373. Minerva Navigation Inc v Oceana Shipping AG (“the Athena”) [2012] EWHC 3608 (Comm); [2013] EWCA Civ 1723

Off-hire clause – vessel drifting to mark time waiting for the arrival of bills of lading – vessel off-hire

The Facts

The vessel was let on back to back time charters on identical amended NYPE forms. The sub-charter was for a “one time charter trip”.

Clause 15 read:

“…in the event of loss of time from….default of Master….or any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost”-

The vessel loaded milling wheat at Novorossiysk, Russia for carriage to Tartous, Syria.

The cargo was rejected by Syrian receivers for alleged contamination.  Charterers gave instructions for the vessel to proceed to Benghazi, Libya which involved the issuing of new bills of lading and the return of the original bills of lading.

To allow for the time required to issue new bills, owners ordered the Master to drift 50 miles off the Libyan coast for about eleven days.

The time lost by drifting was potentially cancelled out by the time lost in replacing the original bills of lading.

Findings

By a unanimous decision, John Schofield, Edward Mocatta and William Robertson held that the off-hire clause operated to deprive the owners of hire over the relevant period of eleven days.

The Tribunal found as a fact that the time lost in issuing new bills of lading and delivering them to owners cancelled out the time lost by drifting off the Libyan coast.  The arbitrators held, however, that the application of the off-hire provision, because it did not involve breach of contract in the usual sense requiring a causal link between the unlawful act and its consequences, did not require the time lost in issuing new bills of lading and delivering them to owners, to be taken into account.

Leave was given to appeal on a point of law relating to the arbitrators’ interpretation of the off-hire clause.

Walker J found that the arbitrators were incorrect in their interpretation of the off-hire provision and that the phrase “time lost thereby” in the off-hire provision did require a causal connection between the off-hire event and the time consequences to the charterers.  In this case, the off-hire event did not deprive the charterers of the use of the vessel (in the abstract) because of the time taken to resolve the bills of lading issues for which the charterers themselves were liable.

Tomlinson LJ (in a judgement concurred in by Lewison and Underhill LJJ) restored the arbitrators’ decision.

The CA held that the approach to the NYPE off-hire clause by Burton J in the TS Singapore (case summary 420) was correct and that by Tuckey J in the Ira (case summary 419) , wrong.

Tomlinson LJ said in terms:

“I have no doubt that the arbitrators were right.  The judge’s view is unjustified by the wording of the clause, inconsistent with the conventional approach to the clause, which approach is here underscored by typed language, additional to that in the printed form, inconsistent with hallowed authority and could moreover lead to the need for “the most intricate and speculative enquiries as to the course which events would have taken” if full working of the vessel had not been prevented….”

Commentary

Although Walker J’s conclusion is superficially attractive, it is not justified by a review of the authorities from Hogarth v Miller (the Westfalia) (case summary 412) onwards.

Hogarth v Miller was a split decision with compelling dissent by Lord Bramwell. That this case is the starting point for the jurisprudential enquiry may be a contributing factor to the confusion in later cases.

The most lucid analysis is by Parker J in the Marika M (case summary 417).

The NYPE off-hire clause was aptly described by counsel (Siberry QC) in the TS Singapore as a “blunt instrument”. Hire is based on effective access to the vessel (in a concrete sense) and the off-hire clause is there simply to ensure that time charterers get what they pay for, i.e. an efficient vessel.  The clause is not designed to deal with other risk factors (e.g. the non availability of bills of lading in this case) or congestion, in some of the others.

 

 

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