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Withdrawal by owners – vessel detained in order to discharge cargo – charterers liable for loss of hire

The facts

The vessel, a VLCC, was chartered on a Shelltime 3 form which gave the owners the right to withdraw upon failure to make punctual payment of hire.

Clause 13 read: “The master (although appointed by owners) shall be under the orders and direction of the charterers as regards employment of the vessel, agency or other arrangements…charterers hereby indemnify owners against all consequences or liabilities that may arise ….from the master otherwise complying with the charterers’ or their agents’ orders”.

While the vessel was loading at Angra dos Reis, Brazil, the owners exercised their right to withdraw upon failure to pay hire. They called upon charterers to discharge the cargo on board. Charterers did not immediately accede to the request, disputing owners’ right to withdraw. After an exchange of correspondence in which owners held their position, charterers ordered the discharge of the cargo. At the same time, charterers requested the owners to put up a substantial sum as security to cover a potential claim for wrongful withdrawal.

Owners put up the security required, reserving their right to reclaim the costs involved.

In the event, the cargo was discharged in just under three days after the notice of withdrawal. Owners claimed the cost of bunkers and remuneration at a market rate over the period. In addition they claimed the costs of putting up security.

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Charter Party Casebook