GedenOperations has failed to persuade a London High Court judge that a more than $20mhire of the 58,000-dwt Bulk Uruguay (built 2011) was on GOA OK terms entitling  a sub-charterer to send the vessel through theGulf of Aden without the owner’s consent.

TheNissan Kaiun owned vessel was chartered by Dry Bulk Handy Holdings to GedenOperations in mid 2010 for 35 to 37 months at $18,500 a day.

Thecourt was told that a GOA OK provision was worth up to $1,250 a day as it madea vessel more marketable even though the charterer still had to pay theadditional war risks insurance premium for going through the pirate threatenedarea.

Gedenhad made clear that they regarded a GOA OK provision as a deal breaker, with DryBulk Handy Holdings aware that it was a matter of importance.

Butsuch a concession was never agreed and on the maiden voyage of the Bulk Uruguayfrom the Tsuneishi Cebu yard in the Philippines to the Atlantic it was madeclear than permission to go through the Gulf of Aden was for that voyage onlyand should not be seen as a precedent.

Anarbitration panel found for Dry Bulk Handy Holdings, a joint venture ofPeter Livanos’ DryLog operation and Chile’s Compania Sud Americana de Vapores(CSAV) that appears to be in the process of breaking up.

DryBulk Handy Holdings as disponent owner was awarded damages of $6.5m on a majority ruling from thearbitrators

ButGeden decided on a court challenge to the arbitration, contending they wereentitled to send the Bulk Uruguay through the Gulf of Aden providing they paidthe additional insurance premium.

Thecase before Justice Popplewell turned on whether Geden’s insistence on GOAOK terms amounted to a repudiatory breach of the charterparty.

Thejudge however found that the experienced arbitrators had applied the correctlegal test so the Geden appeal failed.

“Thecharterers face a high hurdle because they are not able to point to any errorin the legal test which the majority [of the arbitrators] posed for themselves.They rely upon the fact that the question whether or not a breach of contractis repudiatory is one of mixed fact and law and say that there is only oneanswer which the majority could have reached had they correctly applied the lawto the facts, namely that the owners’ breach was repudiatory,” noted JusticePopplewell.

“Onceit is recognised that the relevant question is not simply whether it would be arepudiatory breach for the owners to fail to comply promptly with a voyageorder for GOA transit if and when made, it is readily apparent that this is ahigh threshold which cannot be met,” ruled the judge

JusticePopplewell said the arbitrators finding of fact was not open to challenge atappeal if the law had been correctly understood even if an individual judgemight have come to a different conclusion.

Clickon the document in the related media column to the right to read the judgmentin full.