11. N.V. Reederij Amsterdam v President of India (The “Amstelmolen”) [1961] 2 Lloyd’s Rep. 1

“Obstructions” in Centrocon strike clause held to include ordinary commercial congestion

The facts

Wheat was to be shipped from New Orleans to Madras.

A Baltimore Berth Grain Charter Party contained the following clause:

“Steamer to be loaded according to berth terms with customary berth dispatch and, if detained longer than five weather working days of 24 consecutive hours, Saturdays after noon, Sundays and holidays excepted, Charterers to pay demurrage as per clause no. 16, provided such detention shall occur by default of charterers or their agents.”

The Centrocon strike clause which was incorporated read as follows:

If cargo cannot be loaded by reason of … obstructions … beyond control of the Charterers, … in docks or other loading places … in case of any delay by reason of the before mentioned causes, no claim for damages or demurrage shall be made by the charterers … or owners of the steamer …

The lay time clause contained a WIBON provision.

At the loading port of New Orleans, a valid notice of readiness was tendered and accepted. Thereafter, berthing was delayed by about two weeks due to congestion.

The owners argued that the contract provided for a fixed period of lay time of five weather working days and that the vessel was on demurrage after the elapse of the five days.

The charterers contended that the loading provision did not contemplate a fixed period of lay time but meant that the only obligation on the charterers was to load with customary dispatch. If they failed in this primary obligation, they still escaped liability for demurrage if they completed their loading within the five weather working days.

The charterers contended that the word “obstructions” in Centrocon strike clause included obstruction by congestion.

Findings

Only the first point raised by the charterers was an issue before the umpire who decided in the owners’ favour.

The Commercial Court (Pearson J) agreed with the umpire that the loading clause provided for a fixed period of lay time but allowed the charterers to successfully raise a new point relating to the exemption contained in the Centrocon strike clause.

The only point to go before the Court of Appeal was that of the meaning of the strike clause and Ormerod, Upjohn and Davies LJJ (main judgment by Ormerod LJ) confirmed the judgment of Pearson J.

Commentary

In reaching his decision on the first point, Pearson J referred to a long line of cases including three American authorities and a judgment by Lord Sumner.

In reaching a decision on the interpretation of “obstructions” in the strike clause, reliance was placed in both courts on Leonis Steamship v Rank (No. 2) and Reardon Smith Line v East Asiatic Company.

In both these cases congestion was the secondary cause of disturbances which could fairly be said to fall within the definition of the clauses in question.

The facts were thus different.

In Leonis, Hamilton KC (later Lord Sumner) argued persuasively that the strike clause was not intended to cover indirect consequences such as congestion and that the word “obstructions” could not equated with congestion.

This case is an example of the continuation of erroneous interpretation supported by the doctrine of precedent.

The eiusdem generis rule applied to the type of disturbance described in the strike clause fairly clearly would exclude ordinary commercial congestion and the WIBON clause would be a strong indication that the parties intended the risk of ordinary congestion to be upon the charterers.

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