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In-transit loss clause – not covering forcible removal by pirates

The facts

The vessel loaded a cargo of premium motor spirit at Abdijan, Cote d’ Ivoire.

While the vessel lay off-shore Cotonou, Benin, waiting for a berth at Lagos, pirates boarded the vessel. A STS transfer of approximately 5300 metric tons was carried out by force of arms.

The recap provided for the Beepeevoy 3 form with the following additional clause, headed “In-transit loss clause”:

“In addition to any other rights which charterers may have, owners will be responsible for the full amount of any in-transit loss if in-transit loss exceeds .5% and charterers shall have the right to claim an amount equal to the FOB Port of loading value of such lost cargo plus freight and insurance due in respect thereto. In-transit loss is defined as the difference between net vessel volumes after loading at the loading port and before unloading at the discharge port.”

The recap incorporated exemption clauses which would protect the owners from liability for the losses suffered through the act of piracy.

Two preliminary issues were argued before Andrew Smith J:

(a)        whether the in-transit loss clause covered forcible removal by the pirates; and

(b)       if so, whether the owners were entitled to rely on the exemptions.


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Charter Party Casebook