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Edwinton Commercial Corp & Anor v Tsavliriss Russ (Worldwide Salvage & Towage) Ltd (Sea Angel) [2006]
EWHC 1713 (Comm) (26 July 2006)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2006/1713.html
Cite as: [2006] EWHC 1713 (Comm), [2007] 1 Lloyd's Rep 335

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Neutral Citation Number: [2006] EWHC 1713 (Comm)

Case No: 2004/43

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL
26/07/2006

Before:

THE HON MR JUSTICE GROSS

____________________

Between:
Edwinton Commercial Corporation & Anor Claimants
- and -
Tsavliriss Russ
(Worldwide Salvage & Towage) Ltd
The "Sea Angel" Defendant

____________________

Mrs E. Blackburn QC & Mr M. Jones (instructed by Hextalls) for the Claimants

Mr T Hill (instructed by Eversheds) for the Defendant
Hearing dates: 1st – 3rd March 2006 & 6th – 9th March 2006
____________________

HTML VERSION OF JUDGMENT

____________________
 Crown Copyright ©

The Hon Mr Justice Gross :

INTRODUCTION

1. On the 27th July, 2003, the "TASMAN SPIRIT" ("the casualty"), laden with some 67,537
mt of light crude oil, grounded in or near the approaches to the port of Karachi.
Subsequently, on or about the 13th August, the casualty broke in two. I say nothing as
to the precise place of grounding; that is the subject of a dispute as to the safety of
the port and was not canvassed before me. On any view, the grounding comprised a
major pollution incident; it gave rise to great local sensitivity on the part of the port
authority, the Karachi Port Trust ("KPT") and others.

2. The Islamic Republic of Pakistan ("Pakistan") was not at the material time a signatory
to the International Convention on Civil Liability for Oil Pollution Damage 1969 or the
1992 Protocol by which it was amended (collectively, "CLC"). It follows that the CLC
regime of strict liability, compulsory liability insurance and limitation of liability was
inapplicable. Accordingly, absent agreement, any prospect of satisfying claims for
pollution damage rested on the security of those vessels or assets within the
jurisdiction of Pakistan.

3. On the 30th July, 2003, the Defendant ("Tsavliris") entered into a Lloyd's Standard Form
of Salvage Agreement with the owners of the casualty, on the LOF 2000 form ("the
LOF"), incorporating the SCOPIC clause – to which I shall return later. In the event, the
SCOPIC clause was invoked by Tsavliris on the 13th August. To fulfil its obligations
under the LOF, Tsavliris engaged a number of sub-contracted craft ("the chartered in
vessels"). It was necessary to lighten the casualty, off-loading part of its cargo with the
use of shuttle tankers and transhipping that cargo to a larger tanker, the "ENDEAVOUR
II". One such shuttle tanker was the "SEA ANGEL" ("the vessel"), owned by the First
Claimant, time chartered on the 25th August, 2003 to the Second Claimant and sub-
time chartered on the same day to Tsavliris ("the head charterparty" and "the
charterparty", respectively). The period/trading limits clause of the charterparty
included this wording: "…up to 20..days…for transhipment(s) of up to full cargo of
crude oil from forward and aft sections…" of the casualty. The vessel was delivered
into service under the charterparty on the 26th August.

4. On the 5th/6th September, the vessel completed loading her final parcel of cargo from
the casualty and shifted to "ENDEAVOUR II", in order to tranship that parcel of cargo.
On the 6th September, the Defendant gave 5 days notice of redelivery under the
charterparty. On the 9th September, the vessel completed the discharge of cargo into
the "ENDEAVOUR II". On the same day, Tsavliris gave 3 days notice of redelivery at
Fujairah, assuming that the vessel departed from Karachi that day.

5. In the events which happened, the vessel did not leave Karachi until the 26th
December and was not redelivered until the 1st January, 2004. In the intervening
period, between the 10th September and the 26th December, the vessel had been
unable to depart Karachi because the KPT had refused to issue a "No Demand
Certificate" ("NDC"), a pre-requisite to port clearance and of which more in due
 course. On the 5th December, in a reasoned judgment to which I would pay respectful
tribute, Judge Alam, sitting in the High Court of Sindh at Karachi, held that the KPT's
refusal was unjustified and directed it to issue a NDC.

6. It is against this background that the present dispute has arisen. The Claimants claim
that hire is due and owing under the charterparty in the amount of US$1,373,320, for
the period from 18th September, 2003 (from when Tsavliris ceased paying hire) up
until redelivery on the 1st January, 2004. For its part, Tsavliris denies that any hire is
due and owing and contends instead that the charterparty was frustrated. This issue
was first raised on the 21st October, 2003, when Tsavliris alleged that the charterparty
was frustrated, by latest the 13th October. On the 23rd October, the alleged frustration
date was advanced to, in effect, the 10th September. By the time of the trial, the 10th
September dated was (realistically) not pressed. Instead the Tsavliris case was that the
charterparty was frustrated somewhere between the 19th September (its primary case)
and the 13th October. The Claimants have throughout denied that the charterparty
was frustrated, at all or, by way of a fallback position, not before the 18th October.
There were in addition certain ancillary claims and counterclaims with which it is
unnecessary to deal at this stage.

7. In a nutshell, the rival cases were these. Mr. Hill, for Tsavliris, submitted, first, that there
had been a frustrating event: namely, the unlawful refusal by the KPT to issue a NDC,
when all sums properly due had been paid. KPT had "detained" the vessel as security
for its pollution claims against third parties - the owners of the casualty and its
Protection and Indemnity Club ("the Club"). This detention had continued until a deal
had been done between KPT and the Club. From the 19th September and certainly by
the 13th October, the parties acting as reasonable commercial men would reasonably
have forecast that the period of delay would be inordinate, in the context of a 20 day
charterparty for very limited services. This view was confirmed in retrospect; a 20 day
charter had lasted for some 120 days. Secondly, Mr. Hill contended that the risk of
such detention was not dealt with by the charterparty. This risk had not been assumed
by Tsavliris and was neither foreseen by the parties nor reasonably foreseeable. As Mr.
Hill put it in the Tsavliris written closing submissions:

" …the risk of the vessel being detained by the port authorities for security
of someone else's obligations to pay for pollution damage was not
reasonably foreseeable."

This was not detention arising in the course of the vessel's usual operation. The
Claimants' arguments that the charterparty excluded the doctrine of frustration
whether through cl. 7 of the charterparty, or any safe port or safe places obligation, or
any redelivery obligation, or by way of the rider clause, were ill-founded or
misconceived.

8. For the Claimants, Mrs Blackburn QC denied that there had been any frustrating event.
Delay was a normal incident of a maritime adventure. Detention of salvors' craft and
equipment, whether owned or sub-contracted, was a known risk of the salvage
business; what happened here was not extraordinary. Alternatively, if the delay would
otherwise have given rise to frustration, the risk of such delay was either assumed by
Tsavliris, whether under the various provisions of the charterparty to which reference
 has already been made or otherwise, or it was self induced so that Tsavliris could not
rely upon it. Above all and however analysed, Tsavliris had failed to launch timely
court proceedings in Pakistan which could have secured the release of the vessel. The
proceedings in the event instituted by the Claimants had done just that; it was the
threat of contempt proceedings, following the order made by Judge Alam, which had
brought about the vessel's release. If Tsavliris chose to proceed by way of commercial
negotiations rather than litigation, a case of frustration could not be made good;
there was throughout the opportunity of securing the vessel's release by recourse to
the effective local court system. As to the alleged frustration dates advanced by
Tsavliris, as at the 19th September, the position was far too speculative to permit a
conclusion that the delay would continue for such a period as to give rise to
frustration. Throughout the period contended for by Tsavliris, namely the 19th
September – 13th October, the litigation route had not yet been explored. As
foreshadowed, if wrong on all this and as a fallback position, the earliest frustration
date was the 18th October.

9. Any notion of self induced frustration was disputed root and branch by Tsavliris. There
was no relevant obligation; it was not in breach of any obligation (if obligation there
was); any breach had not caused the delay or its continuation. The decision to pursue
a commercial route to secure the release of the vessel had been justified; in any event,
no court order, without the overall commercial deal already referred to, would have
been effective to ensure the vessel's release.

10. For completeness, I record that the Claimants had earlier pursued an application for
summary judgment under CPR Part 24. This application was refused by Cooke J, on
the 19th February, 2004, for the reasons which appear from his judgment. Other than
by way of a brief reference to the judgment of Cooke J, it is unnecessary to say more
of that application and its fate.

CONTRACTUAL TERMS

11. (A) The LOF: Chronologically, I start with the LOF. Some words of introduction may be
appropriate. Traditionally, as is well-known, services under LOF salvage agreements are
rendered on the principle of "no cure no pay". Again traditionally, salvage rewards and
awards have been fixed with a view to encouraging salvage operations and taking into
account the risk inherent in the "no cure no pay" principle. This approach is reflected
in Art. 13 of the London Salvage Convention 1989 ("the 1989 Convention"), which has
the force of law in the United Kingdom pursuant to s.224(1) of the Merchant Shipping
Act 1995. Increasing concern as to the threat of damage to the environment posed by
marine casualties led to the introduction of measures for "special compensation" for
salvors, now contained in Art. 14 of the 1989 Convention. In circumstances giving rise
to the threat of damage to the environment, Art. 14 was designed to interest salvors
in undertaking salvage operations even when faced with a low value fund and a
significant risk of failure. In the event, however, the limitations of Art. 14, perhaps in
particular the fact that recovery thereunder was confined to the reimbursement of
expenditure and excluded a profit element, gave rise to uncertainty and dissatisfaction
and encouraged a search by the industry for an improved alternative: see, The
Nagasaki Spirit [1997] AC 455; Brice on Maritime Law of Salvage (4th ed.), at paras. 6-
86 and following and 8-194 and following.
12. Such considerations in due course resulted in the development of "SCOPIC", an
acronym for "special compensation protection and indemnity clause". The parties are
free to choose whether or not to incorporate a SCOPIC clause into their LOF. The
philosophy of the SCOPIC clause is "quite distinct" from that of Art. 14 of the 1989
Convention and that of the Nagasaki Spirit: Brice, at para. 8-199. The clause, which
may only be invoked by the salvor, guarantees to him remuneration (not simply
reimbursement) if and insofar as the tariff rates under the clause yield more than an
Art. 13 award. The salvor does not need to prove that there exists a threat of damage
to the environment; but once the SCOPIC clause is invoked, if there is such a threat,
then the SCOPIC clause rather than Art. 14 of the 1989 Convention governs. The
SCOPIC clause is thus again a form of safety net. Where the salvor has erroneously
invoked the SCOPIC clause, in the sense that the Art. 13 award exceeds the SCOPIC
remuneration, then the Art. 13 award is to be discounted by 25% of the difference
between the two. Liability for payment of SCOPIC remuneration rests on the
shipowner (not on cargo interests) as does liability for the provision of security for
such remuneration. In practice, the P&I Club's role is critical, so reflecting the fact that
it is the Club which benefits from the avoidance of pollution and other third party
claims.

13. As already observed, the SCOPIC clause was incorporated in the LOF. For present
purposes, reference should be made to cl.9 thereof, which gives the salvor the right to
terminate his services (cl. 9(i)) and the shipowner the right to terminate his obligation
to pay SCOPIC remuneration (cl. 9(ii)). Clauses 9(ii) and (iii) provide as follows:

" (ii) The owners of the vessel may at any time terminate the obligation to
pay SCOPIC remuneration after the SCOPIC clause has been invoked …
provided that the Contractor shall be entitled to at least 5 clear days' notice
of such termination. In the event of such termination the assessment of
SCOPIC remuneration shall take into account all monies due under the tariff
rates set out in Appendix A hereof including time for demobilisation to the
extent that such time did reasonably exceed the 5 days' notice of
termination.

(iii) The termination provisions contained in sub-clause…. 9(ii) above shall

only apply if the Contractor is not restrained from demobilising his
equipment by Government, Local or Port Authorities or any other officially
recognised body having jurisdiction over the area where the services are
being rendered."

14. It follows that where sub-clause 9(iii) applies, the services continue and SCOPIC
remuneration continues to be earned. Brice goes on to say this (at para. 8-239):

" Governmental intervention is commonplace where there is perceived to

be a threat to the environment from a particular casualty. This can take the
form of the arrest of the casualty , her crew, the salvors' tug(s), crew(s) and
salvage officers unless and until the littoral interests are provided with
suitable guarantees in the event of pollution. If no such guarantees are
forthcoming the relevant authorities are likely to seek to compel the
contractors to continue with their services to the extent necessary to
obviate the threat."
 Unsurprisingly, this passage gave rise to considerable debate at the trial.

15. It is against this background that under the LOF, the owners of the casualty are
potentially liable to indemnify Tsavliris for all liabilities arising under the salvage
operation, including liability towards the owners or operators of vessels, plant and
equipment sub-contracted by Tsavliris for use in the operation. According to Mr.
Moloney, a partner of Eversheds, under the final settlement of Tsavliris claims under
the LOF, the liability insurers of the casualty agreed to take over, inter alia, the conduct
of this dispute. Furthermore, pursuant to this agreement, responsibility for the matter
was transferred from Clyde & Co., hitherto instructed by Tsavliris, to Eversheds, who
were originally solicitors for the owners, managers, master, crew and liability insurers
of the casualty. As these arrangements accordingly make clear, if the Claimants' claim
succeeds, then ultimately it appears that it would be passed on by Tsavliris and borne
by the casualty's owners or the Club, with Tsavliris earning remuneration in the
process; conversely, if the Claimants' claim fails, any loss will lie solely with them.

16. (B) The Claimants and the charterparty: So far as concerns the Claimants, the following
matters may be noted:

i) The terms of the head charterparty were identical to those of the charterparty, save
that the rate of hire under the head charterparty was US$5,000 per day and that under
the charterparty was US$13,000 per day.

ii) As, with respect, concisely summarised by Cooke J in his judgment in the Part 24
proceedings, at [2]:

" The first claimant, Edwinton sue on behalf of themselves and the second
claimant, Global. Any sums recovered are to be used, first, to pay for the
unrecovered costs of the action, and then to satisfay debts due from Global
to Edwinton, with Global retaining the balance. This arrangement was
achieved by an assignment of 31st October 2003 in which Global assigned
to Edwinton all its rights arising under its sub-charter with the defendants,
and a letter of undertaking by which Edwinton agreed with Global that it
would take appropriate steps to recover sums due under that sub-
charterparty and hold them in the matter which I have set out. Thus
Edwinton bring this claim as equitable assignees, with the consent of Global
who remain the legal owners of the claims, and as trustee for Global in
respect of such sums as fall to be recovered for their benefit. Global is also a
party to this action as assignor. "

iii) In the circumstances, no issue was or could be taken at trial as to title to sue.

iv) Save where it is necessary to distinguish between them, I shall refer simply to "the
Claimants", rather than to the First or Second Claimant.

17. I come to the charterparty, primarily contained in or evidenced by a fixture recap

dated 25th August, 2003. The charterparty provided, inter alia, as follows:

" Redelivery: Dropping off last pilot Fujairah Roads after release by
charterers or their authorised representative.
 Period/Trading Limits: Up to 20…days in charterer's option…for
transhipment(s) of up to full cargo of crude oil from forward and aft
sections of crude oil tanker 'Tasman Spirit' presently lying aground Keamari
channel near Karachi, Pakistan for delivery/discharge to one safe berth(s)
always afloat Pakistan/Arabian Gulf range in charterer's option or mutually
agreed safe port(s) or place(s). Transfers within OIMF guidelines.

Charterers to arrange, provide and pay for permits as required by the

Pakistan or any other authorities in order that the 'SEA ANGEL' can perform
under this charter.

Any taxes and/or dues on hire and/or cargo and/or vessel to be for
charterers' account and to be settled directly by them.

Contract: Terms 'SHELLTIME 4' time charter party, suitably amended to

include the following additional clauses:-

It is agreed and understood that any responsibility, costs and any expenses
which may arise following the removal of the crude oil cargo from the crude
oil tanker 'TASMAN SPIRIT' will be for account of 'TASMAN
SPIRIT's'/charterers' interests. It is further agreed and understood that
owners of crude oil tanker 'TASMAN SPIRIT'/charterers will provide directly
to third parties guarantees in relation to any potential cargo claim keeping
free from any liabilities the M/T 'SEA ANGEL', her master and owners except
as a result of wilful neglect on behalf of owners, master or crew." *

* Throughout the trial, this clause has been referred to as "the rider clause".

18. The SHELLTIME 4 form, incorporated into the charterparty as above, provided, inter
alia, as follows:

" 4. Period Trading Limits …Charterers shall use due diligence to ensure that
the vessel is only employed between and at safe places (which expression
when used in this charter shall include ports, berths, wharves, docks,
anchorages, submarine lines, alongside vessels or lighters, and other
locations uncluding locations at sea) where she can safely lie afloat.
Notwithstanding anything contained in this or any other clause of this
charter, Charterers do not warrant the safety of any place to which they
order the vessel and shall be under no liability in respect thereof except for
loss or damage caused by their failure to exercise due diligence as
aforesaid.

7. Charterers to Provide Charterers….shall pay agency fees, port charges,

commissions, expenses of loading and unloading cargoes, canal dues and
all charges other than those payable by Owners in accordance with Clause 6
hereof….."

THE FACTUAL HISTORY

19. Introduction: The factual history and context were explored in great detail at the trial.
It will be unnecessary for me to do likewise in this judgment but, unavoidably, I must
deal with the facts in sufficient detail so as to do justice to the rival cases.
20. At the trial, oral evidence was given by a number of factual witnesses. The Claimants
called Mr. Aga, their Pakistani lawyer. Tsavliris called a number of witnesses: (i) Mr. Hall,
of Clyde & Co.; (ii) Mr. Constantinidis, its Managing Director; (iii) Mr. Taha, its Pakistani
lawyer, of the firm Orr Dignam & Co. ("Orr Dignam"); (iv) Rear Admiral (Retd.) Khalid,
the Executive Director of MM Marine Services (Pvt) Ltd ("MMM"), the Karachi general
agents of Tsavliris throughout the events with which we are concerned; (v) Mr.
Moloney of Eversheds, to whom reference has already been made. All these witnesses
sought to assist the Court, though, understandably, their evidence was influenced by
their individual perspectives. Various further witness statements were read; it is not
necessary to list those here.

21. Questions of Pakistani law, practice and procedure were dealt with in the reports and
Joint Memorandum dated 13th January, 2006 ("the Joint Memorandum") of Mr. Justice
(Retd) Alavi, instructed by the Claimants and Mr. Naeem, a practising Pakistani lawyer,
instructed by Tsavliris; Mr. Naeem in fact acted for the casualty and the Club in this
matter. As appears from the Joint Memorandum, there was very little in issue between
the experts. In consequence, the parties agreed that neither expert would be called to
give oral evidence but that each party would be at liberty to make submissions as to
the experts' reports.

22. Before turning to the history and so as to place it in context, I must first summarise
the standard procedures for the departure of vessels from Karachi, together with
certain aspects of Pakistani law and practice.

23. Standard procedures for vessels departing Karachi: As appears from the undisputed
evidence of Admiral Khalid, supplemented by the evidence from the experts on
Pakistani law and practice:

i) The port of Karachi is controlled by the KPT.

ii) Every vessel entering the port of Karachi must have an agent and is liable to pay
dues in accordance with a published tariff.

iii) Licensed agents operate an account known as a "LPD Account" (i.e., a "Let Pass
Deposit" Account). A "LPD Account" is a one-way account established by the agent
against which only the KPT can make withdrawals.

iv) Prior to a vessel's departure, the KPT raises an invoice setting out the estimated
level of charges. The agent must then deposit this sum into its LPD Account before a
NDC can be requested. A NDC is issued only if there are sufficient funds in the LPD
Account to cover the estimated disbursements.

v) Final port clearance for a vessel is given by Customs, on presentation of a number

of documents, including a NDC.

vi) Accordingly, a vessel which is unable to obtain a NDC from the KPT would be
unable to obtain final port clearance from Customs and would effectively be detained.

24. Aspects of Pakistani law and practice: In Pakistan, vessels may be arrested or detained
pursuant to two regimes. First, vessels may be arrested under the Admiralty
Jurisdiction of the High Court Ordinance 1980, a law based on the Merchant Shipping
Acts pre-dating Pakistan coming into existence in 1947. In the present case, the vessel
 was not arrested in this fashion. Secondly, vessels may be detained by certain public
authorities (or bodies), by refusing port clearance if there are dues or charges owed to
the authority by the vessel; in the case of the KPT, such powers are contained in ss. 52
and 53 of the KPT Act 1886; it is with these powers that the present case is concerned.

25. Against this background, the experts on Pakistani law and practice were asked a series
of questions going to the manner in which an unlawful detention of a vessel by a port
authority could be challenged; the timescale involved; whether the port authority
could ignore orders of the Court and the remedies for non-compliance with any such
order.

26. In summary, the experts said this:

i) The unlawful detention of a vessel by a port authority could be challenged in one of

two ways. First, by a suit seeking a mandatory injunction compelling the authority to
issue a NDC, together with a claim for damages for any loss suffered. If this procedure
is adopted, then a legal notice has to be given, involving some delay; however, a
failure to file such a notice would not or not necessarily defeat the suit. Secondly, by a
Constitutional Petition brought pursuant to Art. 199 of the Constitution of Pakistan
("the Constitution"). A Constitutional Petition will or will likely be a faster remedy – but
– contentious facts cannot be entertained.

ii) As to the timescale involved, there can be no certainty. That said, the Claimants'
expert suggested that there was a reasonable prospect of determining an application
for the release of the vessel (if standing alone) in some 3-6 weeks. For his part, the
Tsavliris expert spoke of obtaining an interim order of a mandatory nature within a
"couple of days" – an opinion of a striking nature. As to the resolution of any appeals,
the experts' views ranged from some 6 months or less up to 2-3 years; these struck
me (with respect) as being essentially speculative.

iii) There is unanimity between the experts that the KPT could not have ignored orders
of the Court, although there was a real risk that delaying tactics might be adopted.
Non-compliance with an order of the Court could render the KPT subject to
punishment for contempt of court: see, Art. 204 of the Constitution.

27. The 27th August – 19th September, 2003: I turn to the factual history, starting with the
chapter covering events up until the 19th September. It will be recollected that the
primary case of Tsavliris at trial was that the charterparty was frustrated on the 19th
September.

28. As early as the 27th August, anticipating the need to meet port dues, MMM sent a pro
forma to Tsavliris, asking for some US$14,459.00 in respect of the vessel's visit to
Karachi. Admiral Khalid said that this sum, once received from Tsavliris, was
immediately paid into MMM's LPD account; he was challenged in cross-examination
and it was suggested that payment(s) into MMM's LPD account were not made until
the 23rd September. Although the documentary evidence is not entirely clear, I am
content to proceed on the assumption that Admiral Khalid's recollection is correct;
however, on the view which I take of the matter, nothing turns on this minor area of
dispute.
29. On about the 28th August, the vessel arrived at Karachi.

30. On the 5th September, MMM for the first time requested up to date invoices from the
KPT for all the Tsavliris sub-chartered vessels engaged in the salvage operation. Apart
from the vessel, these vessels were the "ENDEAVOUR II" (the tanker into which the
casualty's cargo had been transhipped), the "FAIR JOLLY" (used as a shuttle tanker
before the arrival of the vessel) and two tugs, the "UMKA" and the SB "408". MMM
indicated that, on receipt of the invoices, the requisite funds would be requested
(from Tsavliris) and deposited in its LPD account. A number of chasers followed.

31. As already mentioned, on the 6th and 9th September, Tsavliris purported to give 5 and
3 day notices of redelivery under the charterparty.

32. On the 9th September, MMM applied for a NDC for the first time.

33. Also on the 9th September, the first indication emerged that there might be any
hiccup with the departure of the vessel from Karachi. Mr. Paracha, a director of the
Second Claimants, appears to have been told that the vessel was being held by the
KPT because of non-payment of "some port dues from …[Tsavliris]…on their other
vessels/tug boats". The likely delay at the time was thought to be of the order of 2-3
days. It is plain on the available materials that the reasons for this had not been firmly
established. In his evidence, Mr. Constantinidis said that he was aware of this problem
but did not think it was a crisis; he had experience of these situations and believed it
would be sorted out.

34. On the 10th September, the Club purported to terminate the obligation to pay SCOPIC
remuneration under cl. 9(ii) of the SCOPIC clause.

35. On the same day, the vessel was ordered by the KPT to shift from alongside
"ENDEAVOUR II" to a berth.

36. At this stage, Mr. Hall was concerned about the position of the "ENDEAVOUR II"
(rather than the vessel) and perhaps even more so as to the withdrawal of the
passports of the salvage personnel. He consulted Orr Dignam, who advised, on the
11th September, against initiating any action against the KPT, in effect until the
situation had clarified. As to the "detention" of the personnel, Orr Dignam assumed
that this related "….to the ongoing saga with the 'TASMAN SPIRIT' and KPT probably
wish to detain all personnel involved in the event any information is required given
the considerable public furore on the oil spill."

37. Admiral Khalid had meetings with the KPT on the 11th, 12th and 13th September. On
the 13th September, he specifically asked that any sums claimed by the KPT should be
divided into two parts: first, port dues in respect of three vessels chartered in by
Tsavliris (the vessel and the two tugs); secondly, claims made by the KPT in respect of
the grounding of the casualty. Subsequently, he repeated these requests.

38. In his oral evidence, during cross-examination, Admiral Khalid said that on about the
6th/7th September, he had been told, apologetically, by the KPT that the Tsavliris
vessels would not be released until there was an overall settlement of the entire
"salvage operation". In re-examination, Admiral Khalid said that he thought this
 discussion had taken place on about the 11th – 13th September. The suggestion of any
such discussion on the 6th/7th September can safely be put to one side. It is
convenient to defer for later evaluation, Admiral Khalid's suggestion of a discussion of
this nature between (about) the 11th – 13th September.

39. The 15th September was the final day for timely redelivery of the vessel under the
charterparty.

40. On the 17th September, the KPT sent to MMM a detailed "statement of charges …due
against MT Tasman Spirit…" and called upon MMM to deposit in its LPD account the
sum of Rs.650,000,000 – at an exchange rate of Rs.58 = US$1, the equivalent of (very
approximately) US$11 million.

41. These accounts prompted a robust response from MMM, on the same day, again
calling for the port dues and other claims to be dealt with separately. Amongst other
things, MMM said this:

" We feel that one-sided claims are never settled. The parties concerned
contest these. Who will pay the claim has to be established. All this may
take months. Is the KPT's intention to hold Port Clearance of all the vessels
till this [is] decided? Such a decision may be counter productive. "

42. On the 18th September, Mr. Pappas, the Tsavliris Salvage Master and Mr. Gregory, the
Shipowner's Casualty Representative ("SCR" – see SCOPIC, cl. 11), acting on behalf of
the Club, agreed that of the US$11m bill, only some Rs 20,517,604.84, at an exchange
rate of Rs 58= US$1, the equivalent of US$353,751.80 was for the account of Tsavliris.
Of that amount, only some Rs. 923,184.36, at the same exchange rate, US$15,916.97
was attributable to the vessel (as opposed to the other chartered in vessels).

43. Also on the 18th September, the Pakistani Ministry of Foreign Affairs wrote to the
Embassy of Greece, concerning the repatriation of the Master and Crew of the
casualty, as follows:

"The Ministry….has the honour to state that the relevant authorities have
conveyed that the preliminary inquiry into the grounding of MT Tasman
Spirit has still not been completed.

It has also been informed that prior to repatriation of Master and Crew, the
owner of the ship will have to provide the following undertakings, duly
authenticated by the Greek and Phillippines Embassy in Islamabad:

i) Undertaking and assurance through P&I Club to meet all losses including
consequential losses.

ii) Undertaking that owner will produce before Board of Inquiry/ Court of
Law, in Pakistan the Master or any of the Crew as and when required.

The …Embassy is requested to get the above requirements expedited for an

early repatriation of the crew members."
 On the face of it, the implications of this communication are startling; I shall return to
it later.

44. On the 19th September, MMM reported to Tsavliris in the following terms:

" All remittances so far sent by you amounting to USD.192,459…has been

accounted for by you 'On account Port Dues' and today you have remitted
another USD 165,000…totalling to USD 353,751.80. All this amount has
been taken by you as Port Dues. The Port Dues so far submitted by KPT are
up to the 16th September, 2003. the meter is still running and port dues
continue to rise till finally settled. We have doubts that even after the above
payments the vessels will be allowed to sail. We have sought clarification on
this account….The general impression here is that unless the total amount
of Rs. 650,000,000.00 is either paid by you or guaranteed by some one, no
movement is likely to take place. We must therefore await KPT's response to
our letter before actually depositing the amount in our LPD account. You
should not count on partial acceptance of the dues as final settlement. You
must continue efforts to have the balance settled one way or other.
Specially if it does not pertain to you."

On any view, this communication could not have been reassuring. That said, the
language expresses "doubts" and "impression", rather than certainty. To my mind, the
conversation with the KPT, recounted by Admiral Khalid (see above) is not to be
understood as going beyond the terms of this report.

45. My inclination in this regard is strongly reinforced by the evidence of both Mr. Hall
and Mr. Constantinidis. In his evidence, Mr. Hall said that as at the 13th September, he
was still trying to find out whether and, if so, why, the vessel was detained. A delay of
a matter of days would not trigger alarm bells. As of the 17th September, it was clear
that there was a "major problem". Challenged in cross-examination as to why recourse
was not had by then to litigation, he said that, at this stage Tsavliris was seeking a
political and commercial solution to the problem, rather than a litigation route. He
was anxious for a "twintrack" approach involving politics and commercial negotiation.
He did not wish to inflame the overall situation by bringing legal proceedings. Mr. Hall
viewed the 19th September MMM report as an "ongoing process"; the aim was to pay
the port dues and obtain a NDC.

46. For his part, Mr. Constantinidis said of this period in time that there was a "lot of
gossip" but "nothing official". His hope was that a commercial solution would be
found. He did not believe that resorting to litigation would have helped. He wanted to
do his best for Tsavliris, having regard both to his concerns for the personnel
"detained" in Pakistan and to obtaining the release of the vessel, together with the
other chartered in vessels. He continued to hope that matters would not come to
litigation. Put to him in cross-examination that this was a charterparty of short
duration, so that his "first priority" should have been legal action, he disagreed. He
thought a speedier solution would be forthcoming from a commercial cum political
solution. He did not believe for a minute that the law would be quicker; from his
"general knowledge" he did not wish to become "tangled" with court proceedings.
Going to Court was the "last resort"; though he (or his company) had not litigated in
the Pakistani Courts before, Pakistan was not well-known for the speed of its legal
 procedure. As to the 17th September KPT statement of charges (see above), Mr.
Constantinidis said that faced with "an unreasonable US$11 million demand – you
don't worry"; his aim remained a commercial solution, which had to be found; the
involvement of the Club in the solution would help immensely. Asked later by me as to
the timescale for such a commercial solution, he said that he had no fixed timescale in
mind but contemplated something in the order of three months, "certainly before
Christmas".

47. The 19th September – 18th October, 2003: I turn to the next chapter in the history,
taking in the Tsavliris alternative case(s) as to frustration date(s) and the Claimants'
fallback position (in the event that contrary to their primary case, the charterparty was
frustrated).

48. On the 23rd September, MMM paid into its LPD account a further sum (about
US$17,000) in respect of the vessel. MMM continued to press the KPT for a NDC in
respect of the vessel and the two tugs. For completeness, at this time, MMM did not
press for port clearance either for the MT "FAIR JOLLY" (as that vessel was in dock) or
for the MT "ENDEAVOUR II" (as she was under arrest at the suit of cargo interests).

49. On the 24th September, Mr. Hall gave instructions to Orr Dignam. Tsavliris was anxious
to secure the release of the vessel and the two tugs. Orr Dignam was to prepare – but
not issue – an urgent application to the Court seeking an order that Mr. Pappas (the
salvage master) be allowed to depart along with the vessels in question. In addition,
consideration was to be given to bringing a claim for damages against the KPT in
respect of the detention of Mr. Pappas and the vessels. As Mr. Hall explained in his oral
evidence, the matter was "very delicately poised", both in respect of personnel who
had been or, in the case of Mr. Pappas, continued to be detained and with regard to
the release of the vessels; hence his instructions to prepare for legal proceedings but
not to issue them. His preference remained for a commercial solution but he was now
exploring legal options in case of need; he did not think that the legal route would be
quick and he still had no definite explanation as to why the ships had not been
released.

50. On the same day, Orr Dignam responded. They were still examining how best to
proceed – i.e., whether to file a constitutional petition or a separate action by way of a
civil suit for damages. In their opinion, the better route was to issue a formal legal
notice which would be a precursor to the commencement of any proceedings.
Depending on the KPT's reply, as to which they were uncertain, they would be in a
better position to determine their future course of action.

51. On the 26th September, Thomas Miller (acting in respect of the tug "SB 408") advised
Mr. Hall that their information was to the following effect:

" …KPT will not release the SB 408 until they receive security or
compensation from either the owners or Tsavliris….

…the situation in Karachi is very sensitive and difficult and is not going to
be resolved without intervention and agreement being reached between
the 3 parties; owners, Tsavliris and KPT…."
 Mr. Hall's reaction to this advice was that the prospects for release looked very bleak
without legal action but much of the information swirling around amounted to
rumour and gossip.

52. At this time, Mr. Moloney was in Karachi, representing the interests of the casualty and
the Club. He held a series of meetings with the KPT and others on the 26th and 27th
September. He said that the position was "still fluid" and in his report to clients said
that the meetings had done some good. He appreciated that wreck removal was a P&I
obligation; he had thought of seeking to do that under SCOPIC but had decided that
that would not be viable; the contract had therefore been put out to tender and Smit
had by then been identified as the preferred contractor. He was, however, very
unhappy at the prospect of bringing another ISU contractor (Smit) into the Pakistani
jurisdiction while Tsavliris assets were still detained. He and the Pakistani parties with
whom he met were well aware that Pakistan was not a party to CLC (as already noted);
accordingly, the Pakistani parties were very much alive to their security needs. Mr.
Moloney was concerned that settling with the KPT might not dispose of the matter,
not least given that the Defence Housing Association was an "Army run" large
potential claimant. He was also anxious as to the liberty of the master and crew of the
casualty and the dangers posed in this regard by "minor officialdom". He had some
leverage arising from the issue of wreck removal and the high level political
repercussions of the detention of seafarers, highlighted by the letter of the Ministry of
Foreign Affairs of the 18th September (see above).

53. In his Witness Statement (dated 30th November, 2005), Mr. Moloney said that he:

"…was convinced from the moment that the 'Sea Angel' was detained that
any legal proceedings would be utterly ineffectual in obtaining the release
of the detained assets."

Plainly, as he himself came to accept in his oral evidence, Mr. Moloney could not have
known this "from the moment" the vessel was detained. He now said that he became
sure of this after meeting the KPT's lawyers on the 27th September. Cross-examined as
to why this opinion had not found its way into his contemporaneous report (of 27th
September) to his clients, Mr. Moloney answered that he had wanted to keep the
report short and he was "exercising editorial control". I defer until later a more critical
examination of Mr. Moloney's views as to the efficacy of legal proceedings.

54. On the 29th September, Admiral Khalid reiterated to Tsavliris that port dues for the
three vessels for which port clearance was then being sought had been deposited on
the 23rd September. He now said that "he had always maintained that even after the
payment of Port Dues, the KPT would not allow them to sail".

55. On the 30th September, a meeting took place at the office of the KPT's General
Manager Operations ("GMO"), Admiral Bashir, attended by Mr. Pappas and a Mr.
Rapley from the Club. They reviewed the KPT invoices issued to date and (apparently)
agreed that the total to be allocated to Tsavliris amounted to no more than Rs.
28,012,668.46, equivalent to US$482,977.04. This apparent agreement gave a glimmer
of hope, followed as it was by a message, albeit of a somewhat curious nature, from
Admiral Bashir of the 1st October. At all events, MMM asked Tsavliris to transfer to
 them the requisite sums and this was in due course done. However, for Mr. Hall at
least, a "pivotal moment" came when Admiral Bashir declined to sign the
memorandum reflecting the suggested agreement. As Mr. Hall put it, Tsavliris was now
on the horns of a dilemma; if more money was paid the ships might still not be
released and the moneys would be lost; per contra, if the moneys were not paid, the
non-payment might be used as an excuse or reason for clearance not being given.

56. On the 2nd October:

i) Eversheds (i.e., Mr. Moloney) sought to clarify the position with the KPT as to the
departure of the Tsavliris vessels.

ii) MMM continued to chase the KPT for a NDC.

iii) Mr. Paracha (of the 2nd Claimants) spoke to Mr. Hall on the telephone and indicated
that he had instructed his lawyers to commence proceedings against KPT and Tsavliris.

iv) Clyde & Co. (i.e., Mr. Hall) instructed leading counsel to advise on the question of
frustration of the charterparty. So far as it matters, Mr. Hall had himself come to the
conclusion that the charterparty was frustrated by the end of September or early
October. On the evidence, I accept that leading counsel was at this time instructed by
Clyde & Co., on behalf of Tsavliris, to advise on the question of frustration; that said,
as Tsavliris resolutely declined to waive privilege in respect of the Advice, this evidence
takes the matter no further other than serving to rebut any suggestion of
afterthought (had one been advanced).

57. In a meeting on the 9th October, attended inter alia by Messrs. Moloney and Hall, the
view was expressed that no one "believes KPT will allow any Tsavliris vessels to leave
even when they pay the agreed port dues tomorrow or Saturday….If this happens,
Tsavliris will bring an action against KPT in Karachi next week."

58. On the 10th October, Admiral Khalid was informed by the local representative of the
casualty's P&I Club that he had been informed by the KPT that port dues in respect of
all the Tsavliris chartered in vessels had to be paid before any of them would be
allowed to leave.

59. On the 11th October, Usmani & Iqbal, the KPT's Karachi lawyers, wrote to Eversheds in
the following terms:

" We believe there appears to be some misunderstanding…We are not

aware of any agreement having been reached between KPT and Tsavlriis
with respect to payment of dues….At no stage was it proposed or agreed to
by KPT that mere payment of the dues proposed to be allocated to Tsavliris
would enable the vessels in question to sail away….At the time it was
repeatedly emphasised by KPT that the only reason why the sailing of the
vessels was being delayed was because of the non-payment of the total
outstanding dues in respect fo the vessels in question by …[MMM]…..KPT
have no objection to part payment of dues by Tsavliris themselves and the
balance by P&I Club, provided that the whole amount payable in respect of
the vessels in question is settled or in the alternative a Bank Guarantee is
furnished for the amounts that are disputed…..
 May we emphasize that the payment of these dues must not be linked with
the removal of the wreck because the dues are payable by the local agents
of the vessels in question and the removal of the wreck is admittedly the
responsibility of the Owners…. "

60. On the same day, the Second Claimants commenced proceedings against Tsavliris and
the KPT in the High Court of Sindh at Karachi ("the Karachi proceedings"). The
progress of these proceedings looms large and is best considered in the context of the
next factual chapter (covering events up until the 26th December) and is deferred until
then.

61. On the 13th October, Eversheds passed on to Clyde & Co. a copy of this fax letter from
Usmani & Iqbal, adding that the letter confirmed that the KPT intended to detain the
Tsavliris vessels and equipment against both payment of port dues on those vessels
and payment or security in respect of KPT's claims against the owners of the casualty.

62. Nonetheless, perhaps mindful of the conversation relayed to Admiral Khalid on the
10th October (see above) or with a view to a yet further attempt to sway the KPT or
because the funds from Tsavliris had now arrived, on the 13th October, MMM
deposited in its LPD account a sum of Rs.25,500,000. This amount more than covered
the port dues up until the 23rd September in respect of all the Tsavliris vessels (i.e.,
including the MT "FAIR JOLLY" and the MT "ENDEAVOUR II", as allegedly agreed at the
meeting on the 30th September. Immediate port clearance was requested for the
vessel and the two tugs and permission was sought for Mr. Pappas to depart Pakistan
immediately.

63. On the 14th October, Clyde & Co (not at all unreasonably) sought clarification from
MMM as to the payments and figures involved; Mr. Hall was anxious to ensure that
any other sums claimed by the KPT had nothing to do with Tsavliris. Such clarification
was forthcoming on the 15th October.

64. On the 15th October, MMM wrote again to the KPT, acknowledging that the sum
deposited might not now be sufficient to cover the port dues for all five Tsavliris
vessels, as the deposit was based on the dues calculated up until the 23rd September.
However, as the letter pointed out, a substantial amount of the sum deposited related
to the MT "ENDEAVOUR II"; as port clearance was not then being requested for that
vessel, such moneys could be applied to the other vessels for which immediate port
clearance was sought.

65. On the 17th October, MMM sent what might be regarded as the final chaser of this
sequence to the KPT, yet again requesting a NDC. The vessels were not released.

66. By now, Clyde & Co, Orr Dignam and MMM were busying themselves with a draft
legal notice to be served on the KPT. On the 18th October, the final draft was available;
in the event, it was served on the KPT on the 22nd October.

67. If and insofar as it should matter, I shall return to a more precise analysis of the period
13th – 18th October. However, it can at once be said – and is consistent with all the
 evidence – that, as expressed by Mr. Hall in his Witness Statement dated 29th
November, 2005:

" Whilst during the first two weeks of October Tsavliris and I had been
hoping that matters would be resolved without the need for legal action,
particularly following the meeting on 30th September and the
Memorandum obtained as a result, by 13th October there was now clearly
no alternative to proceed in a more aggressive manner…."

With the qualification that (as already remarked) the 13th October might or might not
be the precise date within the period 13th – 18th October at which this conclusion
could properly be reached, in my judgment Mr. Hall's summary is otherwise amply
justified. Whether that factual conclusion leads to the further conclusion that the
charterparty was then or thereabouts frustrated, is, of course, another matter entirely
– and for later consideration.

68. The 18th October – 26th December: This chapter includes the raising of the issue of
frustration, the Karachi proceedings and a commercial settlement involving the Club
and the KPT.

69. I start with the Clyde & Co. letter to the Second Claimants, dated 21st October, 2003,
alleging frustration of the charterparty on or before the 13th October. After re-tracing
the history, Clyde & Co. said this:

" It is clear…..that the KPT are not releasing the 'SEA ANGEL' and the other
vessels and will not release ….[them]…until such time as the KPT have
received compensation from the owners of the 'TASMAN SPIRIT' or their
P&I Club for the initial grounding incident and subsequent pollution, even
before our clients came on the scene.

…the current detention of the 'SEA ANGEL' and the other vessels is illegal
and our clients have written to the KPT to this effect demanding release. If
no response is forthcoming….our clients will have no alternative but to take
appropriate action against the KPT for damages and for an order that the
vessels be released.

Indeed, you have already taken such action….

It is clear that for some time now the commercial purpose of the charter of
the 'SEA ANGEL' has come to an end. All that was required under the
charter between our clients and yourselves for the 'SEA ANGEL' was for the
'SEA ANGEL' to be redelivered to Dubai. That would have only taken a few
days. This should have happened long ago but for the illegal detention of
the KPT.

The latest that the 'SEA ANGEL' should have been released in our clients'
view was once the port dues for the 'SEA ANGEL' and the other vessels had
been paid. As such, our clients regard the charter of the 'SEA ANGEL' as
frustrated from that moment …."
 As has been seen, "that moment" was on the 13th October.

70. On the 23rd October, Clyde & Co. sought to advance the frustration date. Tsavliris was
not liable for any hire from the time the KPT "illegally detained" the vessel.

"…it is our clients' position that the 'SEA ANGEL' should have departed as
soon as our clients gave notice of redelivery or at the very latest within one
or two days thereafter. The fact that the 'SEA ANGEL' did not depart when
the notice of redelivery was given by our clients is…evidence (supported by
subsequent actions of the KPT and statements made by the KPT or on their
behalf), that there was never any intention of the 'SEA ANGEL' being
allowed to depart."

71. Although there was some debate at trial, much of the early chronology relating to the
Karachi proceedings can be shortly summarised, as follows:

i) Mr. Aga (as will be recollected, the Claimants' Pakistani lawyer) was instructed by the
Second Claimants in early October; the precise date, does not, in my view, matter.

ii) Mr. Aga did not proceed by way of Constitutional Petition. Although he knew that
the primary objective of the proceedings was to release the vessel, his application
combined a claim for relief with a claim for damages for the detention of the vessel.
These proceedings were issued on the 11th October. The First Defendant was Tsavliris;
the Second Defendant was the KPT. The claim for damages was advanced against both
Defendants jointly.

iii) On the 14th October, Mr. Aga appeared before the Court, ex parte, seeking and
obtaining a Mareva injunction, restraining the departure of the Tsavliris chartered tug,
"SB 408" from the jurisdiction.

iv) On the 29th October, the application for the release of the vessel first came before
the Court. In the event, the application was adjourned until the 11th November. On
the evidence, this adjournment was inevitable, given that the KPT was not represented
at this hearing.

v) On the 11th November, the matter came back before the Court. All parties were
now represented. At the instigation of the representative of the KPT (who had just
been instructed), the matter was adjourned by consent until the 19th November.

vi) On the 19th November, the matter was adjourned by consent until the 24th
November.

vii) On the 24th November, the matter was listed as no. 75 in the Judge's list. As I
understand the evidence, the matter was then adjourned and given a fixed date listing
on the 3rd December. Either then or on the 3rd December, it matters not which, the
case was transferred from Rahman J (who was the Judge assigned to the litigation
resulting from the grounding of the casualty) to Alam J.

viii) For completeness, though some criticism of the Tsavliris legal representatives was
voiced at the trial, I reject the suggestion (insofar as it was maintained) that any acts
 or omissions on their part caused any or significant delay in these proceedings.

72. On the 3rd December, a substantive hearing took place before Alam J. With admirable
expedition, the learned Judge delivered a carefully reasoned judgment on the 5th
December ("the judgment"). For present purposes, the salient features of the
judgment may be summarised as follows:

i) KPT took a preliminary point, in effect seeking the striking out of the claim against
it. The basis for this contention was the fact that no legal notice had been given. Mr.
Aga side-stepped this argument by agreeing not to press the claim for damages
against KPT, for the time being. On this footing, the preliminary point was not pressed
and the Claimants' proceedings against the KPT were permitted to continue.

ii) Turning to the substantive battle lines, KPT submitted that the shipping agent (i.e.,
MMM) was obliged to clear and pay all the port dues and charges incurred by the KPT
in providing salvage and other facilities and services for the casualty. The liability of
one vessel under the agency of a shipping agent would be the liability of all vessels
under the same agent; non-payment of port dues and charges by any one vessel
would entitle the KPT to refuse port clearance to any other vessel entered with the
same shipping agent. By contrast, the Claimants' case was that port dues and charges
rested squarely on the owner or master of the particular vessel; one ship could not be
detained or held liable for unpaid dues or charges relating to any other ship. Tsavliris
supported the Claimants; all port dues and charges for the Tsavliris chartered in
vessels had been paid to the KPT; the detention of all such vessels was illegal and
without any just cause.

iii) In evaluating the rival arguments, the learned Judge had regard to the provisions of
the KPT Act 1886, the Port Act 1908 and the Customs Act 1969. From the "bare
perusal" of the KPT Act, it was apparent that dues and charges were to be specified in
respect of a particular vessel. Liability for such dues and charges rested on the master
or owner of the vessel. The same conclusion was arrived at from the bare perusal of
the scheme of all three statutes. The liability of the shipping agent was confined to the
short landing or delivery of goods or cargo; it did not extend to liability for port dues
and charges. A shipping agent's acts for any one principal did not bind other
principals; nor could the liability of any one principal be foisted upon another principal
represented by the same agent. Accordingly, the Judge's conclusion was expressed in
the following terms:

" From the scheme of all the Statutes/Acts…it can safely be deduced that
each vessel, through master or owner is liable to discharge and pay Port
dues and charges. Liability of one vessel or principal cannot be enforced
against the shipping agent…."

iv) Turning to the 17th September invoice submitted by the KPT, the Judge concluded
that the major portion related to services rendered to the casualty, rather than to the
Tsavliris chartered in vessels and still less to the vessel. The amount claimed against
the casualty could not be foisted on to the vessel; accordingly, the Claimants had
made out a prima facie case for the release of the vessel. The KPT would be directed
to issue a NDC, thereby enabling the Claimants to obtain port clearance from the
Customs authorities. As the Claimants had, without prejudice, offered to provide
 security in the amount of Rs. 1,000,000 should it transpire that there were additional
port charges for which they were liable, the provision of such security would likewise
be made a term of the order.

73. Notwithstanding the judgment, the vessel was not then released. On the 9th
December, the KPT sought and, on certain conditions, was granted a stay of the order
for release of the vessel for 7 days, to permit an application to the appellate court. In
the event, no application was made by the KPT within the 7 day period, so that the
stay expired on the 16th December.

74. In the meantime, the Club, through Mr. Moloney, had been actively pursuing a
negotiated settlement with the KPT. The essential features of the proposed bargain
centred on the release of the Tsavliris chartered in vessels, the payment of a sum of
money towards the KPT's claims for pollution costs and damage and the agreement to
bring into Pakistan another ISU contractor to undertake the wreck removal of the
casualty. On the 8th December, the Club made a written proposal in this regard. On
the 16th December, the same day that the stay expired (see above), the KPT accepted
that proposal.

75. For present purposes, the salient terms of the agreement between the KPT and the
Club ("the settlement"), were as follows:

" KPT hereby accepts the proposal of the ….Association [i.e., the Club]…
offered through your letter….dated 8 December 2003, as follows:

The Association wishes to facilitate complete removal fo the wreck of

TASMAN SPIRIT to the satisfaction of KPT. To this end, the Club proposes
that the KPT will permit and facilitate the four Tsavliris-controlled vessels
'Umka', 'SB 408', 'Sea Angel' and 'Fair Jolly' to leave Karachi before their
preferred contractors, Smit Salvage BV, come on site, subject only to a
standby tug always remaining attached to the wreck until relieved by a
SMIT tug, and provide the Association with a receipt…

In consideration of this, the Association has agreed and undertaken to:-

1. Pay the balance of port dues according to tariff owed by the four vessels
named above, before their departure, for the period from October 16, 2003
until the date of their departure.

2. Pay KPT or to its order, the sum of USD1.6 million…., as part payment
towards its charges and expenses in providing services to prevent, minimize
and cleanup oil pollution damage arising from the incident. The sum will be
placed in Pakistan, in the manner agreed for payment to KPT ….immediately
on departure from Karachi of the four vessels named above.

3. Contract with….[a named contractor]…to carry out the port infrastructure

cleanup….

4. At your risk and expense, remove the entire wreck of Tasman Spirit to the
extent compulsory by law.
 5. To this end, the Association will contract with Smit Salvage BV"

76. Even now the vessel was not released. There followed yet further haggling as to the
payment of port dues by the Club and the KPT's demand for undertakings from the
Club or the owners of the Tsavliris chartered in vessels releasing the KPT from liability
in respect of their detention. Though the position is not entirely clear, it would seem
that in due course undertakings to such effect were provided by the owners of the
other Tsavliris chartered in vessels but not by the owners of the vessel. On the 17th
December, MMM, acting on behalf of Tsavliris – but without prejudice to the question
of frustration - lodged the Rs.1,000,000 guarantee required by the judgment.
Furthermore, by the 23rd December (perhaps before), the US$1.6 million had been
received in Pakistan and was available to the KPT upon departure of the vessels and
still further sums in respect of port dues had been paid into MMM's LPD account.
Notwithstanding all this activity, as of the 24th December, the vessel (and the other
Tsavliris chartered in vessels) had not yet been released.

77. On the 24th December, Mr. Aga, for the Claimants, issued an application for contempt
of court, naming as Defendants the Chairman and Chief Account Officer of the KPT.
The motion was to be heard on the 26th December. In the event, the vessel and the
other three Tsavliris chartered-in vessels dealt with in the settlement were released on
the 26th, so that the application was never adjudicated upon.

78. From the papers filed in support of the application for contempt, the following
appears. First, it was the Claimants' case that the two alleged contemnors were
deliberately disobeying the order(s) of the Court. Secondly, it was being said,
apparently by the KPT, that regardless of the order(s) of the Court, the vessel (and the
other vessels) would not be released until (variously) Tsavliris paid "its alleged liability"
and/or the Club paid a substantial amount or entered into an agreement with the KPT.
Mr. Aga, in cross-examination, denied that he had been told this by the KPT and gave
Admiral Khalid as his source of information. So far as it matters, Admiral Khalid was
not, I think, cross-examined on this. Tsavliris has placed much emphasis on this
feature, seeking to build upon it the argument that court proceedings were of no
effect in securing the release of the vessel. For instance, Mr. Moloney, in his Witness
Statement of the 30th November, 2005, said this:

" I am in no doubt whatsoever that the release of the detained vessels was
only achieved by the American Club's willingness to perform the wreck
removal operation and by their payment on account to Karachi Port Trust.
This is evidenced by the terms of the agreement that I negotiated with the
KPT. The effect of any legal proceedings in Pakistan had no bearing
whatsoever on that process."

In due course, I shall evaluate this proposition, which, as already noted, formed a
recurrent theme in Mr. Moloney's evidence.

79. It is convenient at this stage, to pull together some miscellaneous threads, helpfully
summarised by Mr. Moloney in his evidence:

i) In respect of any remaining mariners whose departure from Pakistan had been
impeded or prevented, good sense prevailed and they were released unconditionally
 on the 19th April, 2004.

ii) Wreck removal was completed, according to Mr. Moloney to general satisfaction, in
about March 2004.

iii) The wreck of the casualty was sold for US$1.8 million and the proceeds were paid
into Court in Karachi.

iv) At some stage the "ENDEAVOUR II" (which, it will be recalled had been arrested,
initially at least by cargo interests and which had formed part of the settlement) was
sold to Pakistani scrap concerns; the proceeds, amounting to US$7.1 million, are held
in Karachi.

v) An unsafe port arbitration is currently under way.

vi) Outstanding questions of liability relating to the casualty and its aftermath remain
to be resolved.

FRUSTRATION – THE TEST

80. I was referred to a good many authorities and a number of textbooks on the topic of
frustration. Much has been written on this topic and it is not the purpose of a
judgment at first instance to add to the legal literature. Instead, for present purposes,
the summary which follows will suffice.

81. First, the doctrine exists to do justice by mitigating the rigours of the common law; the
effect of frustration, however, is such that it is not to be lightly invoked. As explained
in The "Super Servant Two" [1990] 1 Lloyd's Rep 1, at p.8, by Bingham LJ (as he then
was):

" 1. The doctrine of frustration was evolved to mitigate the rigour of the
common law's insistence on literal performance of absolute promises….The
object of the doctrine was to give effect to the demands of justice…as an
expedient to escape from injustice where such would result from
enforcement of a contract in its literal terms after a significant change in
circumstances….

2. Since the effect of frustration is to kill the contract and discharge the
parties from further liability under it, the doctrine is not to be lightly
invoked, must be kept within very narrow limits and ought not to be
extended…..

3. Frustration brings the contract to an end forthwith, without more and

automatically…."

82. Secondly, the mere fact that, due to an unexpected turn of events, a contract has
become more onerous to perform, will not by itself give rise to frustration of the
contract in question. Instead, what is required is such a change of circumstances, so
that the nature of the contract has fundamentally altered or has become radically
different; performance of the literal words of the contractual promise, if enforced in
the changed circumstances, would involve a fundamental or radical change from the
obligation originally undertaken: Chitty on Contracts (29th ed.), Vol. I, at para. 23-012.
 The distinction is, with respect, illuminated in the speeches of Viscount Simonds and
Lord Radcliffe, in Davis Contractors Ltd v Fareham Urban District Council [1956] AC
696 and in that of Lord Simon of Glaisdale in National Carriers v Panalpina Ltd. [1981]
AC 675.

i) While contracts are characteristically made on the basis and with the expectation
that they will be fulfilled in accordance with their terms:

"…it by no means follows that disappointed expectations lead to frustrated

contracts…"

per Viscount Simonds, at p.715. Accordingly, the mere fact that:

"…there has been an unexpected turn of events, which renders the contract
more onerous than the parties had contemplated…."

will not by itself give rise to frustration of the contract in question: Viscount
Simonds, at p.716.

ii) By contrast:

"…frustration occurs whenever the law recognizes that without default of

either party a contractual obligation has become incapable of being
performed because the circumstances in which performance is called for
would render it a thing radically different from that which was undertaken
by the contract. Non haec in foedera veni. It was not this that I promised to
do."

Lord Radcliffe, at p.729.

iii) Lord Simon of Glaisdale expressed the essence of the distinction in the following
terms (at p.700); frustration takes place when:

" …..there supervenes an event (without default of either party and for
which the contract makes no sufficient provision) which so significantly
changes the nature (not merely the expense or onerousness) of the
outstanding contractual rights and/or obligations from what the parties
could reasonably have contemplated at the time of its execution that it
would be unjust to hold them to the literal sense of its stipulations in the
new circumstances…. "

iv) Self evidently, an intense focus on the contract in its original context is an
indispensable first step in determining whether the change of circumstances relied
upon warrants the conclusion that the nature of the contract has fundamentally
altered or become radically different. In short, to evaluate the impact of the change of
circumstances on the nature of the contract, it is first necessary to ascertain the
parties' rights and duties prior to the occurrence of the supervening event said to give
rise to frustration.

83. Thirdly, while delay is undoubtedly capable of giving rise to the frustration of a
contract, it may be no easy matter to determine whether in any given case it has done
so. Often, it will be a question of degree. In considering the question of delay in the
present case, I keep the following matters in the mind:

i) There can be no frustration if the delay in question is within the commercial risks
undertaken by the parties: Chitty, at para. 23-035.

ii) As Lord Sumner observed, in Bank Line v Arthur Capel [1919] AC 435, a case of
requisitioning, delay is "an incident of maritime adventure". He said this, at pp. 458-9:

" Delay even of considerable length and of wholly uncertain duration is an

incident of maritime adventure, which is clearly within the contemplation of
the parties, such as delay caused by ice or neaping, so much so as to be
often the subject of express provision. Delays such as these may very
seriously affect the commercial object of the adventure, for the ship's
expenses and over-head charges are running on….None the less this is not
frustration; the delay is ordinary in character, and in most cases the
charterer is getting the use of the chartered ship, even though it is
unprofitable to him….."

iii) Although it had been said by Bailhache J, in Anglo-Northern Trading Company

Limited v Emlyn Jones & Williams [1917] 2 KB 78, at p.84, that the main consideration
was the probable length of the total deprivation of use of the vessel as compared with
the unexpired duration of the charterparty, Lord Sumner, in Bank Line v Capel (supra),
added this qualification (at p.454):

" …I agree in the importance of this feature, though it may not be the main
and certainly is not the only matter to be considered."

It is perhaps worth noting that Bailhache J, in Anglo Northern v Jones &

Williams (supra), had also said (ibid) that the doctrine of frustration did not
apply when the time charterer had the use of the vessel for:

"some purpose for which he is under the terms of the time charterparty
entitled to use her, even though that purpose is not the particular purpose
for which he desires to use her… "

iv) The question of frustrating delay is to be considered as it had to be considered by

the parties, rather than after the event:

" The probabilities as to the length of the deprivation and not the certainty
arrived at after the event are also material. The question must be
considered at the trial as it had to be considered by the parties, when they
came to know of the cause and the probabilities of the delay and had to
decide what to do. …..Rights ought not to be left in suspense or to hang on
the chances of subsequent events. The contract binds or it does not bind,
and the law ought to be that the parties can gather their fate then and
there. What happens afterwards may assist in showing what the
probabilities really were, if they had been reasonably forecasted….."

Lord Sumner, in Bank Line v Capel, at p.454.

84. Fourthly, frustration is concerned with the incidence of risk for unforeseen,
supervening events: Chitty, at paras. 23-056 and following. Accordingly and by way of
brief elaboration:

i) An express clause in the contract, intended to deal with the event which has
occurred, will ordinarily preclude the application of the doctrine of frustration; put
another way, the doctrine of frustration is not concerned with events which have been
anticipated and provided for in the contract itself. That said, it will be a question of
construction as to whether the clause extends to cover the event in question. As
expressed in Chitty, at para. 23-056:

" The more catastrophic the event, the less likely it is that a clause will be
held to cover the event which has occurred, unless particularly clear words
are used. "

Save perhaps exceptionally, it is only an express term in the contract which

will preclude the application of the doctrine of frustration; ordinarily at any
rate, an implied term will not.

ii) Generally but not necessarily, the doctrine of frustration will not apply to an event
foreseen by the parties (even if not an express term of the contract): Chitty, at para.
23-057. As to the situation where one party foresaw the risk but the other did not, it
will be difficult for the former to claim that the occurrence of the risk frustrated the
contract: ibid.

iii) It is less likely that a foreseeable event, not actually foreseen by the parties, will
preclude the application of the doctrine of frustration: Chitty, at para. 23-058. The
question is whether one or other party has assumed the risk of the occurrence of the
event. However, for such to be the case, the degree of foreseeability must, necessarily,
be high; many events are foreseeable with neither contracting party assuming the risk
of their occurrence.

iv) It will be necessary, later, to say more concerning Tatem v Gamboa [1939] 1 KB 132.
Here, I must note the observation of Goddard J (as he then was, at pp. 137-8) that:

" …it makes very little difference whether the events are foreseen or not. If
the foundation of the contract goes, it goes whether or not the parties have
made a provision for it…..It seems to me, therefore, that when one uses the
expression 'unforeseen circumstances' in relation to the frustration of the
performance of a contract one is really dealing with circumstances which
are unprovided for, circumstances for which …the contract makes no
provision."

With great respect, this observation is not free of difficulty. For instance, it
cannot easily be determined whether the foundation of a contract has gone
without having regard to the contractual provisions. Further, foreseen
events may preclude the operation of the doctrine of frustration even if the
contract contains no applicable or sufficient express provision covering the
events in question: see, Frustration and Force Majeure, Sir Guenter Treitel,
(2nd ed.), at para. 13-013 and Chitty, supra, together with the authorities
there cited. In any event, the observation is probably obiter, given Goddard
 J's conclusion (at p.135) that the length of the detention, beyond the period
of the charter and in the circumstances of that case, was not foreseeable:
Treitel, ibid.

85. Fifthly, a party cannot rely upon that which would otherwise be a frustrating event, if
the frustration was "self-induced": Chitty, at para. 23-059. In The "Super Servant Two"
(supra), Bingham LJ said this (at p.8):

"4. The essence of frustration is that it should not be due to the act or
election of the party seeking to rely on it…..A frustrating event must be
some outside event or extraneous change of situation…..

5. A frustrating event must take place without blame or fault on the side of
the party seeking to rely on it…"

Later in the same judgment, Bingham LJ (at p.10) elaborated on the real question:

" ….which is whether the frustrating event relied upon is truly an outside
event or extraneous change of situation or whether it is an event which the
party seeking to rely on it had the means and opportunity to prevent but
nevertheless caused or permitted to come about. A fine test of legal duty is
inappropriate; what is needed is a pragmatic judgment whether a party
seeking to rely on an event as discharging him from a contractual promise
was himself responsible for the occurrence of that event."

Where a party makes good a prima facie case of frustration, the burden rests on the
other party to prove that any such (otherwise) frustrating event was self-induced:
Chitty, at para. 23-063.

WAS THERE A FRUSTRATING EVENT?

86. Introduction: As will be recollected, it is the Tsavliris case that there was a frustrating
event on the facts; that frustration was not precluded by the charterparty or otherwise
and that it was not shown to be self induced. That division of the argument is useful,
provided it is accepted that the issue cannot be approached in watertight
compartments; questions going to the contract and the ability of the party alleging
frustration to do something about the alleged frustrating event are, to my mind,
relevant to the inquiry as to whether there was a frustrating event in the first place. In
particular, when asking whether there was a frustrating event on the facts, "the facts"
cannot be approached in a vacuum. In my judgment, it is here that the Tsavliris
submissions, capably advanced though there were, encounter difficulty and it is here –
at the first hurdle – that the Tsavliris case fails: there was no frustrating event. My
reasons follow.

87. A more onerous contract: There can be no doubt that the detention of the vessel
made the charterparty more onerous for Tsavliris. The obligation to pay hire continued
for considerably longer than anticipated. However, as already discussed, this
consideration, by itself, would not suffice to establish that the charterparty was
frustrated.

88. The unexpired portion of the charterparty: I accept that a focus on the probable
length of the delay compared to the unexpired portion of the charterparty, certainly
 by the 13th-18th October, 2003 (see below), represents the high water mark of the
Tsavliris case on frustration. By the 10th September, the vessel had been ready to
commence her redelivery voyage, having completed her services in Karachi. The
charterparty was for a short period (up to 20 days in charterer's option) and the
probable delay, viewed in mid-October and confirmed by the events which happened,
was for a period considerably in excess of that. All the while, if the charterparty
continued in existence, a comparatively high rate of hire was payable, reflecting the
intended use of the vessel for the purposes of assisting in a salvage operation. This is,
as Lord Sumner observed in Bank Line v Capel (at p.454) an important feature –
though it may not be the main and certainly is not the only feature to be considered.
For completeness, in the requisitioning cases the charterers were deprived of the use
of the vessel for all purposes, for the duration of the requisitioning: see, Anglo-
Northern v Jones & Williams (supra); here, strictly, the same could not be said – even
though effectively detained, the vessel remained in the service of Tsavliris. If, however,
a frustrating event was otherwise made good, this consideration would not, in my
judgment, have precluded the frustration of the charterparty.

89. I must next turn to the features of the case other than the probable length of the
delay compared to the unexpired portion of the charterparty. These may conveniently
be considered under the following headings:

i) Delay in the salvage context;

ii) The Tsavliris approach;

iii) Cl. 7 of the charterparty;

iv) Proposed frustration dates;

v) The availability of the Pakistani Court.

90. Delay in the salvage context: I take as my starting point the context in which the
charterparty was to be found. It is incontrovertible that delay is an ordinary incident of
salvage operations as it is of any maritime adventure. Such delay may of course be (to
use Lord Sumner's words in Bank Line v Capel, supra) "even of considerable length
and of wholly uncertain duration". Notably, on the evidence, for some time the delay
here did not trigger alarm bells, all the more so given a situation replete with rumour
and gossip rather than hard fact. Again, as was clear on the evidence, salvage
operators are accustomed to resolving such difficulties and salvage remuneration is
designed to reward or at least reimburse them for their skill in doing so.

91. What then of the nature and extent of the delay in the present case? I focus first, here,
on its nature. It must be acknowledged that, in his evidence, Mr. Hall, with some 30
years of experience at Clyde & Co., said that he had not come across another case
where (salvage) contractors' tugs had been detained by port authorities. I confess to
some surprise at that answer though, it may of course reflect Mr. Hall's own
experience. Inevitably, however, Mr. Hall accepted that such a risk was covered by
SCOPIC clause 9(iii) – as already observed, the SCOPIC clause was an industry
response to the needs of salvors in, amongst others, cases such as this case.
92. In his evidence, Mr. Constantinidis said that he had experience of a tug and a sub-
contracted tug detained in Syria in 1986-7 by cargo interests (who may have been a
public or state body). That was his only experience of the detention of a Tsavliris
chartered in vessel in respect of third party claims against casualties. In Jeddah in
1995, a tug had been required to remain so as to continue salvage operations, when
otherwise Tsavliris would have wished to terminate its services. He acknowledged too
that there had been an arrest of a Tsavliris tug in connection with an allegation going
to the manner in which services had been performed.

93. Perhaps, however, more tellingly than the individual examples put to and
acknowledged or explained by Mr. Constantinidis, was the Tsavliris 2003 "Salvage
Status Statement" ("the Tsavliris 2003 status statement"). As is well-known, such a
statement is typically adduced in evidence by contractors in LOF arbitrations; it
provides an evidential basis for "encouraging awards" and speaks to the expertise of
the salvors in question, the expenses they incur and the risks to which they are
exposed. Here, the Tsavliris 2003 status statement included the following passage:

" On occasions Tsavliris salvage tugs were assisting casualties only to find
themselves arrested or detained for lengthy periods through no fault on
our part."

94. I asked Mr. Constatinidis about this passage. He accepted that the risk was significant
enough to mention, albeit while suggesting that such occasions were more rare now.
He said that this was something which happened occasionally. I asked whether that
was one of the risks of the industry. Mr. Constantinidis answered: "Oh, definitely."

95. What is the true scope of this evidence? As it seems to me:

i) At least in a case involving pollution or the risk of pollution, perhaps a fortiori in the
waters of a state not party to CLC, a salvage contractor is exposed to the risk of
governmental intervention and unreasonable detention of its craft or equipment.

ii) Such is the inevitable conclusion to be drawn from the Tsavliris 2003 status
statement, even allowing for an element of self promotion in documents of this
nature. This conclusion likewise accords with the industry view, found in SCOPIC
clause 9(iii) and, for completeness, with the observations in Brice (set out above)
relating to that clause.

iii) If this conclusion is well-founded, it can make no difference in the present context
whether the craft or equipment deployed in the salvage operation are owned by the
salvor or chartered in. To the port authority, any such distinction will be a matter of
indifference.

iv) The relevant risk is unreasonable detention at the hands of port or other local
authorities. While I accept that there is a difference between an unreasonable
requirement to remain so as to guard against some asserted (but unfounded) threat
and an unreasonable detention to secure a claim against a third party (the casualty
interests), these strike me as variants on the same theme – rather than as entirely
distinct risks. Could it make all the difference to risk allocation here if the port
authority capriciously detained the vessel with a view to prolonging the presence of
Tsavliris as opposed to capriciously detaining the vessel to secure a claim against the
 casualty interests? I do not think so. In both cases, the underlying cause of the
detention would be local whims, pressures or "politics"; in both cases, the essence of
the matter would be the same: the risk of lengthy and, by definition, unreasonable
detention of Tsavliris craft or equipment through no fault on its part.

96. It follows, in my judgment, that nothing in the nature of the detention in the present
case leads me to treat it as other than an incident of the salvage operations in which
Tsavliris was engaged. Viewed in this light, the risk of unreasonable detention of the
vessel at the hands of the KPT must be regarded as, objectively, forming part of the
matrix of the charterparty. That the risk may only manifest itself on occasions or rare
occasions is neither here nor there. If right so far, it would not be straightforward for
either party to found a case of frustration on such detention. In any event and
whatever might have been the position had it been the Claimants who were asserting
frustration, given the evidence summarised above, it is difficult for Tsavliris to do so -
it having entered into the charterparty against the background and with the
knowledge of the risk I have adumbrated. When considering whether the detention in
the present case gave rise to a fundamental or radical change in the obligation
originally undertaken, this conclusion as to the contractual setting by itself provides a
powerful argument for saying that it did not; the risk was always present. There is
indeed a cogent case for concluding that the detention (at least so far as its nature is
concerned) came within the ambit of the commercial risks undertaken by the parties. I
shall return in due course to the prospective extent of the delay.

97. The Tsavliris approach: As already noted when summarising the evidence of Mr. Hall
and Mr. Constantinidis, Tsavliris favoured a solution involving political and commercial
negotiation. They were not at all anxious to resort to litigation and it was only (very
broadly) in mid-October that Mr. Hall, at any event, came to the view that there was
no alternative to a more aggressive approach.

98. Throughout the trial, the Claimants were critical of this approach. They repeatedly
suggested, inter alia, that litigation should have been a "first priority". In my judgment,
such criticism was misplaced. I do not accept that Tsavliris fall to be criticised for not
favouring earlier litigation. The highest I think it can be put is that some parties might
have preferred to litigate sooner; but I cannot begin to conclude that it was
unreasonable to approach litigation as a remedy of last resort.

99. Accordingly, in my judgment, Tsavliris was entitled, so to speak, to play a long game.
But its choice in doing so must be relevant to the question of frustration. The point
should not be over-stated; I do not think it can be said that the mere pursuit of a
commercial solution is fatal to Tsavliris treating the charterparty as frustrated.
Conversely, however, if a reasonable commercial party in the position of Tsavliris could
properly have approached the detention of the vessel by seeking a commercial
solution, it must be difficult to conclude that within a reasonable time frame for such
negotiations the charterparty can be regarded as frustrated. As already noted, the
timescale Mr. Constantinidis had in mind in mid-September for a commercial solution
was something in the order of three months – "certainly before Christmas". As it
struck me that was an answer in evidence, both realistic and revealing in equal
measure. It would certainly be difficult to reconcile the Tsavliris approach with the
contention that, prior to Christmas 2003, justice required the charterparty to be
treated as frustrated. Realistically, that approach instead suggested that this was no
 more than a commercial problem with which salvors are from time to time required to
deal.

100. Cl. 7 of the charterparty: Viewed from another angle, it is not surprising that Tsavliris
should have been actively engaged in the attempts to secure the release of the vessel.
Quite apart from considerations going to its commercial reputation, cl. 7 of the
charterparty (set out above) requires consideration. It is fair to say that cl. 7 loomed
larger in the Claimants' case on the application for summary judgment before Cooke J,
than it did at trial. However, Mrs. Blackburn QC confirmed to me that an argument
based on cl. 7 was maintained. Mr. Hill's response was that cl. 7 was of no relevance.
First, cl. 7 went only to payment; not to the assumption of risk. Secondly, there had
been no failure to pay port dues; alternatively, any failure to port dues was not
causative of the detention.

101. I am not, for my part, persuaded that cl.7 can be disposed of as readily as Mr. Hill
contends. In my view, cl.7 does extend to assumption of risk. It seems inescapable,
notwithstanding Mr. Hill's submission to the contrary, that had there been a simple
dispute, however unreasonably pursued, as to the amount of port dues actually paid,
the risk of any resulting delay would have rested with Tsavliris. So, here, the fact that
the KPT, however unreasonably, adopted the stance that it did as to the amount of
port dues payable, does not impinge on the allocation of risk in respect of port dues
as between the Claimants and Tsavliris. Whereas I am content to proceed on the
footing that cl. 7 by itself may well not preclude frustration – see the reference above
as to the construction of contractual clauses said to do so – I do think it is a relevant
factor in the present equation. In considering whether the detention gave rise to a
fundamental or radical change in obligation, it is pertinent to keep in mind the
Tsavliris sphere of responsibility under the charterparty, of which cl. 7 is a part. In
commercial and contractual terms, Tsavliris assumed the responsibility of making the
arrangements necessary for this sub-contracted vessel to enter into Pakistan, operate
there and depart Pakistan; see, apart from cl. 7, the various clauses as to permits, taxes
and dues found in the fixture recap, set out above.

102. Proposed frustration dates: It is convenient here to pause so as to consider the

frustration dates contended for by Tsavliris. As earlier recorded, Tsavliris's primary case
was that the charterparty was frustrated on the 19th September. In my judgment, that
contention has no merit. It is belied, or at any rate unsupported, by Tsavliris's own
evidence. On that evidence, which I have already summarised when dealing with this
factual chapter and need not repeat, any conclusion ventured on the 19th September
as to the prospective length of delay would have been, at best, speculative.
Accordingly, the argument for frustration as of this date is doomed – even without
regard to the other features of the case telling against frustration more generally.

103. The more cogent argument – in terms of the probable length of delay – was centred
on the 13th October. By then (or thereabouts), it had become clear, as Mr. Hall
explained, that the need for legal action could not be avoided. It must therefore be
considered whether, prospectively, continued detention as of this date, at a stage
when no resort had yet been made to the Pakistani Court to obtain the release of the
vessel, gave rise to the frustration of the charterparty.
104. The availability of the Pakistani Court: It is necessary, in my judgment, to spell out
what this Tsavliris argument entails. To conclude as of mid-October that the
charterparty was frustrated must involve the assumption that either the Pakistani
Court could not grant effective relief or that it could not grant effective relief other
than after a period of inordinate delay. It is, with respect, a strong thing to make such
an assumption with regard to the Court of a friendly foreign state. In my judgment the
evidence does not warrant any such conclusion. Plainly, if effective and timely relief
could be anticipated, the charterparty could not yet be regarded as frustrated.

i) While, as appeared from their evidence, both Mr. Hall and Mr. Constantinidis had
made assumptions as to the speed of Pakistani Court proceedings, neither had any
firm basis for their views – other than a caution derived from experience of operating
internationally. Certainly, no contemporaneous inquiries had been made of Orr
Dignam in this regard.

ii) Against this background, there is no basis for displacing the expert evidence as to
Pakistani law and practice, summarised above. While I am unable – at least in the
circumstances of this case - to accept the Tsavliris expert's view that an interim order
of a mandatory nature could have been obtained within a "couple of days", I see no
reason to doubt the view of the Claimants' expert that a timescale of some 3-6 weeks
could be anticipated. Hindsight serves to confirm the realistic nature of this opinion.

iii) Pausing there, the commencement of proceedings in mid-October 2003, whether

by Tsavliris or by or through the Claimants (if tactical considerations suggested a more
favourable wind for proceedings in which Tsavliris were not claimants), could
accordingly be anticipated to produce an outcome within the timescale contemplated
by Mr. Constantinidis for achieving a commercial settlement. Of course there would be
a risk of appeals but the existence of such a risk would not, in my view, have justified
the conclusion in mid-October that timely and effective relief was unlikely to be
obtained.

iv) There remains for consideration Mr. Moloney's view, highlighted earlier, that "any
legal proceedings would be utterly ineffectual". I reject this evidence as essentially
amounting, with respect, to speculation and insinuation. As already noted, this view
did not find its way into Mr. Moloney's contemporaneous report to his clients. It is
manifestly at odds with the expert evidence. It is unwarranted on a fair consideration
of the facts. While I have no doubt that the settlement – which Mr. Moloney did much
to achieve – played a very important role in securing the release of the vessel, I am
quite unable to accept that the legal proceedings played no or no material role; to the
contrary, I think that the Karachi proceedings did play a material role in securing the
release of the vessel. It is striking that even after the settlement was in place, the
vessel (together with the other vessels in question) remained unreleased; all the
vessels were, however, released following the issue of the contempt proceedings. For
completeness, this conclusion is in no way weakened by anything said by Mr. Aga in
the contempt application. That there had been foot-dragging on the part of the KPT
seems unfortunately plain; that both the settlement and the pursuit of legal remedies
served to overcome it, is in my judgment established.

105. I have not, in all this, overlooked Tatem v Gamboa (supra). As Mr. Hill rightly said, that
case involved a charterparty for a short period, at a high rate, held to be frustrated
following its seizure by a Nationalist ship in the Spanish civil war. As Goddard J
 concluded, the foundation of the contract was destroyed as soon as the "insurgent
war vessel had seized the ship" (at p. 140). I respectfully entertain no doubts as to the
correctness of the conclusion in that case. It does not of course follow that the
conclusion of Goddard J would by itself require or suggest the same answer in the
present case. In any event, it is sufficient to underline a key distinction between that
case and this. In Tatem v Gamboa, there was no prospect of recourse to any court to
obtain the release of the vessel. As discussed, here, the Pakistani Court was available.
For that reason alone, Tatem v Gamboa cannot make good the Tsavliris case here.

106. Conclusion: I have reached the clear conclusion that Tsavliris, upon whom the burden
rests, has not made good its case that there was a frustrating event at any relevant
time. There was not so radical or fundamental a change in the obligation assumed by
Tsavliris as to establish frustration. In summary:

i) I accept that the KPT's detention of the vessel resulted in a far more onerous
charterparty than Tsavliris had contemplated. By itself, that is insufficient to make
good a case of frustration.

ii) I do not accept that prior to about the 13th – 18th October, there was any realistic
case of frustration founded on probable delay. Until then, the prospective length of
delay was, at best, speculative.

iii) I do accept that as of about the 13th – 18th October, there was a realistic argument
to be advanced that the probable length of delay, compared to the unexpired period
of the charterparty, meant that the charterparty was frustrated.

iv) However, I regard that important feature of the case as outweighed by other
features of the case, especially taken cumulatively: namely, the risk, in the salvage
context, of unreasonable port authority detention forming part of the contractual
setting; the decision by Tsavliris to opt in the first instance for a negotiated solution;
the sphere of responsibility assumed by Tsavliris under the charterparty.

v) Any remaining doubts, in particular as to the prospective extent of the delay, were,
to my mind, put to rest by the striking feature of the case that, as of about the 13th –
18th October, no attempt had yet been made to invoke the assistance of the Pakistani
Court to obtain the release of the vessel. No basis has been established for the
necessary premise underlying the Tsavliris case that effective and timely relief could
not be anticipated from the Pakistani Court - not least, taking into account the
timescale disclosed by considerations as to delay in a salvage context and Tsavliris's
own assumption as to the length of time likely to be required for its preferred
commercial solution.

107. I confess that I am not unhappy to arrive at this conclusion. In a salvage operation of
this nature, it seems to me (subject always to any specific contractual provision) more
satisfactory that salvors should assume the risk of unreasonable detention of their
chartered in vessels. Such risks can be incorporated in the price for the services and
passed on whether by way of an Art. 13 award or under the SCOPIC clause. Subject
always to any specific contractual provision, they should not be borne by the owners
of the chartered in vessel alone.
108. By way of postscript, I return to the letter dated 18th September, 2003, written by the
Pakistani Ministry of Foreign Affairs to the Embassy of Greece. That letter appears to
suggest, inter alia, that individual seafarers would be detained pending the provision
by the P&I Club of adequate security in respect of claims arising out of the grounding
and break-up of the casualty. If that be the right interpretation of the letter, then, with
the greatest respect, it gives rise to real unease. I say no more, as the fate of the
casualty's crew was not an issue falling for decision at this trial. But on any view, the
letter serves as a reminder of the attraction of addressing legitimate concerns as to
pollution and the provision of security by way of international conventions, rather
than by way of a unilateral approach.

WAS FRUSTRATION PRECLUDED BY THE CHARTERPARTY?

109. Introduction: The conclusion to which I have come – that there was no frustrating
event – is sufficient to decide the outcome of this trial. Nonetheless, the question of
whether, had there otherwise been a frustrating event, frustration was precluded by
the charterparty, was fully argued. It is right that I should say something in this regard
but, in the circumstances, I shall do so very briefly indeed. Not least, the exercise is
inherently artificial, in that the relevant assumption must be that there has been at
some time (contrary to my conclusion) a frustrating event on the facts ("the relevant
assumption"). Doing the best I can, I am not persuaded that the charterparty
provisions relied upon by the Claimants would, in isolation, have served to exclude the
doctrine of frustration, assuming that there had otherwise been a frustrating event
(i.e., the relevant assumption). As to questions of foreseeability of the risk, I do not
think that any useful purpose would be served by a hypothetical decision on a difficult
area of law in a necessarily fact sensitive area. I reiterate, however, that both cl.7 of the
charterparty and the risk of unreasonable detention forming part of the contractual
matrix, were significant contributory factors in my decision that the nature of the
charterparty had not altered fundamentally or radically so that there had been no
frustrating event. My reasons follow.

110. The obligation to redeliver: Plainly, under the charterparty, Tsavliris was obliged to
redeliver the vessel at Fujairah, at the end of the charterparty period. The orders given
by Tsavliris to the vessel were consistent with this obligation. With great respect to the
argument advanced by the Claimants, I fail to see how the redelivery obligation assists
on the issue of frustration. The short answer to the Claimants' contention is that, on
the relevant assumption, rather than the redelivery obligation amounting to a
contractual provision precluding reliance on the frustrating event, the ability of
Tsavliris to redeliver the vessel would have been prevented by the frustrating event.

111. The due diligence obligation to ensure that the vessel was only employed between
and at safe places: For similar reasons, the obligation contained in cl. 4 of the
SHELLTIME 4 form, takes the matter no further. On the relevant assumption, even the
most generous view of the "secondary obligation" (see, The Evia No.2 [1983] 1 AC
736) does not assist the Claimants; no further order from Tsavliris would have enabled
the vessel to leave Karachi. Tsavliris advanced a variety of other and anterior
objections to the Claimants' reliance on the "safe ports" provision in the charterparty;
given the view which I take of the matter, it is unnecessary to express a view on these
submissions. I do no more than record that they were advanced.
112. The rider clause: Here, the Claimants mounted a rather more formidable argument.
They submitted that the first sentence of the rider clause (the full terms are set out
above) should be given its natural meaning; there was no basis for restricting the
width of its wording. When the clause said "any responsibility, costs and any expenses
which may arise following the removal of the crude oil cargo" from the casualty will be
for the account of the casualty's or Tsavliris's interests, it meant it. If that construction
was well-founded, then the parties had made their own provision for the allocation of
risk in the circumstances which had arisen. Accordingly, the application of the doctrine
of frustration was precluded.

113. Tsavliris contended that the rider clause must be read as a whole and its true scope
was indicated and confined by the second sentence – namely, it was a clause
addressing problems arising in relation to cargo transhipped from the casualty. While
the drafting was not ideal, there were obvious commercial reasons for such a confined
clause. In any event, on the relevant assumption, the wording was not sufficiently clear
to preclude frustration.

114. I have anxiously considered these rival arguments. Very much on balance, I prefer
those of Tsavliris. First, the clause must be read as a whole; if that be right, then it
would be very curious to find a clause of the untrammelled width contended for by
the Claimants bolted together with the second sentence, itself plainly confined to
cargo matters. Secondly, I accept the argument that the language of the clause would
not bear the weight sought to be put on it if, as must be assumed, it alone stood to
preclude the frustration of the charterparty. As a matter of construction, I am unable
to conclude that the parties intended the rider clause to cover the event which, on the
relevant assumption, must be taken to have occurred; I do not think that the wording
of the clause was sufficiently clear to achieve any such purpose.

115. Cl. 7 of the charterparty: For the reasons as to construction already set out, I do not
think that, on the relevant assumption, cl. 7 of the charterparty, taken by itself, would
preclude the application of the doctrine of frustration. That said, as discussed above, I
do think that cl. 7 has no little significance in highlighting Tsavliris's sphere of
responsibility under the charterparty – the starting point for any determination as to
whether there has been so radical or fundamental a change in obligation assumed by
Tsavliris, as to give rise to frustration.

116. A foreseen or foreseeable event? The position here requires a little elaboration. First, I
am not persuaded that it follows from the fact that unreasonable detention by a port
authority of a salvor's craft and equipment (owned or sub-contracted) is a risk of the
industry, that this detention of the vessel by the KPT was actually foreseen by Tsavliris,
at the time it entered into the charterparty. Indeed, as Mr. Hill contended, the
evidential basis for such a conclusion was not laid. Secondly, however, in the light of
my earlier conclusions as to the Tsavliris 2003 salvage statement and the evidence of
Mr. Constantinidis, I am satisfied that such a risk was foreseeable. Thirdly, for reasons
already discussed in connection with the contractual setting, I do think that this
feature is an important contributing factor in deciding that the nature of the
charterparty had not been fundamentally or radically altered by the detention. As
already foreshadowed, beyond this, I do not think it would be right for me to go; in
particular, I decline to express a hypothetical view as to whether, had there otherwise
been some frustrating event, the fact that the risk of unreasonable port authority
 detention of the vessel was foreseeable would by itself have served to exclude the
doctrine of frustration.

WAS FRUSTRATION SELF INDUCED?

117. If, contrary to my earlier conclusion, there was otherwise a frustrating event, would
Tsavliris have been unable to rely on it, on the ground that it was self-induced? Once
again, therefore, the relevant assumption is applicable, the discussion is academic and
the exercise is artificial. Here too, there is very little useful that I can say. The only
suggested basis on which frustration (if frustration there otherwise was) was self
induced, lay in the Tsavliris decision to prefer a negotiated solution to earlier recourse
to litigation. It is, however, impossible to determine this argument without first
deciding on a frustration date and the reasons why the charterparty was then
frustrated. If, for example, the charterparty had been frustrated on or about the 19th
September, 2003, then any argument as to self induced frustration would not get off
the ground. If, however, the charterparty had been frustrated somewhere between the
13th – 18th October, 2003, on the ground of the extent of the prospective delay at that
point in time, then there may well have been rather more to be said for this
submission – even taking into account the burden of proof resting on the Claimants.
Beyond that, I do not think I can usefully go.

118. My reasons for going this far are these. First, I have earlier concluded that the
availability of effective and timely relief could be anticipated from the Pakistani Court
and that the Karachi proceedings played a material role in securing the release of the
vessel. If that be right, then there was scope for argument that proceedings
commenced sooner could have been expected to bring forward the likely date of the
vessel's release.

119. Secondly, I take as my guide the observations of Bingham LJ, set out above in The
"Super Servant Two", supra, at p.10; what is needed is a pragmatic judgment; the
essential question is whether the frustrating event relied upon:

"…is truly an outside event or extraneous change of situation or whether it

is an event which the party seeking to rely on it had the means and
opportunity to prevent but nevertheless caused or permitted to come
about."

120. Thirdly, I accept that Tsavliris did not have the means and opportunity of preventing
the KPT from detaining the vessel in the first place. But, thereafter, Tsavliris's choice as
to whether and, if so, when to have recourse to the Pakistani Court to seek the release
of the vessel could not be ignored in considering the vessel's continued detention and
the extent of the prospective delay. Here too, I would not have been minded to view
the matter as one of criticism or breach of duty; it is, instead, a question of choices
and consequences. The doctrine of frustration exists to do justice. If and insofar as
Tsavliris relied on delay resulting from the vessel's continued detention as constituting
the frustrating event, there would be force in the argument that it had the means and
opportunity of doing something about that detention but it had not or not yet done
so.

THE CLAIMANTS' FALLBACK CASE ON FRUSTRATION

121. It will be recollected that the Claimants' fallback position was that if the charterparty
was frustrated at any time (which they denied), then it was not frustrated before the
18th October, 2003. For its part, Tsavliris contended for a frustration date between the
19th September and the 13th October. In the light of my conclusion that the
charterparty was not frustrated, this point too is academic. Once again, however, it
was fully argued and I will indicate my view.

122. I have already set out the key factual events over the relevant period and I will not
repeat them here.

123. As it seems to me, if the charterparty was to be seen as frustrated, regardless of the
various considerations upon which my conclusion was based, including but not
confined to the fact that no attempt had yet been made to invoke the assistance of
the Pakistani Court to obtain the release of the vessel, then I would likely have
concluded that the frustration date was the 17th October, 2003.

124. As already discussed, the matter must be considered as it had to be considered by the
parties, rather than after the event. By the 17th October, it was clear that something
more was needed to obtain the vessel's release, than Tsavliris ensuring that MMM had
sufficient funds in its LPD account to cover the port dues of all the Tsavliris chartered
in vessels then seeking clearance. If such a conclusion was sufficient to give rise to
frustration of the charterparty (as must be assumed for the purposes of this
hypothesis), then it was established, on the probabilities on the 17th October. I do not
think that the final, forlorn, chaser in the relevant series, sent that day, impacts on the
matter. Conversely, until the 17th October, I do not think that the matter had been
sufficiently worked out to justify this conclusion; I am in particular struck by the
communication from MMM to the KPT, on the 15th October, explaining how the funds
were to be allocated between the respective vessels so as to ensure that the funds in
the LPD account kept pace with the constantly accruing dues. At least a day or so
needed to be allowed thereafter to see if this letter attracted a favourable response.
Come the 17th October, it was, in my judgment, clear that it would not.

MISCELLANEOUS MATTERS

125. By the conclusion of the trial, there was, as I understood it, agreement on a variety of
matters of quantum:

i) relating to the Claimants' claims (in the event that they were successful on liability
as, in the event, they have been) for hire (US$1,373,320), bunkers (US$45,740.60) and
costs incurred in respect of the Karachi proceedings (US$30,200); and

ii) in respect of a Tsavliris counterclaim, in the amount of US$7,674.00 and £1,658.50,

that the Claimants were in breach of a jurisdiction agreement contained in the
charterparty by reason of their failure to withdraw Pakistani proceedings against
Tsavliris in a timely fashion.

126. I shall be grateful for the assistance of counsel in drawing up the order and in
connection with all questions of costs. So far as concerns the agreed items of
quantum, it would be convenient if the agreed figures could be incorporated in the
 draft order; in the unlikely event that there is any difficulty in this regard, I shall of
course consider any submissions advanced by counsel.

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