Laytime questions are some of the most common, yet also technically complex, that Members have to consider as part of their operations. In this Bulletin, the Association will discuss the important recent decision in the "Ladytramp" 2012.
Introduction
Once laytime commences, it may only be suspended in the event of a specified interruption or exception listed in the charterparty. Excepted periods are periods which lie within the definition of laytime, but are nevertheless excluded by an exception clause. To fall within an excepted period, it is necessary to show a causal connection between what is exception and the failure to load/discharge cargo. It is also important to remember that exception clauses are construed against the party for whose benefit they are included in the charter as per the contra proferentem rule. These principles are well illustrated by the recent case, The Ladytramp:
E.D.& F. Man Sugar Ltd vs Unicargo Transportgesellschaft mbH
(The "Ladytramp") [2012] EWHC 2879 (Comm)
In this case, the Commercial Court applied a narrow construction of a laytime exclusion clause in relation to time lost in port of loading. Delay occurred prior to loading due to a fire at the load port terminal which had destroyed the conveyor belt system. Decisions were consequently made by the terminal to re-schedule loading. The question before the Commercial Court was whether Owners were entitled to demurrage for the time thereby lost. Mr Justice Eder held in favour of Owners.
Facts
- Under an amended Sugar Charter Party 1999 form, a cargo of sugar was nominated to be loaded onto The Ladytramp in Paranagua.
- Clause 28 of the Sugar Charterparty Form was as follows:
"In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lock outs of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative due to terms and conditions of appointment of Officers and crew and time so lost shall not count as laytime or time on demurrage or detention."
- On 14 June 2010, a fire occurred at the load port terminal, destroying the conveyor belt system linking the terminal to the warehouse.
- The Vessel tendered a valid NOR on 20 June 2010.
- Loading was re-scheduled by the terminal and port authorities, commenced 18 July and this was completed 20 July 2010.
- Owners claimed demurrage of USD 398,000 from 20 June to 20 July.
Position of the parties
Charterers disputed that demurrage had accrued and argued firstly that the fire constituted a "mechanical breakdown at mechanical loading plants" in line with C/P clause 28, secondly that the terminal/port authority's decisions to re-schedule loading fell within the words "government interferences" in clause 28. An arbitration tribunal in London found in favour of Owners. Charterers appealed to the Commercial Court.
Judgement by the Commercial Court
The point of law Mr Justice Eder had to consider, was whether delay in loading caused by and/or in consequence of a fire which destroys mechanical loading equipment (and/or a port authority's re-scheduling of loading following such destruction) counted as laytime under the relevant charterparty. An additional point on whether Charterers had to nominate an additional safe berth was dismissed by Mr Justice Eder since this was a question of whether there was prevention or delay in loading prior to any valid nomination of a berth. Mr Justice Eder dismissed the appeal and held in favour of Owners on both points.
The fire and mechanical breakdown
Mr Justice Eder considered whether the laytime exceptions in clause 28 applied. There was no exception for "fire". His Lordship agreed with the Tribunal that as a matter of ordinary language and common sense, the destruction of an item is not within the scope of the word "breakdown", still less within the term "mechanical breakdown". Unlike in the cases - The Afrapearl and The Thanassis A - his Lordship held that the nature of the breakdown must be mechanical, as distinct from a wider or external cause. Further the jetty could not be considered as machinery or equipment, and a complete destruction of part of the facility would appear to be something more than a "breakdown".
The government interference
Mr Justice Eder found that there was no evidence that the port authority was a government entity, nor that permission to berth at the relevant berth was suspended by the port authority. Secondly, as a matter of construction, the wording "government interferences" is not intended to encompass an administrative re-scheduling of cargoes due to a fire. In other words, the phrase did not encompass a state-sponsored port authority acting in the ordinary course of discharging its port or berth administrative function, as distinct from a government entity acting specifically/peculiarly in a sovereign capacity which is independent of that ordinary administrative function.
Comments
The judgement of Mr Justice Eder evidences how English courts will analytically assess the precise wording of an agreed clause, and in cases of qualified doubt apply the contra proferentem principle – interpreting the wording against the party invoking the clauses.
Tips for Owners and Charterers
- Be careful when drafting exclusion clauses - as Charterer you want exclusions to be wide;
- As Owners you want exclusions to be narrow;
- Enquire whether the ports frequently visited pose any common problems that may then be included or excluded in the exclusion clauses depending on whether you are Charterer or Owner.
- If in doubt, contact the Association for further advice