UK: The "MOSCOW STARS" – Charterers Challenge Court's Power To Sell Cargo In Arbitration Dispute

Last Updated: 29 November 2017
Article by Simon Jackson and Elliot Boler

In a recent case1, the High Court was asked to determine the scope of the court's jurisdiction to sell cargo, an issue which was pertinent to an arbitration dispute over unpaid hire and other outstanding sums. In the process, the Court had to examine the wording of section 44(2)(d) of the Arbitration Act 1996 which sets out the Court's power to make an order for sale, and reviewed both the jurisdictional requirement of "good reason" for a sale under CPR 25.1 and the discretionary considerations.


On 14 October 2016, the crude oil tanker "MOSCOW STARS" (the Vessel) was loaded in Puerto La Cruz, Venezuela, under a time charter between the claimant, owner of the Vessel, and the respondent charterer. The Vessel was ordered to discharge the cargo in Freeport, Bahamas.

Owing to repeated historic failures by the charterer to make payment of hire fees, the owner served notice of its exercise of a lien over the cargo, in October 2016, and again in November 2016, after which, at the order of the charterer, the laden Vessel sailed to Bullen Bay, Curaçao,.

The owner, subsequently, commenced arbitration in London against the charterer in respect of overdue hire fees, and other outstanding sums, totalling approximately USD7.7 million. In December 2016 and January 2017, whilst the cargo was subject to the contractual lien, it also became subject to arrest by the owner and other companies in the same corporate group (Sovcomflot) as security, following leave from the Curaçao Court

The owner then applied for an order to sell the cargo pursuant to section 44 of the Arbitration Act 1996, having received prior permission from the arbitral tribunal. The application was considered in the High Court before Mr Justice Males. The principal money claim had previously been heard by the arbitral tribunal and it was undisputed that any award, if granted, would likely take many months to enforce.

The issues

The three reasons submitted by the charterer for the dismissal of the application for an order to sell the cargo, were as follows:

  1. the Court did not have jurisdiction to order the sale of the cargo under section 44(2)(d) of the Arbitration Act 1996 (the Act);
  2. even if that power existed, it must be exercised within the scope of CPR 25.1(c)(v), the requirements of which were not met in the present case; and
  3. in any event, the Court should not grant the order in the circumstances.

Court jurisdiction

Section 44 of the Act sets out that the Court has, for the purposes of, and in relation to arbitral hearings, the power to make an order for "the sale of any goods the subject of proceedings" (section 44(2)(d)).

In the present case, the issue concerned whether the cargo was the "subject" of the arbitration proceedings. Males J agreed with the owner that, in the circumstances, for the Court to have no power to order the sale would be unsatisfactory, but held that this argument should not be the determining factor. The charterer submitted that the Court's jurisdiction was limited to circumstances in which the underlying proceedings were "about" the goods2 and where, in advance of a resolution of that dispute, there was no way of knowing which party was entitled to them, to sell or otherwise.

Males J held that, in the present case, until the underlying arbitration was resolved and entitlement to the hire claim established, it was not possible to say what should happen to the cargo. Put simply, a final decision would be required by the arbitral tribunal before either the owner could enforce its lien against the cargo, or the charterer would find itself in a position to obtain delivery. Thus, effectively, an impasse existed which required the assistance of the Court.

Males J noted that, even though the arbitration concerned unpaid hire fees and was not "about" the cargo, the outcome would determine what would ultimately happen to it. In dismissing the charterer's submission, he determined that there was sufficient nexus between both the cargo and the arbitral proceedings in circumstances where a contractual lien was being exercised over a charterer's goods as security, for a claim being advanced in arbitration.

Males J held that there was power for the Court to order a sale of the liened cargo pursuant to section 44 of the Act.

Scope of CPR 25.1(c)(v) and discretion of the Court

The power for making orders the court has in an arbitration case is the same power it has for the purposes of legal proceedings (as expressed in section 44(1) of the Act). In this case, the relevant power is found in CPR 25.1. This is the power to make an order "for the sale of relevant property which is of a perishable nature or which for any other good reason it is desirable to sell quickly" (CPR 25.1(c)(v)); the latter part being relevant in this case.

In considering whether there was good reason to order the sale, the Judge pointed to a number of factors raised by the owner which included: the length of time the cargo had been on the Vessel; the likelihood it would remain there for many more months during which the owner would not be receiving hire fees; the owner's operational costs during this period; the Vessel's forthcoming deadlines in order to meet SOLAS and Class requirements; the fact that the sale of the cargo would be for the benefit of both parties and would leave the owner free to engage its vessel in other operations; the lack of a viable alternative (for example, discharge into storage).

The Judge rejected the charterer's submission that the situation was of the owner's own making, and did not accept it as being a material factor against making the order applied for. Males J stated that neither party could have contemplated in October 2016 that the cargo was going to remain on board for over nine months, nor could the owner have contemplated that the charterer would fail to pay hire for that length of time.

The charterer also relied upon the delay of the owner in issuing its application. Males J deemed this criticism to be outweighed by other factors, noting the significant activity taking place in other arbitrations by Sovcomflot companies against PDVSA over the same period.

Lastly, the charterer made an open offer, just prior to the hearing, to carry out the sale of cargo itself, and hold the sale proceeds in escrow in London. Males J noted the risk that if no order for sale was made at this juncture, then it could drag out the position indefinitely. Additionally, Males J used this open offer as evidence of recognition, on the part of the charterer, that sale of the cargo was the "only viable course". Consequently, he deemed any further consideration of the charterer's submissions that a sale would be prejudicial to its position, unnecessary.


In giving his fully reasoned judgment, Males J reiterated that section 44(2)(d) of the Act did not provide power to the Court to make a free-standing order for sale as a form of independent relief, and that there had to be a sufficiently close nexus between the goods and the arbitration proceedings. This was held to be satisfied on the facts. Accordingly, the Court made an order for the sale of the cargo, the proceeds of which were to be held to the order of the Court pending the outcome in the underlying arbitration.

Also, it should be noted that since the Respondent charterer was the owner of the cargo, Males J emphasised that the decision did not extend to consider the position of the cargo being owned by a third party not involved in the underlying proceedings.


[1] Dainford Navigation Inc. v PDVSA Petroleo SA (The " MOSCOW STARS") (2017) - EWHC 2150 (Comm) (02 August 2017)

[2] Judgment of Lord Millett in On Demand Information Plc v Michael Gerson Finance Plc [2002] UKHL 13, [2003] 1 AC 368

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions