Vessel redelivery - adding off-hire periods to basic charter period


Published: 4 May 2011

The redelivery of a vessel (whether early, late or other aspects) seems to be a constant source for disagreement. In a recent London arbitration, a question arose concerning the adding of a fairly substantial off-hire period to the basic hire period.

The vessel was chartered on the NYPE form, but the standard clause 13 had been expressly deleted. Clause 13 otherwise includes in the charter party term that charterers will have the “option of continuing” the charter for a further period (to be inserted) on the “giving written notice” and this notice must be given previous to the expiration of the first named (i.e. the basic) term. Here, clause 13 was expressly deleted.

The charter was for a period of 13-15 months, 15 days more or less in the charterers’ option. During the agreed charter period, however, the vessel was off-hire for a substantial length of time, namely 159 days as a result of repairs being undertaken.

The charterers believed that they were entitled to add the 159-day period to the basic charter period. They relied on a provision in line 17 of the charter party saying: “charterers’ option to add any off-hire period”. A rider clause also stated that “charterers have the option to add any off-hire period in the charter period.”

The owners thought that neither line 17 nor clause 58 could, on their own, mean that charterers were entitled to add the off-hire period. The owners argued that line 17 and clause 58 would require that the charterers should expressly exercise their option to add on the off-hire period i.e. they should effectively give written notice to the owners.

The Tribunal in London held that it was not necessary for any term to be implied since the redelivery notice provision in the charter gave the owners as much notice as they could reasonably expect. In this particular case, the charterers had not given any redelivery notice as they believed they were entitled simply to add on the 159-day period. No express notice from charterers was therefore necessary.

The Tribunal even went on to say that even if its own conclusion was wrong, the charterers had given constructive notice in the sense that from their behaviour it could be inferred that they had effectively given notice that they wanted to add on the further 159-day period to the charter period. Again, in this respect, the tribunal referred to the fact that the charterers had not given any redelivery notices and furthermore charterers had in fact paid hire (without any relevant deductions) which clearly signified the charterers’ belief and intention to continue the charter for the further additional 159-day period.

The fact that no deduction of redelivery bunkers was made in the latest hire payment clearly demonstrated to the tribunal that the owners had received a clear indication from charterers that they intended to continue to employ the vessel during the whole of the next hire period.

Either way, at least on the particular facts of this case, the charterers were entitled to add on the off-hire period. 

London Arbitration 1/11 (2011) 817 LMLN 2