Legal test for off-hire claims under NYPE terms


Published: 5 May 2014

The Association is grateful to Dimitris Seirinakis, Consultant at Ince & Co Shanghai for contributing to this update.

Off-hire claims are a staple for FD&D case handlers, and recently the Court of Appeal in London reviewed the law on this issue leading to a traditional re-statement of the English law position under the NYPE 1946 form.

Key Points

The court took a narrow view of the meaning of the words "time thereby lost" in Clause 15 of the NYPE 1946 form. Specifically, these words did not apply across the entire period of the whole voyage, and would be applied to a narrow window. The court considered that this would ensure greater certainty for both owners and charterers by avoiding both speculative and overly intricate assessments of what events were relevant to the off-hire assessment.

That means events occurring after the ending of the off-hire event may not have a bearing on the off-hire assessment itself.

Given the similarity to the wording of the 1993 form, it is a decision that should be applicable for that version for the NYPE too.

If parties wish to achieve a different outcome, then they would need to make clear and express changes to the pro forma terms. In that regard Members are asked to contact the Association for further assistance in preparing any desired bespoke off-hire clauses.

Advice to Shipowners

Charterers have, under Clause 8 of the pro forma NYPE 1946 form, the right to give lawful orders for the employment of the vessel and these need to be obeyed.

Absent a clear legal or contractual excuse or exception, the consequence of not following such orders will at the very least lead to a claim for off-hire. It could further lead to claims for damages for breach of the terms Clause 8.

Should Members have further queries, they are asked to contact the Association.