The High Court of England & Wales recently handed down its decision in the matter of Pacific Basin IHX Limited v Bulkhandling Handymax AS. The matter concerned the risk of piracy in the Gulf of Aden and whether owners were entitled, under the charterparty which included Conwartime 1993 clause, to deviate via Cape Town to avoid the risk of piracy on a voyage from Europe to the People's Republic of China.

In their award in favour of owners, the arbitrators held that the phrase "may be, or are likely to be" connoted a serious risk that the vessel would be exposed to acts of piracy. In this the Court held that the arbitrators had focused on the quality or nature of the event of which there was a risk, instead of the likelihood of the risk materialising. Instead of asking whether there was a serious chance that a vessel would be exposed to acts of piracy, the arbitrators had asked themselves whether there was a chance the vessel would be exposed to the risk of a serious event, namely, being exposed to piracy.

Whilst the Court ultimately returned the matter to the arbitrators for further determination on the facts, the Court has nonetheless provided some much needed clarity to the interpretation of the Conwartime clause in that owners and charterers alike must consider the real likelihood of a piracy attack occurring, as opposed to considerations of the seriousness of the event itself.

 

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