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16 January 2019
In CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd (the Pacific Voyager) the Court of Appeal held that where a voyage charterparty contained no provision as to the vessel's time of arrival in the loading port or readiness to load, an expected time of arrival for the discharge of cargo under the previous charterparty provided the basis for an absolute obligation on the owners to commence the approach voyage to the loading port.(1)
The Pacific Voyager was chartered on an amended Shellvoy 5 form for a voyage from Rotterdam to the Far East. At the time of fixture, the vessel was employed under another charterparty, where it was to discharge and load cargo in two different ports in Egypt and then proceed to Antifer, Le Havre for its final discharge. While transiting the Suez Canal, the vessel struck a submerged object, suffered water ingress and was drydocked for repair. The charterers exercised the option under the cancelling clause to terminate the charterparty and claimed damages for the owners' breach of the utmost dispatch obligation contained in Clause 3 of the charterparty.
It is well settled that where a voyage charterparty contains the provision that the owners shall proceed with all convenient speed or with utmost despatch to the loading port, and also gives an expected time of arrival or readiness to load at the loading port, there is an absolute obligation on the owners to commence the approach voyage at such a time as it is reasonably certain that the vessel will arrive on or around the expected time, and also that any exceptions in the charterparty do not apply prior to the period before the approach voyage begins.(2)
There was no express provision as to the vessel's time of arrival or readiness to load at Rotterdam, but the recap provided for the inclusion in Clause B, which provides for completion of "Position/Readiness", the anticipated timetable for completion of the previous voyage, including "ETA [expected time of arrival] ANTIFER 25 JAN, 2015 (DISCHARGING) ALL ABOVE BSS IAGW / WP" (the latter words meaning "on the basis if all goes well / weather permitting").
The question was whether the inclusion in the charterparty of the expected time of arrival at the last discharge port under the previous charter – Antifer – meant that there was an absolute obligation to begin the voyage to the loading port. More particularly, the court had to consider whether the obligation took effect at the time when it was reasonably certain that the vessel would need to leave the last discharge port under the previous charter.
The Court of Appeal upheld the first-instance judgment, agreeing that the obligation to begin the approach voyage started "at the end of a reasonable discharging period for the Vessel if she were to arrive for final discharge at Antifer on 25 January 2015". The court referred to the judgment in The North Anglia, which decided that, if effect is to be given to the utmost despatch obligation, "some time for sailing must be put in". In the current case, the "some time" in question had to be a reasonable departure date from Antifer, taking into account a period for discharge.
The owners had contended that the inclusion of the words "ALL ABOVE BSS IAGW / WP" ("on the basis if all goes well / weather permitting") rendered the charterparty subject to the completion of the prior chartered service. The Court of Appeal rejected this notion, stating that any such contingency would require much clearer wording and that the reference had been made to the previous charter to provide honest and reasonable estimates of the completion of the Antifer service.
In charterparties where no expected time of arrival or readiness to load at the loading port is stated, the question will be whether an equivalent can be identified which can be used as the basis for an absolute obligation requiring the owners to proceed to the loading port by a particular time.
In this case, the Court of Appeal considered that the itinerary for the intermediate voyage was such an equivalent.
Where owners wish to make the chartered services subject to the completion of intermediate voyages, they should ensure that clear wording is used. This will protect owners from the problems faced in this case. Owners could also seek to negotiate the language in the charterparty to specifically make the charterparty exceptions also applicable to the period before the commencement of the approach voyage.
The Court of Appeal raised the question of what the position would be if there was no itinerary and that the only guidance was the cancelling date, but stated that that would be a question for another day. Owners should be aware that they will not necessarily escape liability for damages for a late arrival by omitting an expected time of arrival or readiness to load at the loading port or an itinerary, and charterers should be well advised to insist on including the same in the charterparty.
For further information on this topic please contact Herman Steen at Wikborg Rein's Oslo office by telephone (+47 22 82 75 00) or email (firstname.lastname@example.org). Alternatively, contact Eleanor Midwinter or Marcus Sharpe at Wikborg Rein's London office by telephone (+65 6438 4498) or email (email@example.com or firstname.lastname@example.org). The Wikborg Rein website can be accessed at www.wr.no.
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