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Time Charterparty – employment and agency clause – master negligent in carrying out charterers’ orders – shipowner not entitled to indemnity from charterers.

The facts

Coal was shipped from the USA to Japan. The time charter contained an employment and agency clause reading as follows:-

The Captain (although appointed by the Owners) shall be under the orders and direction of the Charterers as regards employment and agency; and Charterers are to load, stow and trim, tally and discharge the cargo at their expense under the supervision of the Captain.

In carrying out the charterers’ orders, the master negligently miscalculated the maximum load permissible to comply with the draught regulations applying to passage through the Panama canal. In consequence, portion of the cargo had to be transshipped and then re-loaded on to the vessel at the shipowner’s expense.

The charterers claimed that the vessel was off-hire for the duration of the delay while the owners cross-claimed for an indemnity for the transshipment expenses.


The arbitrator (Staughton QC) dismissed the off-hire claim and upheld the owner’s indemnity claim.

The Commercial Court (Lloyd J) dismissed both the claim and the cross-claim.

The Court of Appeal (Lord Denning MR, Griffiths and Shaw LJJ) affirmed the decision of the Commercial Court. The off-hire clause failed because it depended on a finding of unseaworthiness. Being overloaded for the purposes of passing through the Panama Canal did not qualify as unseaworthiness.

Because the master was at fault, the owners could not rely on the indemnity usually implied in a charterparty of this nature.

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Charter Party Casebook