Steel trader, Metall Market OOO, has failed in a bid to overturn an arbitration ruling confirmed by a high court judgment that it was liable to contribute to general average costs arising from the initial voyage of the 8,300-dwt Lehmann Timber(built 2008).

The vessel was hijacked in the Gulf of Aden in May 2008 and held by Somali pirates until July when a substantial ransom was paid.

Then after release while on route for Oman the vessel suffered a loss of propulsion and had to be towed to Salalah.

Shipowner, Vitorio Shipping, declared general average over both incidents, seeking a contribution from Metall Market, which had shipped over 1,000 steel coils from China to St Petersburg in Russia.

The arbitrators decided that both the payment of the ransom and the cost of the tow together amounting to just over $3.5m were allowable general average disbursements, putting the contribution to be paid by the cargo owner at 29%.

The arbitration was largely upheld high court judge, Justice Popplewell, who found that Vitorio Shipping is entitled to refuse delivery of part of a cargo of steel coils for which a general average guarantee was provided because there was no general average bond.

But the judge also ruled that the owner was not entitled to recover storage and other expenses incurred in respect of the cargo in question.

Metall Market took its case to appeal, where it has again won a partial victory on a point of law about maritime liens, but the practical effect is minimal so the arbitration ruling is effectively upheld.

Appeal judges, Lady Justice Arden, Lord Justice Patten and Sir Bernard Rix, faced two questions that the latter described as issues of importance relating to general average.

Rix identified these questions as whether a shipowner’s lien for general average contribution was waived when a bond or insurers guarantee was requested.  In the case before the court the guarantee given was only for a small part of the cargo carried under one of four bills of lading.

The other concerned the question of whether a shipowner’s exercise of a general average lien prevented the recovery of the continued expense of looking after a cargo, rather than discharging it.

One of the matters where the appeal judges took a view was in relation to the “Soanes” principle, dating from a court case in the mid 19 century that the exercise of a lien was a matter of self-help.

The appeal court dismissed Metall Market’s challenge on the first question but allowed Vitorio’s appeal about the applicability of the Soanes principle.

The appeal court ruling refers to a ship named as the Lehmann Trader, but the ship in question appears to be the Lehman Timber, as this was the vessel that was the subject of the original high court ruling. The Lehmann Timber has since been renamed the Botnia.

Click on the documents in the related media column to the right to read the appeal and high court judgments in full.