribunal may reject a particular defence or line of argument without necessarily addressing every sub-point or subsidiary factual contention advanced in support of it. To hold otherwise would impose upon arbitral tribunals an impossible and wholly unrealistic burden and would be contrary to the policy of the Act, which is to uphold finality of awards.
Having reviewed the grounds identified in your letter, it is apparent that what KMH characterises as a "failure to deal with all issues" is, in reality, a disagreement with the weight the Tribunal attached to certain items of evidence and with the conclusions the Tribunal drew from the evidence. That is a complaint about the merits of the Award, not about the procedure by which it was reached, and it does not give rise to a valid challenge under section 68.
3.3 Other Alleged Irregularities
Your letter makes certain additional, and somewhat opaque, references to other categories of serious irregularity. We note those references but observe that, insofar as the grounds have been articulated in your letter, TSL does not identify any irregularity — let alone one causing substantial injustice. TSL reserves the right to respond in full to any further or more particularised grounds that KMH may seek to advance, but does so without any concession that such grounds exist or have any merit.
4. Response to the Threatened Section 69 Challenge (Appeal on Point of Law)
Your letter also threatens a challenge to the Award under section 69 of the Act, on the basis that the Tribunal is said to have erred on one or more questions of English law.
We make the following preliminary observations.
First, section 69 of the Act requires either the agreement of all other parties to the reference, or leave of the court, as a condition precedent to an appeal on a question of law. TSL does not agree to any appeal. Accordingly, KMH will be required to seek the leave of the court under section 69(2)(b), and any such application must satisfy the stringent criteria set out in section 69(3).
Second, leave to appeal will only be granted if the court is satisfied that:
(a) the determination of the question of law concerned will substantially affect the rights of one or more of the parties (section 69(3)(a));
(b) the question is one which the tribunal was asked to determine (section 69(3)(b));
(c) on the basis of the findings of fact in the award, either (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 (section 69(3)(c)); and
(d) 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 (section 69(3)(d)).
These are cumulative requirements, and each must be satisfied before leave will be granted. The courts have emphasised that the section 69 threshold is deliberately high and that leave is sparingly granted, in order to preserve the finality of arbitral awards and to give effect to the bargain the parties struck when they agreed to resolve their disputes by arbitration: see The Nema [1982] AC 724 at 743 (Lord Diplock); CMA CGM SA v. Beteiligungs-KG MS "Northern Pioneer" Schiffahrtsgesellschaft mbH & Co [2002] EWCA Civ 1878 at [11]–[13]; Dallah Real Estate & Tourism Holding Co v. Ministry of Religious Affairs of the Government of Pakistan [2010] UKSC 46 at [30].
Third, and in any event, the Tribunal's application of English law to the disputes arising under the Charter-Parties was entirely orthodox. In particular:
(i) The Tribunal correctly identified and applied the legal test for repudiatory breach in the context of the wrongful early redelivery of M/V Aegean Fortuna, following established principles set out by the House of Lords in Hongkong Fir Shipping Co Ltd v. Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 and the Supreme Court in Spar Shipping AS v. Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982.
(ii) The Tribunal's calculation of loss-of-bargain damages followed the conventional "difference in value" method, assessing the charterer's liability by reference to the difference between the contractual rate and the market rate at the date of acceptance of the repudiatory breach, consistently with the authorities, including The Elena D'Amico [1980] 1 Lloyd's Rep 75.
(iii) The Tribunal's treatment of the off-hire deductions for M/V Volga Spirit was based on a close analysis of the relevant charter-party provisions and the factual evidence before it, and reflected a proper application of the principles governing off-hire clauses as discussed in The Berge Sund [1993] 2 Lloyd's Rep 453 and NYK Bulkship (Atlantic) NV v. Cargill International SA (The Global Santosh) [2016] UKSC 20.
(iv) The Tribunal's computation of pre-award interest followed the approach conventionally adopted in London arbitrations and was consistent with section 49 of the Act and the applicable contractual provisions.
Fourth, it is evident from your letter that the substance of KMH's complaint is not directed at any identifiable error of law but rather at the Tribunal's findings of fact and, in particular, at the Tribunal's assessment of the factual witnesses, the Tribunal's evaluation of the documentary evidence, and the Tribunal's preference for the opinions expressed by TSL's expert witnesses over those advanced by KMH's experts. These are quintessentially findings of fact. It has been repeatedly and authoritatively stated by the courts that section 69 does not provide a mechanism for challenging findings of fact, and that a party seeking leave to appeal may not dress up a challenge to the tribunal's factual findings as a question of law: see Geogas SA v. Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd's Rep 215 at 228 (Steyn LJ, as he then was); Kershaw Mechanical Services Ltd v. Kendrick Construction Ltd [2006] EWHC 727 (TCC) at [50].
TSL is confident that any application by KMH for leave to appeal under section 69 will be refused.
5. Enforcement Proceedings Will Continue
We confirm the following:
(a) Permission to enforce the Award as a judgment of the High Court was granted by Mr. Justice Ashworth on 2 August 2024, pursuant to section 66 of the Act, in Commercial Court proceedings Claim No. CL-2024-000487. The order was duly served on KMH.
(b) A Worldwide Freezing Order (the "WFO") was granted by Mr. Justice Ashworth on 16 July 2024, on a without-notice basis, restraining KMH from dealing with, disposing of, or diminishing the value of its assets worldwide up to the value of £108,600,000. That order was continued with modifications at the return date hearing before Mrs. Justice Goldsmith on 30 July 2024, following a contested hearing at which KMH was represented by your firm. The WFO remains in full force and effect.
TSL has filed, and will continue vigorously to pursue, enforcement proceedings in multiple jurisdictions, as is its right as the holder of a final and binding arbitral award rendered under the LCIA Rules. Enforcement proceedings are being advanced in, among other jurisdictions, Cyprus, Singapore, and the United Arab Emirates.
We wish to make clear to your client that the filing of any application to set aside or challenge the Award under sections 68 or 69 of the Act will not operate as an automatic stay of enforcement. There is no such provision in the Act. To the extent that KMH seeks a stay of enforcement pending the determination of any such application, any such application will be vigorously opposed by TSL, and TSL reserves its right to continue enforcement in England and Wales and in all other relevant jurisdictions in parallel with, and irrespective of, any challenge proceedings.
6. Costs Consequences
We put you and your client on clear notice as to the costs consequences of pursuing the threatened application.
If KMH proceeds with a set-aside or challenge application on the grounds outlined in your letter of 8 August 2024, TSL will oppose it in the strongest terms and will seek its costs of resisting the application on the indemnity basis. TSL's position is that the pursuit of a meritless challenge to a final arbitral award, in circumstances where the evident purpose of the application is to delay enforcement and to provide cover for the further dissipation of assets, is conduct that falls squarely within the category of cases in which the court may properly reflect its disapproval in the costs order.
We remind you that the court has already had before it substantial evidence of KMH's systematic dissipation of assets in the period following the issuance of the Award — evidence which was the basis upon which the WFO was granted. That conduct forms part of the wider context in which the court will assess KMH's motives in bringing any challenge, and it is a matter that TSL will draw to the court's attention on the question of costs.
This letter is open correspondence. It will be referred to and relied upon by TSL in connection with any costs application arising from KMH's threatened challenge. We invite you to bring this letter to the attention of your client and to ensure that your client is fully apprised of the potential costs exposure.
7. Compliance with the Worldwide Freezing Order
We take this opportunity to remind you that the WFO made by Mr. Justice Ashworth on 16 July 2024 and continued by Mrs. Justice Goldsmith on 30 July 2024 remains in full force and effect. The WFO requires KMH to disclose all of its assets worldwide with a value exceeding £25,000 within seven days of service of the order.
TSL reserves all of its rights in the event of any breach of the WFO, including the right to seek sanctions for contempt of court. Any person who knowingly assists in a breach of the WFO may also be held to be in contempt of court and may be imprisoned, fined, or have their assets seized.
We also wish to express TSL's concern that the threatened set-aside application should not be used as a vehicle or pretext for further delay in KMH's compliance with the asset disclosure obligations imposed by the WFO, or for the further dissipation of assets. TSL will scrutinise KMH's conduct in this regard carefully and will not hesitate to bring any concerns to the attention of the court.
8. Demand for Payment
We reiterate the demand first made in our letter of 8 July 2024 for immediate payment by KMH of the full amount of the Award and costs, being £108,600,000, together with post-award interest accruing at the rate of 5.25% per annum (simple) on the sum of £96,450,000 from 29 June 2024 until the date of payment.
As at the date of this letter, post-award interest has accrued in the approximate sum of £645,000 and continues to accrue at the rate of approximately £13,875 per day.
KMH's continued failure to satisfy the Award, considered together with the evidence of deliberate asset dissipation already before the court, only underscores the urgency and necessity of immediate payment. We remind you that the Award is final and binding under the LCIA Rules and that the filing of any challenge application does not relieve KMH of its obligation to satisfy the Award in full. No challenge has yet been filed; no stay has been granted or even applied for. The Award is presently enforceable, and payment is due.
9. Conclusion
In light of the matters set out above, we invite you and your client to reconsider seriously the threatened application. The grounds identified in your letter do not, in TSL's view, disclose any basis for a successful challenge under either section 68 or section 69 of the Act. The pursuit of such an application will result in significant further costs liability for your client, which TSL will seek to recover on the indemnity basis.
TSL remains willing to engage in discussions regarding the satisfaction of the Award, including as to the timing and mechanics of payment, but any such discussions must be on the basis that they are entirely without prejudice to TSL's enforcement rights and to its right to pursue enforcement in all relevant jurisdictions without limitation. Any proposals for settlement should be directed to the undersigned.
We confirm that this letter constitutes open correspondence and may be referred to the court on any question of costs or on any other matter as TSL considers appropriate.
We look forward to hearing from you.
Yours faithfully,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Partner
Direct Line: +44 (0)20 7936 4472
Email: s.eklund@calderwoodharkness.com
Copies to:
Catherine Whitford, Partner, Harkness Whitford & Co. — by email (c.whitford@harknesswhitford.com)
Ioanna Christodoulou, General Counsel, Thalassa Shipping & Logistics SA — by email (i.christodoulou@thalassasl.com)
Hannah Brinkley, Calderwood & Harkness LLP — internal
Head of Claim | Amount
Wrongful early redelivery of M/V Aegean Fortuna | £42,300,000
Outstanding hire and damages for M/V Crimson Horizon | £28,150,000
Restitution of fabricated off-hire deductions for M/V Volga Spirit | £2,740,000
Loss of profit / market differential damages | £16,480,000
Pre-award interest at 5.25% per annum (simple) | £6,780,000
Total Award | £96,450,000

CALDERWOOD & HARKNESS LLP 45 Moorgate London EC2R 6AR United Kingdom

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