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E.N.E. Kos 1 Limited v Petroleo Brasileiro S.A. (The "KOS") [2010]

The Court of Appeal has recently handed down its judgment on the Charterers' appeal against the decision of Andrew Smith J in this dispute. The case raises two novel points arising out of the early withdrawal of a time chartered vessel for the non payment of hire.

At the time of the withdrawal the vessel was partially laden and the Owners claimed remuneration and expenses for discharging this cargo back ashore after the charter came to an end. Andrew Smith J had held that the Owners were entitled to these sums by means of a "right correlative to" their duties as bailees of the cargo. The Court of Appeal disagreed. Since there was no element of accident, emergency or necessity in the case, the Owners were not entitled to any remuneration. They were, though, entitled to the cost of the bunkers consumed by the vessel during discharge. Longmore LJ's judgment provides useful guidance on the application of the House of Lords' decision in The "Winson".

The other issue in the case concerned costs. The Owners had provided security to the Charterers for an alleged claim for wrongful withdrawal. When that claim was dismissed, the Owners claimed the bank fees they had paid for the bank guarantee as "costs of or incidental to" the proceedings. Andrew Smith J had held that the fees were recoverable as costs and the Court of Appeal agreed. In so doing, they have introduced a new head of litigation costs which is likely to arise in a large number of commercial disputes.