IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (QBD)
Claim No. CL-2024-000487
BETWEEN:
THALASSA SHIPPING & LOGISTICS SA Claimant / Award Creditor
— and —
KORINTHIAN MARITIME HOLDINGS LTD. Respondent / Award Debtor
SKELETON ARGUMENT OF THE CLAIMANT IN OPPOSITION TO THE RESPONDENT'S APPLICATION TO SET ASIDE THE AWARD PURSUANT TO SECTIONS 68 AND 69 OF THE ARBITRATION ACT 1996
References: References in the form [Award, §X] are to the Final Award dated 28 June 2024 in LCIA Case No. 224718. References in the form [1/Tab X] are to the hearing bundle. References in the form [WS-X, §Y] are to the witness statements filed in these proceedings.
I. INTRODUCTION
1. This skeleton argument is filed on behalf of Thalassa Shipping & Logistics SA ("TSL") in opposition to the application by Korinthian Maritime Holdings Ltd. ("KMH") dated 19 August 2024 (the "Application") to set aside LCIA Award No. 224718 dated 28 June 2024 (the "Award") pursuant to sections 68 and 69 of the Arbitration Act 1996 (the "Act").
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), and Dr. Henrik Dalmqvist (co-arbitrator, nominated by KMH) (together, the "Tribunal"). The Tribunal Secretary was Ms. Fiona Beckett. The Award followed a fully contested 10-day evidentiary hearing at the International Dispute Resolution Centre ("IDRC"), London, from 11 to 22 September 2023, at which both parties were represented by experienced solicitors and counsel, called factual and expert witnesses, cross-examined opposing witnesses, and filed extensive written submissions.
3. The Award ordered KMH to pay TSL the total sum of £96,450,000, comprising:
(a) Damages of £42,300,000 for wrongful early redelivery of M/V Aegean Fortuna;
(b) Outstanding hire and damages of £28,150,000 for M/V Crimson Horizon;
(c) Restitution of £2,740,000 for fabricated off-hire deductions on M/V Volga Spirit;
(d) Loss of profit and market differential damages of £16,480,000 across all three charter-parties; and
(e) Pre-award interest of £6,780,000 at 5.25% per annum simple from the respective dates of breach to 28 June 2024.
4. The Tribunal also awarded costs of £12,150,000 (being £3,240,000 in LCIA administrative and tribunal costs, plus £8,910,000 in TSL's legal costs, with 85% of those costs allocated to KMH), bringing the total liability to £108,600,000. The Award further provided for post-award interest at 5.25% per annum simple on all unpaid sums from 29 June 2024.
5. Permission to enforce the Award as a judgment of the court was granted by Mr. Justice Ashworth on 2 August 2024 pursuant to section 66 of the Act.
6. TSL submits that KMH's Application should be dismissed in its entirety. The Application is, in substance, a disguised appeal on the merits of the Tribunal's factual and legal findings, dressed up as challenges under sections 68 and 69 of the Act. None of the five grounds advanced by KMH meets the high threshold required by the Act. KMH advances three grounds under section 68 (serious irregularity) and two grounds under section 69 (appeal on a point of law). Each, when properly analysed, amounts to no more than dissatisfaction with the Tribunal's findings of fact, its assessment of the evidence, or its exercise of procedural discretion. These are not matters that fall within the court's supervisory jurisdiction under the Act.
7. TSL respectfully invites the court to dismiss the Application with costs on the indemnity basis, for the reasons developed in this skeleton argument.
II. BACKGROUND
A. The Parties
8. TSL is a Société Anonyme organized under the laws of the Hellenic Republic, with its principal offices at 14 Akti Miaouli, 4th Floor, Piraeus 185 35, Greece. TSL was founded in 1987 by the Papadimitriou family and has since grown into a substantial international shipping enterprise. TSL operates a fleet of 34 vessels, comprising bulk carriers, tankers, and container feeders, with annual revenues of approximately €620 million for the financial year 2023. Ownership of TSL is divided between the Papadimitriou family trust (72%) and Aegean Capital Partners SA (28%). The key personnel of TSL relevant to these proceedings are: 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).
9. KMH is a private limited company incorporated in Nicosia, Cyprus (Company Registration No. HE 387421), with a registered office at 28 Themistokli Dervi Avenue, Suite 601, Nicosia 1066, Cyprus. KMH controls approximately 18 dry-bulk carriers through a network of single-purpose vehicle subsidiaries incorporated in various jurisdictions. KMH is beneficially owned by the Volkov family through a series of holding structures incorporating entities in the British Virgin Islands and Cyprus. The estimated pre-dispute net asset value of the KMH group was approximately USD $280 million. The key personnel of KMH relevant to these proceedings are: Mr. Andrei Volkov (ultimate beneficial owner and de facto director), Mr. Sergei Volkov (Director), Ms. Marina Kazakova (Chief Financial Officer), and Mr. Alexei Demidov (Director of Fleet Operations).
B. The Charter-Party Agreements
10. The underlying dispute arises out of three time charter-party agreements entered into between TSL (as charterer) and KMH (as disponent owner or owner, as the case may be) in respect of three dry-bulk vessels:
(a) M/V *Aegean Fortuna* (IMO 9784521): a Supramax Bulk Carrier of 58,200 DWT, registered under the flag of the Republic of the marshall Islands, owned by Dnepr Shipholding Inc. (a KMH group entity). The charter-party was signed on 15 March 2019 for a period of approximately five years.
(b) M/V *Crimson Horizon* (IMO 9801334): a Handymax Bulk Carrier of 37,500 DWT, registered under the flag of the Republic of Liberia, owned by Korinthian Bulkers (Singapore) Pte. Ltd. (a KMH group entity). The charter-party was signed on 22 January 2020 for a period of approximately four years.
(c) M/V *Volga Spirit* (IMO 9756892): a Panamax Bulk Carrier of 76,400 DWT, registered under the flag of the Republic of Cyprus, owned by Dnepr Shipholding Inc. The charter-party was signed on 10 June 2021 for a period of approximately three years.
11. All three charter-party agreements were governed by English law and contained arbitration clauses 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. The arbitration clauses were materially identical, providing for a tribunal of three arbitrators, with each party nominating one co-arbitrator and the LCIA Court appointing the presiding arbitrator.
C. KMH's Breaches
12. Beginning in mid-2022, KMH engaged in a course of conduct that the Tribunal found to constitute a pattern of repudiatory breach across all three charter-parties:
(a) M/V *Aegean Fortuna*: KMH wrongfully redelivered the vessel on 18 June 2022, approximately 14 months before the contractual expiry date, in repudiatory breach of the charter-party. TSL accepted the repudiation and claimed damages for loss of bargain.
(b) M/V *Crimson Horizon*: KMH failed to pay hire on the vessel from 1 July 2022. Arrears of £4,280,000 had accrued before TSL exercised its contractual right to withdraw the vessel on 15 September 2022. TSL subsequently accepted KMH's failure to pay hire as a repudiatory breach and claimed both the outstanding hire and damages for loss of bargain.
(c) M/V *Volga Spirit*: KMH applied off-hire deductions to hire payments totalling approximately £2,740,000, which the Tribunal found to have been fabricated and unsupported by any genuine off-hire event. The Tribunal ordered restitution of those sums.
13. These breaches occurred against the background of a substantial decline in the dry-bulk freight market in the second half of 2022, which the Tribunal found was the economic motivation for KMH's conduct. The Tribunal expressly found, at paragraph 187 of the Award, that "KMH's breaches were deliberate and commercially motivated, designed to extricate itself from charter-party commitments that had become unprofitable in light of falling freight rates."
D. The LCIA Arbitration
14. TSL filed its Request for Arbitration on 14 November 2022, commencing LCIA Case No. 224718. The Tribunal was constituted on 8 February 2023 following the appointment of the co-arbitrators by the respective parties and the appointment of the Presiding Arbitrator by the LCIA Court.
15. The Tribunal conducted a thorough case management process, including a first procedural conference on 27 February 2023 at which detailed directions were given for the exchange of statements of case, witness statements, expert reports, and disclosure. The procedural timetable was agreed by both parties and embodied in Procedural Order No. 1 dated 3 March 2023.
16. The evidentiary hearing took place over 10 hearing days from 11 to 22 September 2023 at the IDRC, London. Both parties were represented by experienced legal teams. TSL was represented by Calderwood & Harkness LLP. KMH was represented by Harkness Whitford & Co. (SRA No. 614823), with Ms. Catherine Whitford (Partner, International Arbitration) and Mr. James Thornbury (Associate) acting as KMH's principal legal representatives. Both parties called factual and expert witnesses. Each side had full and fair opportunity to cross-examine the opposing party's witnesses and to make both opening and closing written and oral submissions.
17. The factual witnesses who gave evidence at the hearing included, for TSL, Captain Dimitrios Kouretas and Ms. Elena Stavridis, and for KMH, Mr. Alexei Demidov and Ms. Marina Kazakova. Expert witnesses included, for TSL, Mr. Jonathan Briggs of Camberwell Management Consulting (shipping market expert) and Mr. Richard Hennessy FCA of Harborline Advisors (quantum expert), and for KMH, Mr. Simon Derbyshire of Arrow Shipbroking (shipping market expert) and Mr. Charles Pennington ACA of Westvale Strategy Partners (quantum expert). All witnesses were cross-examined.
18. The Final Award was issued on 28 June 2024. It is a comprehensive document running to 312 paragraphs over 97 pages, addressing in detail every issue in dispute between the parties.
E. The Award
19. The Award made the following findings and orders, in summary:
(a) M/V *Aegean Fortuna* damages: £42,300,000, calculated by reference to 14 months of remaining charter period at a market differential of approximately £3,021,429 per month between the contractual charter rate and the available market rate for comparable vessels, as established by TSL's expert evidence.
(b) M/V *Crimson Horizon* damages: £28,150,000, comprising outstanding hire of £4,280,000 plus loss of bargain damages of £23,870,000 for the unexpired charter period.
(c) M/V *Volga Spirit* restitution: £2,740,000, being the amount of fabricated off-hire deductions that the Tribunal found KMH had wrongfully withheld from hire payments.
(d) Loss of profit / market differential damages: £16,480,000, representing additional consequential losses across all three charters, including sub-charter losses and repositioning costs.
(e) Pre-award interest: £6,780,000 at 5.25% per annum simple from the respective dates of breach to 28 June 2024.
20. The total amount of the Award was £96,450,000 (approximately USD $120 million at the prevailing exchange rate of £1 = USD $1.2441 as of 28 June 2024).
21. On costs, the Tribunal ordered that KMH should bear 85% of all costs, resulting in an allocation to KMH of £12,150,000 (being £3,240,000 in LCIA administrative and tribunal costs, plus £8,910,000 in TSL's legal costs). The Tribunal further ordered post-award interest at 5.25% per annum simple on all unpaid sums from 29 June 2024 until the date of payment.
22. It is to be noted that the Award was unanimous. All three members of the Tribunal — including Dr. Henrik Dalmqvist, the co-arbitrator nominated by KMH — concurred in the findings and the relief granted.
F. Enforcement Proceedings
23. TSL filed its application for permission to enforce the Award as a judgment of the court pursuant to section 66 of the Act on 15 July 2024, in these proceedings (Claim No. CL-2024-000487). Permission was granted by Mr. Justice Ashworth on 2 August 2024.
24. In parallel, on 16 July 2024, TSL obtained a worldwide freezing order on an ex parte basis from Mr. Justice Ashworth, freezing KMH's assets worldwide up to the value of £108,600,000. The freezing order was continued with modifications on the return date on 30 July 2024. The evidence filed in support of the freezing order, including the witness statement of Mr. Nikolaos Papadimitriou and the asset tracing report prepared by Hartwell Pemberton LLP, established a real risk of dissipation of assets by KMH and its associated entities.
25. KMH filed the present Application on 19 August 2024, seeking to set aside the Award on grounds arising under sections 68 and 69 of the Act.
26. TSL has also commenced enforcement proceedings in parallel jurisdictions, reflecting the multi-jurisdictional nature of the KMH group's asset base. These include: proceedings in Cyprus (Case No. 2247/2024, Nicosia District Court), Singapore (OS No. 872/2024, Singapore High Court), and the United Arab Emirates (Case No. 1893/2024, Dubai Court of First Instance). Those proceedings are not directly before this court, but they are relevant context demonstrating the urgency and importance of finality in these proceedings.
III. LEGAL FRAMEWORK
A. Section 68: Serious Irregularity
27. Section 68(1) of the Act provides that a party to arbitral proceedings may apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings, or the award. A party may only bring such a challenge if the serious irregularity has caused or will cause "substantial injustice" to the applicant.
28. Section 68(2) sets out an exhaustive list of the categories of serious irregularity that may found a challenge. These include, so far as relevant to KMH's Application:
(a) Failure by the tribunal to comply with section 33 of the Act (the general duty of the tribunal to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with the case of its opponent, and to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense) — section 68(2)(a);
(b) The tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction) — section 68(2)(b);
(c) Failure by the tribunal to deal with all the issues that were put to it — section 68(2)(d);
(d) Uncertainty or ambiguity as to the effect of the award — section 68(2)(f); and
(e) 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 — section 68(2)(i).
29. The threshold for a successful challenge under section 68 is "deliberately high." This has been emphasised by the highest courts on numerous occasions:
(a) In Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, the House of Lords held that section 68 is designed to cover cases where the tribunal has gone "so wrong in its conduct of the arbitration that justice calls out for it to be corrected" (per Lord Steyn at [28]).
(b) In RAV Bahamas Ltd v Therapy Beach Club Inc [2021] UKSC 45, the Supreme Court reaffirmed the restrictive nature of section 68, emphasising that it is not an avenue for reviewing the merits of the tribunal's decision.
(c) In Bandwidth Shipping Corporation v Intaari [2007] EWCA Civ 998, the Court of Appeal held that section 68 should be read and applied as a "long stop, only available 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" (per Tuckey LJ at [41]).
30. Critically, the role of the court under section 68 is not to review the merits of the tribunal's decision. As the Court of Appeal held in Checkpoint Ltd v Strathclyde Pension Fund [2003] EWCA Civ 84, the court must resist the temptation to carry out a detailed textual analysis of the award with a view to finding fault with it. Section 68 is not a backdoor appeal on the merits, and is not a mechanism for challenging findings of fact or the tribunal's evaluation of the evidence.
31. The requirement of "substantial injustice" is a separate and additional hurdle. It is not enough for an applicant to demonstrate that a serious irregularity occurred; the applicant must also demonstrate that the irregularity caused, or will cause, substantial injustice. This requires the applicant to show that, but for the irregularity, the outcome of the arbitration would have been, or could realistically have been, substantially different. A merely theoretical possibility that the outcome might have been different is insufficient.
B. Section 69: Appeal on a Point of Law
32. Section 69(1) of the Act provides that, unless otherwise agreed by the parties, a party to arbitral proceedings may appeal to the court on a question of law arising out of an award made in the proceedings. However, such an appeal may only be brought with the permission of the court, unless all the other parties agree to the appeal.
33. Section 69(3) sets out the criteria for granting leave to appeal. The court shall not grant leave unless it is satisfied that:
(a) The determination of the question will substantially affect the rights of one or more of the parties;
(b) The question is one which the tribunal was asked to determine;
(c) On the basis of the findings of fact in the award, the decision of the tribunal on the question is either (i) 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) 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.
34. These criteria are cumulative. All four must be satisfied before leave may be granted. If any one of them is not met, leave must be refused.
35. Furthermore, the LCIA Rules, under which the parties agreed to arbitrate, provide at Article 26.8 that awards shall be "final and binding." This provision reflects the parties' bargain for finality. While the parties did not enter into an express exclusion agreement under section 69(1), the court should take into account the parties' choice of institutional arbitration under the LCIA Rules as a factor weighing against the grant of leave. The parties chose LCIA arbitration precisely because of the certainty, efficiency, and finality it provides.
36. The court should be especially reluctant to grant leave where the question is one of mixed fact and law, or depends on the tribunal's interpretation of a specific contract applied to specific facts, as opposed to a pure question of law of general application. As the Court of Appeal held in CMA CGM SA v Beteiligungs-KG MS "Northern Pioneer" [2003] 1 WLR 1015 (per Tuckey LJ at [20]):
"The more the question of law relates to the construction of a particular contract, and the more the answer depends upon the context in which the words are found and the background facts known to the parties at the time, the less likely it is that the question will be one of general public importance."
37. It is fundamental that questions of fact, or questions of mixed fact and law that are predominantly factual, are not appealable under section 69. The court has no jurisdiction under section 69 to interfere with the tribunal's findings of fact.
IV. KMH'S GROUNDS OF CHALLENGE AND TSL'S RESPONSE
A. Ground 1 (Section 68): Alleged Failure to Deal with an Essential Issue — Quantum of M/V *Aegean Fortuna* Damages
KMH's Contention.
38. KMH contends that the Tribunal failed to deal with an essential issue put to it within the meaning of section 68(2)(d) of the Act. Specifically, KMH argues that the Tribunal failed to deal with KMH's argument that the market rate for Supramax bulk carriers had declined significantly in the period following the wrongful early redelivery of M/V Aegean Fortuna on 18 June 2022, such that the £42,300,000 damages figure was excessive and did not properly account for KMH's evidence of available substitute employment at reduced rates. KMH relies in particular on certain fixtures identified in the report of KMH's shipping market expert, Mr. Simon Derbyshire.
TSL's Response.
39. This ground is wholly without merit. The Tribunal dealt with this issue expressly and at length. The Tribunal's treatment of the question of quantum for the wrongful early redelivery of M/V Aegean Fortuna occupies paragraphs 142 to 198 of the Award, spanning some 20 pages of detailed analysis. The Tribunal addressed KMH's market evidence head-on and rejected it.
40. At paragraphs 176 to 183 of the Award, the Tribunal specifically considered the market data and fixture evidence relied upon by KMH's expert, Mr. Derbyshire. The Tribunal found, in terms, that:
(a) Mr. Derbyshire's comparables were "not properly comparable" to M/V Aegean Fortuna, being based on fixtures for vessels of different specifications, different trade routes, and different charter periods (Award, §178);
(b) Mr. Derbyshire had failed to make appropriate adjustments for the specific characteristics of M/V Aegean Fortuna, including its enhanced cargo-handling equipment and its established trading pattern in the Atlantic basin (Award, §179);
(c) Mr. Derbyshire's evidence was "internally inconsistent" in certain material respects and was contradicted by contemporaneous market reports from Baltic Exchange assessments (Award, §181); and
(d) By contrast, the market evidence of TSL's expert, Mr. Jonathan Briggs of Camberwell Management Consulting, was "thorough, well-supported by contemporaneous data, and methodologically sound" (Award, §183).
41. Having considered and rejected KMH's market evidence, the Tribunal accepted TSL's expert evidence on the applicable market differential and calculated damages over the 14-month remaining charter period based on the difference between the contractual charter rate and the market rate as established by Mr. Briggs's evidence. This was a classic exercise of the Tribunal's fact-finding function.
42. The legal principles governing a challenge under section 68(2)(d) are well-established. A "failure to deal with" an issue means a failure to address an issue at all — it does not encompass a situation in which the tribunal has addressed the issue but reached a conclusion with which the applicant disagrees. As Gloster J (as she then was) held in Petrochemical Industries Co (KSC) v Dow Chemical Co [2012] EWHC 2739 (Comm) at [18]:
"A failure to deal with an issue is not the same as reaching a wrong conclusion on an issue. Section 68(2)(d) is concerned with a failure to deal with the issue at all, not with the way in which the tribunal dealt with it."
43. Similarly, in Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd's Rep 83, the court held that a tribunal is not required to set out every step of its reasoning or to address every sub-argument or piece of evidence advanced by a party. What is required is that the tribunal address the essential issues in the case. This the Tribunal plainly did.
44. KMH's real complaint is that the Tribunal preferred TSL's market evidence to KMH's. That is not a ground for challenge under section 68. The Tribunal weighed the competing expert evidence, assessed the credibility and reliability of the experts, and reached a reasoned conclusion. The court cannot and should not intervene simply because KMH would have wished the Tribunal to reach a different conclusion.
45. Even if this court were to find (which TSL denies) that the Tribunal had failed to deal with some aspect of KMH's market evidence, there is no basis for concluding that substantial injustice has been caused. The Tribunal gave detailed reasons for rejecting KMH's market data as unreliable and non-comparable. There is no realistic prospect that, had the Tribunal considered KMH's alternative market evidence more fully, the outcome would have been substantially different. The Tribunal's findings on this issue were reinforced by multiple independent lines of evidence, including contemporaneous Baltic Exchange assessments, market circulars, and the testimony of Captain Kouretas as to the trading pattern and earnings capacity of M/V Aegean Fortuna.
46. Ground 1 accordingly fails on both limbs: there was no failure to deal with an essential issue, and no substantial injustice has been demonstrated.
B. Ground 2 (Section 68): Alleged Procedural Unfairness — Exclusion of Late Evidence on M/V *Volga Spirit* Off-Hire Deductions
KMH's Contention.
47. KMH contends that the Tribunal acted in breach of its general duty under section 33 of the Act and in a manner giving rise to serious irregularity under section 68(2)(a) by refusing to admit late-filed documents that KMH argued showed the off-hire deductions on M/V Volga Spirit were legitimate. KMH argues that the exclusion of these documents deprived it of a reasonable opportunity to put its case on this issue.
TSL's Response.
48. This ground is similarly without merit. The Tribunal's decision to exclude KMH's late evidence was a proper exercise of the Tribunal's case management powers, made after careful consideration of the competing interests of both parties, and well within the range of decisions that a reasonable tribunal might make in the circumstances.
49. The relevant procedural history is as follows. The procedural timetable agreed by both parties and set out in Procedural Order No. 1 (dated 3 March 2023) provided for the exchange of documentary evidence by 30 June 2023, with witness statements to follow by 31 July 2023 and expert reports by 18 August 2023. KMH complied with these deadlines and produced its documents and witness evidence accordingly.
50. On 4 September 2023 — a mere seven days before the commencement of the 10-day evidentiary hearing — KMH applied to the Tribunal for permission to introduce a set of additional documents, described by KMH as "recently located" vessel maintenance and classification records, which KMH contended supported the legitimacy of the off-hire deductions it had applied to M/V Volga Spirit.
51. The Tribunal heard submissions from both parties on 6 September 2023 and issued a detailed ruling in Procedural Order No. 4, dated 7 September 2023. The Tribunal refused KMH's application on three independent grounds:
(a) No satisfactory explanation for late disclosure. KMH had failed to provide any adequate explanation for why the documents had not been produced during the ordinary disclosure phase. The documents were said to have been held by KMH's fleet operations department in Limassol, but KMH offered no explanation as to why those records had not been identified and disclosed in accordance with the agreed procedural timetable.
(b) Substantial prejudice to TSL. Admission of the documents at such a late stage would have caused substantial prejudice to TSL, which would have had no adequate opportunity to investigate the provenance, authenticity, and accuracy of the documents, to seek corresponding documentation from third parties (including classification societies), or to put the documents to its own witnesses. TSL's factual and expert evidence had already been finalised on the basis of the disclosed record.
(c) Doubtful provenance and relevance. The Tribunal noted concerns about the provenance of the documents and their relevance to the issues in dispute, observing that they appeared to be internal records of uncertain authenticity that were not corroborated by any independent source.
52. This was a quintessential case management decision, squarely within the Tribunal's discretion. The Tribunal was exercising its powers under Article 14 of the LCIA Rules and its general duty under section 33 of the Act, which requires the tribunal to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, and to give each party a reasonable opportunity of putting its case and dealing with the case of its opponent. The section 33 duty runs to both parties. It is not a one-way street that entitles a party to introduce evidence at any stage, regardless of the impact on the opposing party and the integrity of the procedural timetable.
53. The principles governing the court's review of a tribunal's case management decisions under section 68 were considered by the Court of Appeal in Westvale & Co. AG v Vorchmeld Airport GmbH [2006] 2 Lloyd's Rep 1, where the court held (per Tomlinson LJ at [72]) that a tribunal's procedural and case management decisions are reviewable under section 68 "only in extreme cases where the decision is so far removed from what could reasonably be expected of the arbitral process that the court could conclude substantial injustice had been caused." The court emphasised that it is not for the supervisory court to substitute its own view of how the tribunal ought to have managed the proceedings.
54. The present case is far from the "extreme case" that section 68 is designed to address. The Tribunal considered the competing interests carefully, gave both parties an opportunity to be heard, and reached a balanced decision that respected the procedural timetable agreed by the parties while protecting TSL from the prejudice that would have resulted from the late introduction of unverified documents.
55. Moreover, even if the documents had been admitted, there is no basis for concluding that the outcome would have been substantially different. The Tribunal's finding that the off-hire deductions on M/V Volga Spirit were fabricated rested on multiple independent lines of evidence, including:
(a) The testimony of Captain Dimitrios Kouretas, who gave detailed evidence that the vessel was fully operational during the periods in which KMH claimed off-hire;
(b) Contemporaneous vessel position data (AIS records) demonstrating that M/V Volga Spirit was trading normally and at sea during the periods claimed as off-hire;
(c) Classification society records from Bureau Veritas confirming that the vessel had a valid class certificate throughout the relevant periods, with no deficiencies noted;
(d) The vessel's operational logs, which were contemporaneous with the relevant periods and showed normal trading activity;
(e) The evidence of TSL's quantum expert, Mr. Hennessy, who analysed the claimed off-hire events and demonstrated that they were inconsistent with the vessel's operational records; and
(f) The Tribunal's adverse findings on the credibility of KMH's witness Mr. Demidov, whose evidence on the off-hire events the Tribunal found to be "unreliable and, in material respects, untruthful" (Award, §243).
56. The excluded documents — even assuming they were genuine — were internal KMH records that would have been assessed in the context of all this other evidence. There is no realistic prospect that they would have altered the Tribunal's finding that the off-hire events were fabricated.
57. No substantial injustice has been demonstrated. Ground 2 should be dismissed.
58. Furthermore, and separately, TSL relies on section 73 of the Act in respect of this ground. KMH continued to participate fully in the arbitration after the Tribunal's ruling in Procedural Order No. 4, including by participating in the 10-day evidentiary hearing, calling its witnesses, cross-examining TSL's witnesses, and making closing submissions. At no point did KMH reserve its right to challenge the Tribunal's ruling or indicate that it regarded the ruling as a serious irregularity. KMH is accordingly deemed to have waived its right to object. This is addressed further at Section VI below.
C. Ground 3 (Section 68): Alleged Tribunal Bias or Apparent Bias
KMH's Contention.
59. KMH raises an allegation of apparent bias against the Presiding Arbitrator, Sir Malcolm Fenton-Clarke. KMH contends that Sir Malcolm demonstrated apparent bias by the manner and extent of his questioning of KMH's witnesses during the evidentiary hearing, and by comments made during the hearing that KMH characterises as suggesting prejudgment. KMH relies on several passages from the hearing transcript.
TSL's Response.
60. This ground is entirely without merit and borders on an abuse of process. TSL addresses it briefly and respectfully submits that it should be given short shrift by the court.
61. Waiver under section 73. As a preliminary matter, KMH is barred from raising this ground by reason of section 73 of the Act. KMH participated in the full 10-day evidentiary hearing from 11 to 22 September 2023 without raising any objection whatsoever to the Presiding Arbitrator's conduct. The conduct of which KMH now complains occurred during the hearing itself. KMH did not, at any point during or after the hearing:
(a) Object to Sir Malcolm's questioning;
(b) Apply for a break or adjournment to consider its position;
(c) Raise any concern about perceived bias, whether orally or in writing;
(d) Apply for Sir Malcolm's removal under Article 10 of the LCIA Rules; or
(e) Reserve its right to challenge Sir Malcolm's conduct before the court.
62. Instead, KMH continued to participate without reservation in the hearing, including calling its own witnesses, cross-examining TSL's witnesses, and filing post-hearing submissions. Under section 73(1) of the Act, a party who takes part in arbitral proceedings without objecting forthwith, or within any time allowed, that there has been an irregularity affecting the tribunal or the proceedings, may not subsequently raise that objection before the court. KMH is therefore deemed to have waived its right to object. The waiver point is addressed further at Section VI below.
63. The substantive complaint is without merit. Even if KMH were not barred by section 73, the allegation of apparent bias would fail on the merits. The conduct of which KMH complains — namely, probing questions put by the Presiding Arbitrator to KMH's witnesses during oral evidence — is entirely consistent with the normal and proper conduct of an arbitral hearing. It is well-established that a tribunal may, and indeed should, ask questions of witnesses in order to test the evidence, to clarify matters, and to satisfy itself as to the truth. Judicial and arbitral questioning of witnesses does not give rise to an inference of bias.
64. In Bremer Handels GmbH v Ets Soules et Cie [1985] 1 Lloyd's Rep 160, the court held that a tribunal's questioning of witnesses, even where it is robust or extensive, does not without more constitute evidence of bias. The function of the tribunal is to ascertain the truth, and probing questions are a legitimate and necessary tool for that purpose.
65. The test for apparent bias is that established by the House of Lords in Porter v Magill [2001] UKHL 67: whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. This is an objective test. The fair-minded observer is taken to be one who is neither complacent nor unduly suspicious, who is aware of the legal traditions and culture of the relevant jurisdiction, and who knows the facts.
66. Applying the Porter v Magill test to the facts of this case, no fair-minded and informed observer would conclude that there was a real possibility that Sir Malcolm Fenton-Clarke was biased against KMH. The passage of the hearing transcript on which KMH relies shows no more than a tribunal doing its job — testing the evidence of witnesses, probing inconsistencies, and seeking clarification. The comments relied upon by KMH, when read in their full context rather than selectively, are entirely consistent with proper judicial conduct.
67. The fair-minded observer would also take into account that:
(a) Sir Malcolm Fenton-Clarke is one of the most experienced and respected international arbitrators practising in London, with a distinguished career spanning more than 30 years, including service as a Queen's Counsel and a Deputy High Court Judge before entering full-time practice as an arbitrator;
(b) Both parties' witnesses — not only KMH's witnesses — were questioned by the Tribunal;
(c) KMH raised no objection at the time, which is inconsistent with a genuine and contemporaneous perception of bias; and
(d) Most significantly, the Award was unanimous. All three arbitrators — including Dr. Henrik Dalmqvist, the co-arbitrator nominated by KMH itself — concurred in the findings and the relief granted. If the Presiding Arbitrator's questioning had been indicative of prejudgment or bias, one would expect KMH's own nominee to have dissented. The unanimity of the Award is wholly inconsistent with any suggestion that the Presiding Arbitrator's conduct tainted the decision-making process.
68. No substantial injustice has been caused or will be caused. The allegation of bias is unsupported by the evidence, is contradicted by the unanimous nature of the Award, and is barred by section 73. Ground 3 should be dismissed.
D. Ground 4 (Section 69): Alleged Error of Law — Measure of Damages for Repudiatory Breach of Charter-Party
KMH's Contention.
69. KMH contends that the Tribunal erred in law in adopting the "loss of bargain" measure of damages for the wrongful early redelivery of M/V Aegean Fortuna and the repudiatory breach of the M/V Crimson Horizon charter, rather than applying what KMH describes as a "mitigation analysis" that would, it says, have resulted in a significantly reduced award. KMH seeks leave to appeal under section 69 of the Act.
TSL's Response.
70. Leave to appeal should be refused. KMH's application does not meet any of the criteria in section 69(3) of the Act.
71. The Tribunal's decision is not "obviously wrong." The applicable principles for assessment of damages for repudiatory breach of a time charter-party are well-established in English law. The starting point is the "loss of bargain" measure: the innocent party is entitled to be placed in the position it would have been in had the contract been performed. In the context of a time charter-party, this is measured by the difference between the contractual rate and the market rate for the unexpired period of the charter.
72. The Tribunal correctly applied the principles established in the leading authorities:
(a) The Golden Victory [2007] UKHL 12, in which the House of Lords confirmed that the measure of damages for repudiatory breach of a charter-party is assessed by reference to the difference between the contractual rate and the market rate over the unexpired charter period, subject to any supervening event that would have brought the charter to a premature end; and
(b) The New Flamenco [2017] UKSC 43, in which the Supreme Court considered the proper approach to assessing damages where the innocent party disposes of the vessel following the charterer's breach, and confirmed the primacy of the loss of bargain measure.
73. The Tribunal assessed the difference between the contractual rate and the available market rate over the unexpired charter periods for both M/V Aegean Fortuna and M/V Crimson Horizon, based on the expert evidence of Mr. Briggs. This was the orthodox and correct approach in law.
74. The Tribunal fully considered KMH's mitigation arguments. It is incorrect for KMH to suggest that the Tribunal applied the loss of bargain measure without having regard to the principles of mitigation. To the contrary, the Tribunal addressed mitigation at paragraphs 199 to 217 of the Award. The Tribunal found as a fact that TSL had taken reasonable steps to mitigate its loss, including by seeking substitute employment for the vessels through its brokers in the relevant markets. The Tribunal noted that substitute employment was obtained for M/V Aegean Fortuna within approximately three months of redelivery, but at a rate substantially below the contractual charter rate, consistent with the depressed market conditions prevailing at the time. The Tribunal gave credit for the earnings from substitute employment in calculating the net loss.
75. KMH's real complaint, as with Ground 1, is not that the Tribunal applied the wrong legal test, but that the Tribunal rejected KMH's factual case on the extent of TSL's mitigation and the available market rates. That is a challenge to the Tribunal's findings of fact, which is not amenable to appeal under section 69. The court has no jurisdiction under section 69 to interfere with the Tribunal's findings of fact or to substitute its own assessment of the evidence.
76. The question is not one of "general public importance." The principles governing damages for repudiatory breach of a time charter-party are well-settled. There is no novel or uncertain question of law that requires determination by the court for the benefit of the shipping industry or commercial law more generally. The Tribunal applied established principles to its findings of fact.
77. The question is one of mixed fact and law. To the extent that KMH's challenge engages any question of law, it is inextricably intertwined with the Tribunal's findings of fact — in particular, its findings as to the applicable market rates, the availability of substitute employment, and the reasonableness of TSL's mitigation efforts. As the Court of Appeal held in CMA CGM SA v Beteiligungs-KG MS "Northern Pioneer" [2003] 1 WLR 1015, the court should be reluctant to grant leave where the question turns on the application of settled legal principles to the specific facts found by the tribunal.
78. It is not just and proper for the court to determine the question. The parties agreed to resolve their disputes by arbitration under the LCIA Rules, which embody a commitment to finality (Art. 26.8). KMH, having submitted to the jurisdiction of a distinguished tribunal, having had the benefit of a full 10-day evidentiary hearing, and having had every opportunity to advance its case, should not now be permitted to reopen the Tribunal's findings under the guise of a section 69 appeal.
79. Even if leave were granted — which TSL submits should not occur — the appeal would fail on the merits. The Tribunal's reasoning on damages is consistent with binding authority and is well-supported by the evidence. There is no error of law.
80. Leave to appeal under Ground 4 should be refused.
E. Ground 5 (Section 69): Alleged Error of Law — Construction of Off-Hire Clause in M/V *Volga Spirit* Charter
KMH's Contention.
81. KMH contends that the Tribunal erred in law in construing the off-hire clause (Clause 15) in the M/V Volga Spirit charter-party. KMH argues that, on its proper construction, Clause 15 permitted the deductions that KMH made from hire payments, and that the Tribunal's interpretation of the clause was wrong in law.
TSL's Response.
82. Leave to appeal should be refused. This ground fares no better than Ground 4.
83. The construction of a particular clause in a particular contract is not ordinarily a question of law of general public importance suitable for appeal under section 69. The off-hire clause in the M/V Volga Spirit charter-party was a bespoke provision, drafted by the parties for the specific purposes of their commercial relationship. Its construction depends on the specific language of the clause, the contractual matrix, the factual background known to the parties at the time of contracting, and the parties' course of dealing. As the court observed in Kershaw Mechanical Services Ltd v Kendrick Construction Ltd [2006] EWHC 727 (TCC) at [38], the construction of a particular clause in a particular contract is not a question of general public importance but a question specific to the contract in question.
84. The Tribunal's construction was fact-specific. The Tribunal's approach to the construction of Clause 15 was set out at paragraphs 228 to 258 of the Award. The Tribunal considered the language of the clause, the structure of the charter-party as a whole, the commercial context in which the charter was concluded, and the parties' course of dealing. The Tribunal applied the well-established principles of contractual construction set out in Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and Wood v Corvila Insurance Services Ltd [2017] UKSC 24. These decisions of the Supreme Court establish that the court should ascertain the objective meaning of the language of the contract, having regard to the natural and ordinary meaning of the words, the overall purpose of the clause and the contract, the facts and circumstances known or assumed by the parties at the time the contract was executed, and commercial common sense — but that commercial common sense should not be invoked to rewrite a contract that was clear on its face.
85. The Tribunal held that, on its proper construction, Clause 15 required that off-hire could only be claimed in respect of periods during which the vessel was genuinely unable to perform the chartering service by reason of one of the specified off-hire events. The Tribunal found that the clause did not permit deductions in respect of periods during which the vessel was in fact operational and trading. This construction is plainly not "obviously wrong." It is consistent with the well-established line of authority on the construction of off-hire clauses in time charters, which hold that off-hire clauses are exceptions to the primary obligation to pay hire and are to be construed narrowly.
86. The Tribunal's alternative finding is dispositive. In any event, even if this court were to reach a different conclusion on the proper construction of Clause 15 — which TSL does not accept — the Tribunal's alternative finding would independently sustain the result. The Tribunal found, as a fact, that the off-hire events relied upon by KMH had not actually occurred. The vessels were not off-hire at the relevant times. The Tribunal found at paragraph 247 of the Award that:
"Even if Clause 15 were construed in the manner contended for by KMH, KMH's claim to deductions would fail because the off-hire events upon which KMH relies did not occur. The evidence before the Tribunal, including the vessel's operational logs, AIS data, and classification records, demonstrates that M/V Volga Spirit was fully operational during the periods in respect of which KMH claims off-hire. The Tribunal finds as a fact that the off-hire events were fabricated."
87. This factual finding is not amenable to challenge under section 69, which is limited to questions of law. Since the factual finding that the off-hire events were fabricated would independently sustain the Tribunal's award of £2,740,000 in restitution, any appeal on the construction of Clause 15 would be academic. The court should not grant leave to appeal on a question of law that could not, even if resolved in KMH's favour, affect the outcome.
88. Leave to appeal under Ground 5 should be refused.
V. THE APPLICATION IS A DISGUISED APPEAL ON THE MERITS
89. Taken as a whole, KMH's Application is an impermissible attempt to re-litigate the merits of the dispute that was resolved by the Tribunal after a full hearing. Each of KMH's five grounds, when properly analysed, amounts to dissatisfaction with the Tribunal's findings of fact, its assessment of the evidence, or its exercise of procedural discretion — none of which is a proper basis for challenge under sections 68 or 69 of the Act.
90. The pattern is clear:
(a) Ground 1 (quantum of M/V Aegean Fortuna damages) is a complaint about the Tribunal's assessment of competing expert evidence on market rates — a question of fact.
(b) Ground 2 (exclusion of late evidence on M/V Volga Spirit) is a complaint about the Tribunal's exercise of case management discretion — a matter within the Tribunal's procedural powers.
(c) Ground 3 (alleged bias) is a complaint about the Tribunal's probing questioning of witnesses — a complaint about the manner in which the Tribunal performed its fact-finding function.
(d) Ground 4 (measure of damages) is a complaint about the Tribunal's application of well-established legal principles to its own findings of fact — a question of mixed fact and law, predominantly factual in nature.
(e) Ground 5 (construction of off-hire clause) is a complaint about the Tribunal's construction of a specific clause in a specific contract, which is rendered academic by the Tribunal's alternative finding of fact that the off-hire events were fabricated.
91. The Tribunal heard extensive evidence over 10 hearing days. Both parties were represented by experienced and specialist legal teams — Harkness Whitford & Co. (Ms. Catherine Whitford and Mr. James Thornbury) for KMH, and Calderwood & Harkness LLP for TSL. Both sides called factual and expert witnesses, cross-examined opposing witnesses, and filed extensive written and oral submissions. KMH had every opportunity to advance its case and did so, fully and without restraint.
92. The policy of the Arbitration Act 1996 is expressed in section 1, which provides:
"The provisions of this Part are founded on the following principles, and shall be construed accordingly —
(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;
(c) in matters governed by this Part the court should not intervene except as provided by this Part."
93. The court's supervisory jurisdiction under sections 68 and 69 is a narrow one, carefully calibrated to respect the autonomy of the arbitral process and the parties' bargain to resolve their disputes through arbitration. It is not a mechanism for the losing party to obtain a second bite at the cherry. KMH's Application, if allowed to succeed, would undermine the policy of the Act and the finality of arbitral awards more generally.
94. TSL submits that the Application should be dismissed in its entirety as a disguised appeal on the merits, for which sections 68 and 69 provide no remedy.
VI. WAIVER AND LOSS OF RIGHT TO OBJECT (SECTION 73)
95. Separately, and in the alternative to the submissions set out above, TSL relies on section 73 of the Act in respect of KMH's grounds relating to procedural matters, namely Ground 2 (exclusion of late evidence) and Ground 3 (alleged bias of the Presiding Arbitrator).
96. Section 73(1) of the Act provides:
"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,
(b) that the proceedings have been improperly conducted,