This was an appeal against an arbitration Award. The Sellers sold the ship Union Power under a MOA on the terms of the Norwegian Sale form 1993. Following delivery, the vessel was found to have a severe engine problem, and a dispute arose as to whether the Sellers were liable to the Buyers for such damage. The arbitration tribunal held that Sellers were liable to the Buyers on the ground that Section 14 (2) of the SOGA implied a duty on the Sellers to provide a vessel of satisfactory quality and such duty was part of the agreed contract of sale.
The relevant clause of the agreed sale contract read: Clause 11. Condition on delivery: The Vessel shall be delivered and taken over as she was at the time of inspection, fair wear and tear excepted. However, the Vessel shall be delivered with her class maintained extended to 30 September 2009 without condition/recommendation, free of average damage affecting the Vessels class. The Vessel’s continuous survey cycles of machinery are to be as per current machinery continuous status attached hereto (attached «A»). Her International, National, Class and Trading Certificates clean, valid until 30 September 2009, except ISSC and SMC to be valid at time of delivery only, …»
The Arbitration Tribunal held that Section 14 (2) of the 1979 SOGA implied a term as to satisfactory quality, and the parties had not contracted out this term in their agreed MOA. The fact that the vessel was sold “as she was” in the context of clause 11 of the MOA did not prevent such implied term from being incorporated into the contract of sale. The Sellers appealed to the High Court. Mr. J. Flaux upheld the arbitration award. To read a full copy of the judgement click here.