Owneast Shipping Ltd (the plaintiff) was the owner of the Qatar Star. The vessel was time chartered to Qatar Navigation QSC (the defendant).

The charterparty included the following clauses:

5. Payment of said hire to be made to Owners designated bank account in cash in United States Currency, 15 days in advance … otherwise failing the punctual and regular payment of the hire … the Owners shall be at liberty to withdraw the vessel from the service of the Charterers …

62. Punctual Payment

… where there is any failure to make 'punctual and regular payment' due to errors or omission of Charterers' employees, bankers or Agents or otherwise for any reason where there is absence of intention to fail to make payment as set out, Charterers shall be given by owners 3 banking days notice to rectify the failure and where so rectified the payment shall stand as punctual and regular payment.

The defendant's record of hire payments was unsatisfactory. The semi-monthly payment of hire was due on 24 August 2006, but the payment was not made by that date. On 15 August 2006, the plaintiff gave notice under cl 5 and withdrew the vessel. The majority of the arbitral tribunal held that the plaintiff had wrongfully withdrawn the vessel because the dominant cause of the defendant's failure to pay was incompetent management rather than intentional non-payment. A notice under cl 62 should thus have been served by the plaintiff. The plaintiff said that it did not need to serve a notice. The plaintiff appealed. On appeal, one of the questions that the Court was asked to examine was whether cl 62 applied where the failure to pay any hire by the due date was the result of recklessness on the part of the defendant.

Held: Appeal dismissed.

The word 'intention' in cl 62 did not have an extended meaning so as to include recklessness. The Court reasoned that the word 'intention', used in cl 62, was not a term of legal art, but was an ordinary English word which should be given its ordinary English meaning. There were many examples of statutory or contractual provisions in the commercial field where a clear distinction was made between intention and recklessness. For example, the words 'or recklessly and with knowledge that damage would probably result' were added to art 4 of the LLMC 1976 in order for the express purpose of extending the scope of art 4 in return for higher limits. The same formulation had also been adopted in art 13 of the Athens Convention 1974, which had been given effect in the UK by the Merchant Shipping Act 1995 (UK). Thus, the Court declined to widen the scope of the word 'intention' in cl 62. Whether an intention not to make payment on time was established was a question of fact, and the majority of the tribunal had decided that there was no such intention. The plaintiff should have served a notice under cl 62 before the withdrawal.