Briety Shipping v Trafigura Maritime Logistics: Commercial Court holds LNG hire spread cannot be read as an absolute value

A negative number remains a negative number. That, in essence, is the Commercial Court's answer to a shipowner's contention that a floating hire formula pegged to the difference between two LNG spot prices should operate whichever way the difference ran.

In Briety Shipping Inc v Trafigura Maritime Logistics Pte Ltd [2026] EWHC 1714 (Comm), handed down on 10 July 2026, Mr Justice Waksman dismissed a claim for unpaid hire under a five year time charterparty of the LNG carrier TENERGY, rejected rectification claims founded on common and unilateral mistake, and held that the hire claim would in any event have been substantially time-barred.

A formula that met an inverted market

Clause 10 of the charterparty, signed in July 2020, fixed a floor of US$50,000 per day and a ceiling of US$145,000, with the rate ratcheting upwards in increments once the "JKM-TTF Spread" reached US$1.30 per MMBtu. Step 3 of the mechanism required the TTF quotation, the European spot price, to be deducted from the JKM publication, the Far East marker.

Historically JKM exceeded TTF. Following the Russian invasion of Ukraine in February 2022 it did not, and for thirteen months TTF stood above JKM. The owner contended that the resulting negative figure should be converted to an absolute value, so that a spread of minus 1.5 triggered the ratchet exactly as a spread of plus 1.5 would. The charterer paid the floor throughout, and the invoices prepared by the owner's own brokers were calculated on that basis.

Waksman J found nothing in the language to entail the conversion. "Spread" is a defined term, tied expressly to the deduction in Step 3 and to nothing further. It is not a term of art carrying a single meaning, and both sides produced market materials using it in senses convenient to themselves, which demonstrated only that context governs. Averaging positive and negative daily figures is not unworkable but sensible, since what a charterer seeks in a volatile month is evidence of a sustained upward trend.

The argument that a table of hire rates beginning at zero presupposed absolute values fared no better. The table is illustrative and need not have started below the US$1.30 trigger at all.

The Arb explains the asymmetry

The owner's answer to the resulting "one-way bet" was that the parties must have intended a symmetrical profit share. The judge disagreed, and the factual matrix was decisive against it.

Traders in the LNG market knew the east-west arbitrage, colloquially "the Arb", which opens when JKM exceeds TTF by enough to justify the longer voyage to Asia. When it opens, carriers are tied up on longer round trips, supply tightens and spot freight rates rise. The correlation between an open Arb and rising freight is the commercial logic of the clause. The owner's expert conceded under questioning that she would understand a reference to the Arb as the east-west arbitrage. Any reasonable owner or charterer would have known that TTF did not exceed JKM for sustained periods.

Against that background there is nothing implausible in a bargain conferring the upside only when the Arb is open.

Rectification and the twelve month bar

The common mistake claim depended on a heads of agreement of May 2020. It was not binding, being expressly subject to agreement of all terms, management approval and a specification review, and leaving the pricing mechanism to further definition. Nor did it evidence the symmetrical profit share alleged.

The unilateral mistake claim, which required the charterer's negotiator to have known of or been reckless as to the owner's contrary intention, came nowhere near the convincing proof required. Suggestions that he had obscured amendments, and that the owner's own broker had colluded in doing so, were described as fanciful and highly improbable. An inverted price order in one step was simply a typographical error.

Had the claim succeeded, clause 51.12 would have confined it to US$14,766,830. Time runs from the date hire falls due, not from resolution of the disagreement. The provision permitting payment of the floor pending resolution protects the charterer from withdrawal of the vessel. It does not postpone the accrual of the cause of action, and an owner must sue within twelve months to preserve the shortfall.