Review of the English Court of Appeal judgment in The NIKMARY (Triton Navigation Ltd v Vitol SA) [2003] EWCA Civ 1715 - 2 December 2003
The English High Court passed judgment on this matter earlier this year and the appeal has now been heard, upholding judgment in Owners' favour. The facts of this case may well strike a familiar note to many tanker members regarding tank cleaning.
The NIKMARY arrived outside loadport where she spent some time cleaning tanks (her previous cargo was vegoil and her expected cargo was gasoil). The vessel then entered port and gave Notice of Readiness on 2 December 2000. She proceeded to berth the next day where the terminal, Reliance, had a cargo of gasoil ready for loading. A local surveyor, jointly appointed by Reliance and Vitol (voyage charterer), rejected the tanks. The vessel shifted to anchorage for further cleaning. The next day the tanks were again rejected by the same surveyor and by a surveyor appointed by the vessel's agents. The following day, after more cleaning, the tanks were passed by three surveyors - another surveyor having been appointed by Owners' P&I Club. However, by the time the vessel was ready (a valid NOR was given at 1930 on 5 December 2000) Reliance had other commitments to fulfil and was not willing to provide a cargo for the NIKMARY. (In fact Vitol's cargo was scheduled for loading in November and the vessel had arrived late but Charterers had agreed to extend the cancelling date). On 9 December Reliance informed Vitol that it would "be able to load this vessel only by end of December 2000". In fact Reliance did not call the vessel for loading until 2 January 2001, and in the meantime she remained at anchorage.
Owners claimed demurrage: the delay was due to the absence of any cargo. Vitol argued that the vessel had lost her turn in the queue as a result of the time taken to carry out additional cleaning. Sound familiar?
The Court of Appeal reiterated (there are several House of Lords decisions on this point) that a voyage charterer owes an absolute and non-delegable duty to provide cargo for loading. Clear and distinct words would have to be used in the charterparty to protect a charterer from providing cargo. The Court did not accept Vitol's arguments that they failed to load a cargo because of scheduling difficulties (other vessels were loading at Reliance's berth). The NIKMARY was not allowed to berth because Vitol could not obtain a cargo from Reliance, not because of congestion. It was the Reliance/Vitol contract which put Vitol at the back of the queue. In effect, Vitol had no cargo available for loading until early January 2001.
The Court of Appeal considered three particular arguments put forward by Vitol to claim that laytime or demurrage did not run. These may sound familiar so they are worth closer inspection:
- That Charterers were protected by clause 6 ASBATANKVOY because the vessel was delayed in getting into berth for a reason over which they had no control.
The Court held that clause 6 was a standard exceptions clause which would protect a charterer only in respect of its duty to load cargo and not its duty to provide cargo. It therefore offered Charterers no protection in respect of its failure to have cargo ready for loading between 6 December 2000 and 2 January 2001. - That by virtue of clause 30(c)(v) time did not begin to count until the vessel was in berth and cargo hoses had been connected: "Owner shall indemnify Charterer for all direct and/or indirect costs and consequences as a result of the Vessel not being clean to the satisfaction of jointly appointed Inspector and should the Charter not be cancelled, all time until connection of hoses, after the Vessel has been passed as clean to the satisfaction of jointly appointed Inspector, shall not count as laytime, or if on demurrage, as time on demurrage."
The Court held that this clause could not be applied here on the simple basis that there was no "jointly appointed inspector" when the vessel was rejected on 4 December, nor when she was found clean on 5 December. (One surveyor had been jointly appointed by Reliance and Vitol but the charterparty called for joint appointment by Owners and Vitol). The Court considered that "jointly appointed inspector" envisaged joint appointment by Owners and Vitol, not a joint inspection by separately appointed inspectors. However, they did go on to say that the clause would have applied if the inspectors had been separately appointed and then agreed to issue a joint report. - That the NIKMARY was delayed in berthing because of shipowners' fault so laytime did not run while she waited for a cargo.
It was clear that laytime would not run if there was delay caused by fault of the shipowners. However the Court did not find anything which they regarded as either a breach of contract or fault. The vessel was presented after the cancelling date, but the Court confirmed that that in itself was not a breach. Presentation after the cancelling date merely gave Vitol a right to cancel which it chose not to exercise.
The NIKMARY gave an ineffective NOR and was presented before cleaning had been completed. That was not a breach of contract and the Court went on to say that even if it was, it caused no delay in loading. If no NOR had been tendered, the vessel would in any event have been cleaning her tanks, without any fault, until after Reliance's December commitments became clear. It was only when Reliance said they would not be able to provide the cargo that the vessel was doomed to wait.
So what went wrong? Charterers, although in an awkward position as a result of the late arrival of the vessel in an "unclean" state, chose not to cancel the charter, presumably for good commercial reasons. However they were caught out because they did not or were not able to amend their contract with Reliance and, more importantly, because they failed to use a "jointly appointed inspector" as required by the charterparty. If they had, the result might have been different.