Voyage/Time Charterparty
Caselaw
Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] EWCA Civ 198
Voyage Charter – RECAP differs from wording of Vitol’s Oil companies approval clause – Owners liabillity for breach …more »« less
The vessel loaded cargo at Odessa and Batumi and when on her laden voyage the charterers exercised its option to discharge and reload at Antwerp. At Antwerp cargo was discharged, further cargo loaded and the Class annual survey carried out. At the same time Shell and Conoco SIRE inspections were conducted. Upon annual survey Class imposed a condition and vessel failed both SIRE inspections.
Delays during the voyage gave rise to Owners’ claims for demurrage and port costs. Charterers counterclaimed that as a result of inspections at Antwerp the vessel lost the benefit of any oil major approvals and because of this the charterers was unable to sell the cargo on satisfactory terms. Charterers claimed that but for the owners breaches of Vitol cl.18 they would have sold the cargo to Shell for $3,246,592 but instead realised only $1,185,460.
The court came to view that clause 18 of the recap, which has no express continuing warranty of approval for the duration of the charterparty, was not intended to be read together with Vitol Clause 18 (Approval Clause) but in substitution for it. On its true construction the clause 18 of the recap was confined to a promise at the time when it was made.
Accordingly, it was held that there was no breach of the charterparty by the owners because (as Longmore LJ stated at para 21) there was not any evidence that at the date of the charter the Owner knew anything about the vessel that would cause the named oil companies to "disapprove" the vessels or alter the terms of the letters which they had given in relation to the vessel.
Read more comments here: Voyage Charterparty. Approval Clause.
Read case report here: Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] EWCA Civ 198
Hyundai Merchant Marine Company Ltd v Trafigura Beheer BV [2011] EWHC 3108 (Comm) (29 November 2011)
Charterparty Time – Speed warranty – Shelltime 3 – All weather warranty – Weather conditions up to a maximum of Force 4 on the Beaufort Scale. …more »« less
Charterparty on amended Shelltime 3 form contained the following provisions:
Clause 24. Detailed Description and Performance
Owners warrant that at the date of delivery under this charter the vessel shall be of the description set out in Gas Form C attached hereto and signed by them and undertake to use their best endeavours so to maintain the vessel during the period of her service hereunder. Further but otherwise [without] prejudice to the generality of this clause Owners guarantee that the average speed of the vessel will be not less than knots in ballast and knots fully laden, with a maximum bunker consumption of tons diesel oil/ tons fuel oil per day for all purposes excluding cargo heating and tank cleaning. See Additional Clause 42 attached which also overrides any references to over performance herein. [lines 201-216] The aforesaid average speeds shall be calculated in each yearly or other less period, as defined hereinafter by reference to the observed distance from pilot station to pilot station on all sea passages and over the whole of the time the vessel is on hire during such period [lines 217-219]…
…
In the event of any conflict between the particulars set out in the aforesaid Form and any other provision (including this clause) of this charter, such other provision shall prevail. [lines 241-242]
Clause 42: Speed/Consumption.
Speed about 15 knots average consumption about 40 mts IFO 380 CST at sea plus about 0.2 mts GO and about 10 mt IFO 380CST at port plus about 0.2 mt GO. Otherwise as per Gas Form C.
Gas Form C A.1 General Description Owners Sure Gas Shipping SA, Panama A.5 Speed Guaranteed average speed on a year’s period and max wind force 4 in Beaufort scale: Loaded about 14.5 knots, Ballast about 15.5 knots.
Charterers claimed that the vessel had failed to perform in accordance with the speed and consumption provisions. Their main contention was that cl.24 is an "all weather warranty" and guarantees an average speed and maximum daily bunker consumption measured over the whole period that the vessel is on hire under the charter, regardless of weather conditions. They based this argument on analysis of the words in lines 217-8: "on all sea passages and over the whole of the time the vessel is on hire during such period" which lead them to conclusion that the average speed, as refered to in cl 42, and consumption under clause 24 is calculated in all weather conditions.
The learned judge agreed with the charterers that provision stated in lines 217 to 220, namelty that "The aforesaid average speeds [i.e. those incorporated by reference from Clause 42] shall be calculated in each yearly or other less period … on all sea passages and over the whole of the time the vessel is on hire during such period" is an all weather warranty.
This conclusion defeated further owners’ argument that the charterers’ contention is uncommercial because it would involve the owners having chosen to warrant an all weather average speed more onerous than that contained in Gas Form C. The judge held that if provision of cl 42 to be qualified by "weather conditions of maximum Beaufort Force 4" as imported from Gas Form C, such construction will be inconsistent with the words of lines 217-220 in clause 24 and therefore all weathers performance calculation, as stipulated in cl 24, must prevail.
Sideridraulic Systems SpA and Anor v BBC Chartering & Logistic GmbH & Co KG [2011] EWHC 3106 (Comm)
Carriage of goods by sea – HVR – Deck cargo – Whether master’s remark "ALL CARGO LOADED ON DECK" assigns cargo as deck cargo. …more »« less
By a "fixture recap" of 16 September 2009, the defendants charted out their vessel fore carriage of two shipments of filter tanks between 15 and 30 November 2002, the first shipment being of 13 tanks and the second being of ten tanks. The recap included a provision giving the defendants liberty to carry the tanks as deck cargo in the following words: shipment under/on deck in owners option, deck cargo at merchant risk and b/l to be marked accordingly.
The first shipment was completed without incident. During the second shipment One of the tanks was lost and another damaged during the voyage, and the claimants contend that the defendants are liable for damages of some $400,000.
There was no dispute that the tanks were carried on deck. On the face of the bill of lading, under which this shipment was carried it was stated:
MASTER’S REMARKS -ALL CARGO LOADED FROM OPEN STORAGE AREA ALL CARGO CARRIED ON DECK AT SHIPPER’S/CHARTERER’S/RECEIVER’S RISK AS TO PERILS INHERENT IN SUCH CARRIAGE, ANY WARRANTY OF SEAWORTHINESS OF THE VESSEL EXPRESSLY WAIVED BY THE SHIPPER/CHARTERER/RECEIVER. AND IN ALL OTHER RESPECTS SUBJECT TO PROVISIONS OF THE UNITED STATES CARRIAGE OF GOODS BY SEA ACT 1936.
The bill of lading moreover provided:
3. Liability under the contract (a) Unless otherwise provided herein, the Hague Rules contained in the International Convention for the Unification of Certain Rules Relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply. In respect of shipments to which there are no such enactments compulsorily applicable, the terms of Articles I-VIII inclusive of said Convention shall apply. In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on 23 February 1968 ("The Hague-Visby Rules") apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. ... Unless otherwise provided herein, the Carrier shall in no case be responsible for loss of or damage to deck cargo and/or live animals….
B. US Trade. Period of Responsibility (i) In case the Contract evidenced by this Bill of Lading is subject to the US Carriage of Goods by Sea Act of the United States of America 1936 (US COGSA), then the provisions stated in said Act shall govern before loading, and after discharge and throughout the entire time the cargo is in the Carrier’s custody. … In the event that US COGSA applies, then the Carrier may, at the Carrier’s election, commence suit in a court of proper jurisdiction in the United States in which case this court shall have exclusive jurisdiction. (ii) If the US COGSA applies, and unless the nature and value of the cargo has been declared by the shipper before the cargo has been handed over to the Carrier and inserted in this Bill of Lading, the Carrier shall in no event be or become liable for any loss or damage to the cargo in any amount exceeding USD500 per package or customary freight unit…
The claimants first brought proceedings in Alabama, USA but realising that the carriers even if liable will be able to limit their liability to $1,000 (or $500 per package) under the United States Carriage of Goods by Sea Act, 1936 ("COGSA 1936"), their had denied that COGSA 1936 is applicable and commenced an arbitration reference against the defendants in London.
The main question for decision was whether the tanks were deck cargo, and more specifically whether they were "by the contract of carriage … stated as being carried on deck" to fall under governance of Section 1(6) and section 1(7) of COGSA 1971. The carrirs submitted that the master’s remark on the front of the bill is such a statement.
The judge accepted the defendants’ submission and held that:
22. The ordinary and natural meaning of the master’s remark is largely a matter of impression, but to my mind the defendants’ interpretation is the more natural. The claimants’ meaning would more naturally be conveyed by the statement that "Any cargo carried on deck at shipper’s/charterer’s/receiver’s risk…". Moreover, the defendants’ interpretation is supported by considerations other than the language of the remark itself: i) First, the statement is made by way of a master’s remark. This would not be an obvious or usual place to state a contractual provision. The remark is more readily taken to be, or at least to include, a statement of fact about how the cargo was to be carried or otherwise handled. ii) Moreover, the bill contained another master’s remark that "All cargo loaded from open storage area". There (a) "All cargo" means all of the tanks (and not "any cargo") and (b) a verb ("was" or "has been") is to be interpolated after the word "cargo" in order to give the remark grammatical structure. In both respects, on the defendants’ interpretation both the master’s remarks are similar.
ED & F Man Sugar Ltd v Belmont Shipping Ltd [2011] EWHC 2992 (Comm)
Arbitration – Section 33 of the Arbitration Act 1996 – Whether failure of the tribunal to alert the party to an argument that it could have made a more favourable concession was a serious irregularity which caused the charterers substantial injustice. …more »« less
The vessel arrived at Santos, the load port, on 16 September 2009 and tendered NOR immediately (and was re-tendered on 19 September). However, vessel failed inspection by surveyor on the 18 September, noting some defects rendered her holds unfit for cargo, which defects were rectified and the vessel was eventually approved ready to load at 1140 on 20 September. The vessel did not berth until 2340 on 5 October 2009 and completed loading at 0545 on 7 October 2009. The owners claimed demurrage. It was agreed that the load port laytime was 5 days 3 hours.
The charterers denied that the NOR tendered on 16 September 2009 was valid because the Vessel’s holds were not fit for cargo, but accepted that "an NOR was good on 21st September 2009 (normal office hours) and laytime commenced at 1400 as per Charterers’ calculation".
Abitrators held that neither the NOR dated 16 September 2009 nor that dated 19 September 2009 was valid. The vessel was not ready to load. They then said:
13. However, the Claimants did not deliver a further Notice of Readiness after the vessel had been approved at 1140 on Sunday 20 September. We consider that the Respondents are correct that if the Claimants had then delivered a Notice of Readiness, it would have been effective at 0800 on 21 September with the result that laytime would have commenced at 1400 that day. We therefore find that at Santos the vessel was on demurrage for 1 day 7 hours 50 minutes at a cost of US$13,263.89. The Respondents did not rely upon the decision in the Happy Day [2002] 2 Lloyd’s Rep. 487 so the potential consequences of that decision have not affected our conclusion.
The charterers appealed that the arbitrators were obviously aware that there was an argument, following the decision in the Happy Day, to the effect that laytime commenced when loading was commenced on 5 October. On that basis no demurrage would have been due at the loading port but despatch money would have been due to the charterers. The charterers submitted that in those circumstances the arbitrators’ duty pursuant to section 33 of the Arbitration Act was to enquire of Femis Limited whether any reliance was being placed on the decision in the Happy Day. Their failure to do so was a serious irregularity which caused the charterers substantial injustice.
The charterers put much reliance on a comment made by Waller LJ in the Magdalena Oldendorff [2008] 1 Lloyd’s Rep. 7 at paragraph 42 as follows:
If an arbitrator appreciates that a party has missed a point then fairness requires the arbitrator to raise it so that the party can deal with it.
The judge, however, disagreed with them, underlying that:
17. … when Waller LJ observed that "if an arbitrator appreciates that a party has missed a point then fairness requires the arbitrator to raise it so that the party can deal with it", his comment was made in the context of a point which was in issue and which was required to be dealt with. The context of the present case is different. What was in issue in the present case was whether a valid NOR had been given on 16 September 2009. The charterers had a reasonable opportunity to deal with that point and in so doing expressly accepted that laytime commenced on 20 September 2009. No case was made by the charterers that laytime did not commence to run until 5 October 2009 and so such a case or point was not in issue.
18. I do not consider that Waller LJ’s observation can be read as saying that where a party has made a concession and where the arbitrators appreciate that it is arguable that such concession need not have been made the arbitrators are under a duty to raise such argument so that the party can decide whether to withdraw its concession. Waller LJ’s observation does not therefore, in my judgment, assist Mr. Young’s [councel for the charterers] argument that the arbitrators acted in breach of their duty pursuant to section 33 of the Arbitration Act 1996.
20. … I am unable to accept that, where a tribunal has decided the issue placed before it and given effect to a concession made by a party, that party can claim to have suffered a substantial injustice because it has not been alerted to an argument that it could have made a more favourable concession. It can hardly be said that giving effect to a concession is an example of "an extreme case" which "justice calls out" to be corrected. The arbitrators had before them a concession made on behalf of an experienced charterer.
The judge further explained that although the arbitrators are not barred from asking a party whether it has considered raising a different case from that which it has advanced but section 33 of the Arbitration Act 1996 does not oblige them to do so. Furthermore, it is often happens when there is an oral hearing and tribunal is anxious to understand the basis upon which a case is being advanced. When the arbitration is on documents alone it is presumed that the parties are often concerned to keep costs to a minimum because the amount in dispute is modest and in such circumstances it is understandable that a tribunal will be reluctant to ask a party, which has put in a detailed submission in a modest case, whether it wishes to run a different case. The arbitrators should be alive to the dangers of introducing into their awards matters which have never been in issue between the parties because then they must give the parties an opportunity to address such matters and if necessary to adduce further evidence with regard to them which will add to the costs of a modest case.
National Shipping Company of Saudi Arabia v BP Oil Supply Company [2011] EWCA Civ 1127
Shipping – Laytime and Demurrage – BPVoy4 – claim was wrongly drawn up – Result of misdescribing or mislabelling of otherwise valid demurrage claim. …more »« less
The vessel arrived at Freeport, the nominated loadport, and tendered notice of readiness at 0930[1] on 6 February 2008. She berthed at berth 10 at the BORCO terminal at 1712 on 7 February and started loading operations at 2236 the same day, loading cargo by ship-to-ship transfer, from the BRITISH WILLOW and the BARING SEA, and from shore tanks. At 0136 on 11 February 2008 the hoses were disconnected and at 0330 that morning the vessel left berth 10 to drift off Freeport awaiting the arrival of the GANGES SPIRIT, from which she was due to load a further parcel of cargo. Her place at berth 10 was taken by another vessel, the CAP GEORGE.
The GANGES SPIRIT arrived off Freeport the following day (12 February 2008) and gave notice of readiness to discharge her cargo at 0735. At 1025 that day, the BORCO terminal suspended operations at the jetties and at 1354 the same day closed operations at the jetties, due to deteriorating weather conditions. The intention had been for the GANGES SPIRIT to berth at berth 9 and to discharge a parcel of cargo into the ABQAIQ at berth 10. However, the arrival draft of The GANGES SPIRIT was too great for berth 9, requiring her to berth at berth 10 to discharge part of her cargo into a shore tank, before shifting to berth 9. As it happened, however, when the GANGES SPIRIT arrived, the ABQAIQ and the GANGES SPIRIT had lost their turn for berths 9 and 10, which were now occupied by the CAP GEORGE and the SANKO BRIGHT. The ABQAIQ eventually re-berthed at berth 10 at 0300 on 17 February and between 0654 on 17 February and 0954 on 18 February she loaded cargo from the GANGES SPIRIT and a shore tank. At 1312 that day hoses were disconnected and an hour later she unmoored and headed for Singapore.
The ABQAIQ arrived at Singapore and tendered notice of readiness at 1200 local time on 22 March. At 1306 she anchored awaiting a berth and shifted to her discharging berth between 1324 and 1600 on 28 March. She completed discharge and hoses were disconnected at 1500 on 30 March.
When submitting their demurrage claim the Owners evidently formed the view that the events at Freeport had the effect of interrupting the running of laytime and in their demurrage report it was reflected that laytime stopped running at 0136 on 11 February. At that point, 3 days, 4 hours, 24 minutes of laytime remained unused. The owners thought at the time that the correct way in which to claim detention for the period from 0136 on 11 February and until vessel left Freeport was to claim for the entire period occasioned by what they regarded as a second berthing at the demurrage rate and additionally to claim for the cost of bunkers consumed during this exercise.
Thus on 31 March 2008, the day after completion of discharge, the Owners issued an invoice entitled "Supplementary Invoice". The demurrage report for Singapore in consequence indicated that there was 3 days, 4 hours, 24 minutes of laytime unused on arrival at that port. This was wrong because it is common ground that laytime, which was 96 hours for all ports combined, of which there might have been four, had in fact been wholly used at Freeport. The vessel was on demurrage on arrival at Singapore. In the Owners’ demurrage report for Singapore laytime was counted as from 1800 on 22 March, i.e. six hours after giving of notice of readiness. This also was wrong. The Charterers in their turn considered that there must be one demurrage claim and asked the Owners to amend their documentation. On 4 June 2008 they, however, settled initial Owners’ demurrage claim but refused to pay for additional detention claim from 0136 on 11 February and until vessel left Freeport.
Parties were unable to settle this matter amicably and on 1 March 2010 the Owners issued their claim in respect of detention at Freeport which was eventually recast on the conventional basis, i.e. that laytime and in due course demurrage continued to count notwithstanding the vessel had been ordered to leave the berth and had in due course returned to the same berth. On this footing demurrage was claimed on the basis that the vessel was on demurrage for 4.3 days at Freeport and for a further 7.8292 days at Singapore.
The judge at the first instance held that the parties’ agreement of 4 June 2008 was full and final settlement of any and all claims for demurrage under the charter. He based his decision on the footing that there was no unfair advantage taken on the part of the Charterers of a mistake it knew the Owners had made. On the contrary, the Owners was well aware of the Charteres suggestion that the additional freight claim be re-submitted as a demurrage claim but the Owners persisted in maintaining two separate claims, one for demurrage and one for additional freight. In these circumstances, the Charterers were entitled to proceed on the basis that no demurrage claim was being made or was going to be made in respect of the period before 25 March 2008, and it was on that basis that the parties entered into the settlement.
The Court of Appeal disagreed with the judge. Lord Justice Tomlinson delivering the only reasoned judgment said in particular that:
48. … what is important and admissible as part of the background against which the email exchange of 3/4 June must be construed is that the Owners would reasonably have been under the impression that their claim set out in the Time and Bunkers Invoice was under review by Charterers on the basis that it was in fact a claim for demurrage.
50. … There was nothing said or done by the Owners from which the Charterers could reasonably have concluded that no claim for demurrage was going to be made in respect of this period. On the contrary, it was the Charterers themselves who signified to the Owners that they were treating the claim as properly being one for demurrage. Bearing in mind that the compensation sought for the delay at Freeport was claimed at the demurrage rate and bearing in mind also that the Owners were treating it as in fact a claim for demurrage, it is to my mind simply impossible to conclude that the parties were proceeding on the basis that no claim for demurrage other than that contained in the Demurrage Invoice either was being or would ever be pursued by the Owners arising out of this charterparty. The Charterers knew that a claim for compensation at the demurrage rate in respect of the time spent at Freeport was being pursued but that the Owners were wrongly under the impression that they were additionally entitled to the cost of bunkers consumed. ... the Charterers’ demurrage specialists must be taken to have had it well in mind that in fact the vessel had incurred demurrage at Freeport and what is more that she was already on demurrage upon arrival at Singapore. The Charterers cannot possibly have been approaching the matter on the basis that, were the Owners to accept the 1 hour 6 minutes adjustment of the timesheet proffered by the 3 June email, they would thereby lose their entitlement to recover the additional demurrage due to them once the demurrage reports were correctly drawn up. To attribute to the Charterers such an approach would be an attribution of sharp practice which I decline to make.
51. … The agreement did not in my view preclude recovery by Owners of a further sum in respect of time used at Singapore. Still less in my view did the agreement preclude recovery by Owners of demurrage incurred at Freeport. Once the issue of the claim in respect of time spent at Freeport was addressed, it would inevitably be necessary to adjust the demurrage report for Singapore to reflect the fact that the vessel had in fact arrived already on demurrage.
60. … we were referred to an observation of Gloster J in The Sabrewing to the effect that parties are obliged to comply carefully and strictly with demurrage time bar clauses of this sort. Gloster J was there concerned with the precursor provision in BPVOY3, and in particular with clause 16 thereof, now clause 19 of BPVOY4, which calls for the presentation of particular documentation supporting a claim for extra time incurred in consequence of the inability to receive cargo at a discharge pressure of 7 bar measured at the vessel’s manifold. For my part I am not sure that it is helpful to introduce into the approach to these provisions a notion of strict compliance. Where in a commercial contract one finds a provision to the effect that one party is only to be liable to the other in respect of claims of which he has been given notice within a certain period, it is fair to assume that the parties wish their relationship to be informed rather by certainty than by strictness.
62. The basic requirement of the clause is that the Charterers shall have received both the claim and the supporting documentation within the 90 day period. I accept that the Charterers must be in a position to know that the one relates to the other. However I do not think that Mr Byam-Cook [council for the charterers] went so far as to suggest that the supporting documents must necessarily be presented at the same time as the claim, and if he did I would reject that suggestion. Once that is accepted, the words "together with" import no requirement other than that both presentations, that of the claim and that of the supporting documentation, must have been achieved within the 90 day period.
64. … What is important … is that the Charterers are put in possession of the factual material which they require in order to satisfy themselves whether a claim is well-founded or not. No doubt ordinarily the documents will be presented by the Owners or by their agents, but I would not rule out the possibility that there could be circumstances in which compliance could be achieved in another manner, for example by asking Charterers to refer to documents already in their possession or shortly to be received from third parties.
65. Drawing the threads together, in my judgment the Charterers had received from the Owners within the 90 day period, in the shape of the two invoices of 31 March and 2 April, a claim in writing for either damages for detention measured at the demurrage rate or straightforward demurrage in respect of the periods spent at Freeport and Singapore after 0136 on 11 February 2008, subject only to the claim being properly drawn up in accordance with the charterparty provisions and by reference to the events recorded in the demurrage reports. The claim was wrongly drawn up because it scored the laytime unused as at 0136 on 11 February 2008 at Singapore rather than at Freeport, but that did not prevent the Charterers from appreciating, as in fact they did, that the Owners had a valid claim for demurrage in respect of the substantial period beyond her laytime for which the vessel was detained at the two ports. The Owners are not debarred from now putting a different legal label on part of the claim, the substance of which was presented in time. The Charterers received with the invoice of 2 April 2008 documents which objectively they would or could have appreciated substantiated each and every part of the claim. They were thereby put in possession of the factual material which they required in order to satisfy themselves that the claim was well-founded. They were able to satisfy themselves as to the extent of their liability. In my judgment the Owners are not precluded from pursuing a claim for demurrage as formulated in these proceedings.
Transpetrol Maritime Services Ltd. v SJB (Marine Energy) BV [2011] EWHC 3374 (Comm)
Vitol’s Oil companies approval clause – Tbook (To the best of owner knowledge) – Demurrage – Owners’ liabillity. …more »« less
The vessel loaded cargo at Odessa and Batumi and when on her laden voyage the charterers exercised its option to discharge and reload at Antwerp. At Antwerp cargo was discharged, further cargo loaded and the Class annual survey carried out. At the same time Shell and Conoco SIRE inspections were conducted. Upon annual survey Class imposed a condition and vessel failed both SIRE inspections.
Delays during the voyage gave rise to Owners’ claims for demurrage and port costs. Charterers counterclaimed that as a result of inspections at Antwerp the vessel lost the benefit of any oil major approvals and because of this the charterers was unable to sell the cargo on satisfactory terms. Charterers claimed that but for the owners breaches of Vitol cl.18 they would have sold the cargo to Shell for $3,246,592 but instead realised only $1,185,460.
The judge found that the word "best" cannot take an obligation beyond the extent of Owners knowledge but it does mean that they are stuck with what they, as a company, actually knew, as opposed to what a particular employee happened to recall at any one time. The words do not require Owners to make enquiries additional to those which would ordinarily be made in the course of their business.
Owners were held liable for breach Oil companies approvals clause because in the light of what had happened at Antwerp, the extent and implications of which were known to Owners, any of the specified companies would not have continued to regard the vessel as approved. It was also held to be more likely than not that if the vessel had remained, as it was warranted to in an approved state, then the charterers would have sold the cargo for higher price. Damages assessed on the basis of price difference were of $2,675,602
Glory Wealth Shipping Pte Ltd. v Korea Line Corporation [2011] EWHC 1819 (Comm)
Time charter on an amended NYPE form for a minimum of 36 months - Earlier redelivery which owners accepted as a repudiatory breach - no available market for a period charter of a duration that corresponded to the balance of the charterparty - Measure of damages. …more »« less
The vessel was delivered into charter on 21 June 2008 for a minimum of 36 months to maximum 38 months at a daily rate of US$39,800. In November 2008, the charterers purported to make early redelivery, which the owners accepted as a repudiatory breach. The owners claimed damages on what was called a "hybrid basis", originally by reference to losses on a substitute fixture the vessel had contracted in the spot market up to January 2009, and by reference to market rates for the balance of the charter period from that time. The arbitrators agreed with the ownerss and awarded them the full amount of their claim for damages for the balance of the charter period. The charterers appealed arguing that it was wrong in law to bring a hybrid claim for part actual and part market-based losses on the supposed basis that one looks to the market when it comes back to life. The only relevant date for the market is the date of termination, because this is the moment at which the innocent party can go into the market and mitigate its loss by finding a substitute fixture: see The Elena D'Amico [1980] 1 Lloyd’s Rep 85 at 89. Where there is no available market at the date of termination, it is necessary to fall back on the broader question of asking what sum would put the claimants in the same financial position that they would have been in had the charterparty been performed. Since the Owners did not enter the long-term period charter market in July 2009, their actual trading thereafter must be the basis of the damages claim.
The judge was essentially in agreement with the charterers, that the House of Lords deciesion in The Golden Victory [2007] 2 AC 353 emphasises the overriding compensatory principle that damages awarded should represent no more than the value of the contractual benefits of which the claimant has been deprived. He concluded that damages are to be assessed by reference to the actual loss of the owner. Assessment of such damages is subject to the usual rules, including the principle that where the owner has unreasonably failed to mitigate its losses, it may not claim its self-induced loss. The revival of the market is obviously relevant in that regard. Mitigation apart, the revival of the market at a later date may be a factor to take into account in calculating future loss if damages fall to be assessed before the end of the contractual period, but the revival of a market for the then unexpired period of the charter does not in itself provide the correct measure of damages.
TTMI SARL v Statoil ASA [2011] EWHC 1150 (Comm)
Voyage charterparty – Shellvoy5 – Arbitration Clause – Mistake in recording the identity of the chartered vessel’s time chartering owner – Whether contract was formed between the parties …more »« less
Held that in absence of any evidence as to an oral contract made prior to the recap, express terms of the recap email prevail over decision whether or not an executory contract was created between the parties. Such contract is likely to exist if the voyage has been completely performed and freight paid.
Dolphin Tanker Srl v Westport Petroleum Inc [2010] EWHC 2617 (Comm)
Shipping – Time Charterparty – Amended Shelltime4 form – Meaning of an Oil Majors – Qualifying Rejection. …more »« less
1. In spite of that fact that clause 50(VESSEL’S APPROVAL CLAUSE) referring to ‘oil major’ listed only 5 companies namely: BP, Shell, ExxonMobil, Chevtex and Total Fina Elf, the arbitrator and the court supported the charterers view that ordinary and natural meaning of the words ‘oil major’ in §3.2 includes additionally ConocoPhillips as one of six major oil companies. See also: Meaning of an ‘oil major’ and ‘Recognised Oil Majors’.
2. The court held that a vetting inspection initiated by the owners cannot restrict a right of termination under §3.2 so far as in §3.3 t was specifically defined that A VETTING REVIEW / INSPECTION IS DEFINED AS A NOMINATION BY THE CHARTERER’S. See also: Inspection initiated by Charterers’ nomination.
3. Contract defined THE OIL MAJOR REVIEWING THE VESSEL BY EITHER A PHYSICAL INSPECTION OR LATEST SIRE INSPECTION REPORT. The owners contented that the charterers have to prove that Qualifying Rejection was the (or an) effective cause of that failure. This argument was rejected by the judge. He concluded that the findings that the latest SIRE report was considered as part of the process of nomination and review are sufficient to show that the rejections were Qualifying Rejections of clause 50. See also: Effective cause of majors’ rejection.
Choil Trading SA v Sahara Energy Resources Ltd [2010] EWHC 374 (Comm)
Cargo of Naphtha sold on terms "PHRC naphtha quality" and "as produced by Port Harcourt Refining Company (PHRC) with following actual specifications as determined at loadport on the basis of samples drawn from shore tanks" - Cargo supplied did not conform to the contractual standard due to MTBE contamination - Buyer claimed damages for breach of warranty - Seller argued that there was no term as to quality, but cargo sold as is. …more »« less
The court accepted that the likelihood was that the high levels of MTBE contamination were the result of contamination from gasoline in the shore tanks. It was held that although sales of Nigerian naphtha are often made "as is" or without warranty and at a heavy discount it does not mean that the term "Quality: PHRC naphtha quality" can or should be interpreted as if it said or meant that there was literally no term as to quality of any kind. If the parties had intended that all that was warranted about the product sold was that it could be called "naphtha" they would have expressed themselves differently. The buyer was bound to accept naphtha, whatever its characteristics, provided it was "PHRC naphtha quality". But it was not that obliged to accept a cargo which was heavily contaminated by a substance which was not the result of naphtha production and which is not normally present in naphtha produced by PHRC.
Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc (The Reborn) [2009] EWCA Civ 531
Amended Gencon form – Implied term into the charterparty as to the safety of the berth when no express warranty as to safety of nominated port was given.more » « less
The dispute arose out of damage allegedly sustained by the vessel during loading at Chekka in the Lebanon as a result of her hull being penetrated by a hidden underwater projection at the loading berth nominated by the charterers.
The charterparty was on the 1994 revised Gencon form, as amended by the parties, and specified as follows:
"Box 10:
Loading port of place (Cl.1) 1 Berth Chekka - 27 ft SW permissible draft.
Clause 1:
The said [v]essel shall...proceed to the loading port(s) or place(s) stated in Box 10 or so near thereto as [it] maysafelyget and lie always afloat.
Clause 20:
Owners guarantee and warrant that upon arrival of the vessel to and/or prior its depart from, loading or discharging ports... the vessel including, inter alia, the vessel’s draft, shall comply fully with all restrictions whatsoever of the said ports... including their anchorages, berths and approaches and that they have satisfied themselves to their full satisfaction with and about the ports specifications and restrictions prior to entering into this charterparty.
Since word "safely" was deleted from clause 1 it was common ground that charterparty did not warrant safety of port. Therefore in order to succeed, it was necessary for the owners to establish that an appropriate term was to be implied into the charterparty as to the safety of the berth. The charterers’ case was that the loss should lie where it falls, i.e. on the owners, and that, if the parties had intended the charterers to warrant the safety of the loading berth, they could and would have said so, as is very common in voyage charterparties.
Sir Anthony Clarke MR agreed with the charterers (at para 41) that the basis of the suggested implied term is that it was for the charterers to nominate the loading berth and that it was therefore reasonably to be expected by the parties that the charterers would ascertain the safety of the berth before nominating it because the owners would not know what berth the charterers were going to nominate. The learned judge held that above contention would be inconsistent with clause 20. He said at paras 42-43:
By clause 20 the owners guaranteed and warranted that upon arrival at the loading port, which was Chekka, the vessel complied with all restrictions of the port, including its berths and approaches and that they had satisfied themselves to their full satisfaction with and about Chekka’s specifications and restrictions before entering into the charterparty. The expression “restrictions” in the penultimate line naturally includes restrictions of the berths, as expressly provided earlier in the clause. Thus the owners were willing to give those warranties in relation to the berths at Chekka. In order to do so it may well be that they in fact checked the berths at Chekka, which would have involved their identifying the possible berths at Chekka.
...
In any event I would agree with the view expressed by the judge at [28] that box 10 and clause 20 read together indicated that the owners agreed that they would either investigate Chekka, that is the berths at Chekka, or take the risk of any dangers getting to whatever berth was nominated, using it (ie loading at it) and departing from it. ... the only choice the charterers had was to choose and nominate the loading berth. Once it was nominated it was treated as having been written into the charterparty at the outset. In all the circumstances the owners were accepting that the charterers had the right to elect a berth of their choice, with only one limitation, namely that a vessel of 27 feet salt water draft could berth there. A nomination of a berth which could not accommodate such a vessel would be a bad one because it would be an “impossible berth”.
Rix LJ in his concurring judgment said at para 61:
The appearance of express terms as to safety of ports, berths or places, so frequently found in charters of all kinds, even in time charters where the natural background is one in which the vessel’s trading is left broadly open to the charterer’s choice, emphasises to my mind that the basic risk to the integrity of his vessel is upon its owner. If he wishes to shift that risk on to his charterer, the warranty of safety is the time-honoured way of doing so. In the present case, the owner has chosen not to extract such a warranty, but on the contrary has agreed to the port and to taking the risk of its restrictions and limitations, as well as those of its anchorages, berths and approaches. In such a case it seems to me that if there is some unforeseen risk which lies outside those terms, it does not lie with the charterer, but with the owner.
The Court of Appeal refused to follow somewhat broad dictum of Devlin J in Compania Naviera Maropan S/A v. Bowaters Lloyd and Pulp and Paper Mills Ld (The Stork) [1955] 2 QB 68:
"There must be an obligation, express or implied, to nominate a loading place of some sort; if the ship is not told where to load she cannot earn her freight, and so, by failing to nominate or by nominating an obviously unsafe place the charterers would defeat the object of the charterparty without being liable for damages. There must therefore be an obligation to nominate at least one loading place, and there must be implicit in that some condition about safety to prevent the making of a derisory nomination."
and held that there was "no authority which extends any implied warranty of safety to a voyage charterer’s choice of berth in a port which is not itself warranted safe" (Rix LJ at para 62). The court also in part agreed with the editors of the 21st edition of Scrutton on Charterparties, 2008, where they say (at page 119) that if the charterparty, whether time or voyage, provides for the nomination of a port or berth, a warranty that the port or berth is safe will probably be implied but also add that this is not invariable and may depend upon the specific terms of the charterparty. Thus it can be concluded that in any particular case all will depend upon the circumstances and on the terms of the particular charterparty.
Share this article on:
Leave your questions and comments here
Although author encourages visitors to leave their comments using this form, but should you be unable or unwilling to use it for any reason you can mail to info@lawandsea.net to contact with him.