The sip had been taken by pirates. The parties disputed the burden of expenses while negotiations took place for its release.
Held: the hypothetical other expense must be one which would have been reasonably incurred in a sense ‘interpreted and applied with a sufficient degree of latitude to give rule F practical effect’. The deputy judge found difficulty in seeing how any ransom payment could be described as reasonable: ‘At least in one sense, no ransom payment could ever be described as ‘reasonable’. Pirates are criminals engaged in extortion and their demands are unlawful and deplorable. How can a payment extorted by pirates be described as ‘reasonable’? In my view, it cannot. The idea of a ‘reasonable ransom’ is radically misconceived and the term an oxymoron.’
It would not be reasonable to say that an owner under an obligation to proceed with due despatch had not reasonably incurred a ransom paid. He went on: ‘Even if it may be said that, by January 2009, a pattern of dealing between Somali pirates and shipowners had developed, as described by David Steel J in Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2010] 2 All ER 593′ [2010] 1 Lloyd’s Rep 509 at paras 19, 23, 25 and 26 (affirmed on appeal: [2011] 1 Lloyd’s Rep 630; [2011] 1 WLR 2012), such a pattern would not remove the potential for unreasonable, irrational and illogical behaviour.’
Negotiation is an uncertain process and it ‘was not possible to state with reasonable certainty when the ransom demand was made that the amount of the ransom would inevitably be significantly reduced by the process of negotiation’. Whether or not it is ‘possible to state with reasonable certainty’ that a negotiation will achieve significant success cannot however be the test of whether or not negotiation should reasonably be essayed. The deputy judge also derived comfort from his conclusion on this point from the consideration that ‘natural justice requires that all should contribute to the substituted expenses incurred’
Citations:
[2015] 1 Lloyd’s Rep 73
Statutes:
Jurisdiction:
England and Wales
Cited by:
At First Instance – Mitsui and Co Ltd and Others v Beteiligungsgesellschaft Lpg Tankerflotte Mbh and Co Kg and Another SC 25-Oct-2017
This appeal raises the issue whether the daily vessel-operating expenses of shipowners incurred while they were negotiating to reduce the ransom demands of pirates should be allowed in general average – ie whether those expenses should be shared . .
At First Instance – Mitsui and Co Ltd and Others v Beteiligungsgesellschaft Lpg and Others CA 13-Jul-2016
The court was asked whether the general expenses incurred when a ship was taken by pirates were allowable in General Average while the negotiations for release took place. . .
Lists of cited by and citing cases may be incomplete.
Transport
Updated: 19 September 2022; Ref: scu.645852