362. DGM Commodities Corp v Sea Metropolitan SA (the “MV Andra”) [2012] EWHC 1984 [Comm]

Frustration – conduct by receivers held to be the real cause of delay and not a supervening administrative ban – voyage charterparty not frustrated

The Facts

Frozen chicken was shipped from the United States to St Petersburg on a Gencon form.  

Discharge was initially delayed by the receivers’ not paying. 

During discharge of the vessel, which commenced after the expiry of laytime, limited contamination by gasoil of the cargo was discovered. This was the fault of the shipowners  due to the unseaworthiness.      

Receivers demanded a cash settlement and were unwilling to accept security in the form of a P & I Club letter or an undertaking from the owners’ parent company.  

In the meantime that portion of the cargo which was contaminated was subjected to an order from the authorities preventing its discharge. 

The vessel was delayed for just over 6 months while receivers refused to accept the security offered by the owners. 

Eventually an agreement was reached by which owners paid a cash settlement and the receivers consented to the re-export of the cargo, permission for which was obtained from the authorities as a formality. 

Owners claimed demurrage for the 6 month period. 

 Findings

 An arbitration tribunal found that the ban on discharge of the contaminated chicken was not the real reason for the delay.   Receivers’ refusal of security in the form offered by owners was unreasonable and charterers were liable for their conduct. A substantial sum in demurrage was awarded.

 Charterers were granted permission to appeal in respect of a question of law which was framed as follows: 

 “Where a voyage charterparty is delayed without the fault of either party, in circumstances that would otherwise amount to frustration, but where those delays are in part caused and/ or contributed to by the action or inaction of the cargo receivers (not being parties to the charterparty), is the charterparty frustrated? Or does that action or inaction mean that what would otherwise be frustration is “self induced” by charterers, such that charterers cannot contend that the charterparty is frustrated”.

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