Is the vessel the right ship?


Published: 2 September 2008

Can a charterer, under standard wordings of a charter party form, insist that Owners must provide the vessel with Rightship approval? The English courts have now dealt with the question in the case concerning the “SILVER CONSTELLATION”.

The Rightship approval/vetting system seems to have gained fairly wide acceptance since it was established in 2001. Amongst other things, Rightship will allocate its own rating to a particular vessel where a three, four or five star rating, according to Rightship, means that the ship is an acceptable risk. According to the Rightship web site, the average vetting time for July 2008 was 58 minutes and  the number of handy vessels alone vetted during July 2008 was no less than 808. Vessel inspections between 1 January – 31 July 2008 are stated to be a total of 1,033.

With this vetting procedure/system being used by several types of marine businesses, it is no surprise that some Owners and Charterers may disagree as to whether or not Rightship should be used or not.

A requirement that Rightship should approve the vessel can of course be agreed to be a part of the terms in the C/P, but the question can well arise whether, under the more standard wordings in one of the usual charter party forms, a charterer can insist that Owners must provide the vessel with Rightship approval.

This has now been dealt with by the English courts in the case concerning the “SILVER CONSTELLATION”.

The vessel was chartered on the usual NYPE form and therefore included a duty for the owners to “maintain her class and seaworthiness and keep the vessel in a thoroughly efficient state... with all certificates necessary to comply with current requirements of all ports of call... for the service.” In this C/P, there was also a rider clause headed “Certificates, Laws and Regulations” stipulating that the vessel was and would remain in all respects eligible for trading to the ports, places or countries specified or not excluded in this charter.”

There was a dispute which was related to the Rightship approval system. The court specifically noted that the Rightship approval system is aimed at identifying those vessels that were suitable and safe for the carriage of iron ore or coal cargoes and that the system had been operated by shippers and terminal operators in Australian ports since it was first established in 2001. Furthermore, the court noted that by now the Rightship system would have been “well in the minds of those involved in the transportation of coal/iron ore.”

There were in fact two disputes:

  1. Whether both the printed standard clauses of the NYPE form and the rider clause meant that Owners were obliged to provide a vessel with Rightship approval (and maintain the Rightship approval throughout the currency of the C/P) and
  2. Whether Owners were obliged to allow a Rightship inspection of the vessel (and other Rightship vetting procedures) as and when required by Charterers either under clause 8 of the NYPE C/P or pursuant to “implied duties of cooperation”.

The matter went first to arbitration where the tribunal found in favour of the Charterers, but the owners appealed to the London High Court.

The Owners maintained that, as there was no specific reference in the C/P to Rightship approval, this could not be implied. The Charterers argued that the requirements of eligibility and certification in both the printed NYPE clause and rider clause effectively meant that Rightship approval was included in the C/P terms.

The court took the view that the focus of the wording in both the pre-printed text and in the rider clause (which of course did not specifically mention Rightship) could be said to be upon requirements legally imposed either by the law of the flag, the law of the country to which the vessel had been ordered or by the laws of the port of call. This inter alia followed by the heading to the rider clause “Certificates, Laws and Regulations”.

 It could not be established that a Rightship approval was in any way “lawfully” required by the ports at which coal or iron might be loaded, but it was simply a commercial requirement which admittedly had become progressively more widespread since 2001. Both the printed form and the rider clause in the C/P focused on certification and documentation which in turn established fitness and eligibility, but the court found that the Rightship scheme did not give rise to any documentary form of certification. It did not matter that approval was recorded in the computer hard drive of the Rightship vetting organisation. That very feature was, according to the High Court in London, a “further reflection of the extra-legal and private nature of the system.” For good measure, the London High Court also said that “the basis of any approval was obscure.”

The court therefore accepted that the Rightship approval could not be said to be included as a requirement which was covered by the wording in either the standard pre-printed form of the NYPE form or the rider clause in dealing with certificates etc.

This left the issue of whether or not the Owners were obliged to allow a Rightship inspection of the vessel. The Owners had argued that the Rightship approval was something which could be likened to a class inspection, but this was not accepted by the court. The court accepted that Rightship approval was to be obtained on a voyage by voyage basis and that it was dependent on the requirements of the relevant shipper or loading terminal, and the court found that this was more like the need to allow shore inspectors on board to accept cleanliness of the vessel’s holds. The court therefore concluded that, since the Owners were under orders and directions of the Charterers as regards employment (clause 8 of the NYPE form) this would provide sufficient basis for a duty to oblige the Owners to permit a Rightship inspection for the purpose of Rightship approval.