In upholding the decision of an LMAA Tribunal, the English High Court has held that a shipowner can make a recovery from charterers in respect of time spent carrying out underwater cleaning where no time is in fact lost and where such cleaning takes place after redelivery.
In this case, it was held that the hull fouling clause had created a debt claim in the Owners’ favour, thus imposing liability on the Charterers for the time spent on remedial cleaning. This was the case irrespective of whether the Owners had actually suffered a loss of time.
Background
The bulk carrier MV ‘GLOBE DANAE’ (the ‘Vessel’) was chartered on an amended NYPE form for a time charter trip via the east coast of India to Brazil for a duration of about 40 to 50 days (the ‘Charterparty’).
After being delivered into the Charterers’ service, the Vessel loaded a cargo of metallurgical coke in bulk at Haldia, India, before heading to the disport in Brazil. At the disport, the intended cargo receivers rejected the cargo. As a result, the Vessel remained idle in a laden state in tropical water ports for at least 42 days which caused the hull fouling clause at clause 86 of the Charterparty to be engaged:
‘Clause 86 Hull Fouling
Owners not to be responsible for any decrease in speed/increase in consumption of the Vessel whether permanent or temporary cause [sic] by Charterers staying in ports exceeding 25 days trading in tropical and 30 days if in non-tropical waters. In such a case, underwater cleaning of hull including propeller etc. to be done at first workable opportunity and always at Charterers’ time and expense. After hull cleaning vessel’s performance warranties to be reinstated.’
(Own emphasis added).
Upon the completion of the discharge operations, the Charterers redelivered the Vessel to the Owners in an unclean state and without having undertaken cleaning of the hull – despite requests from the Owners to do so. The Owners decided to undertake the underwater cleaning of the Vessel’s hull and propeller themselves prior to the Vessel’s delivery under its next employment.
The LMAA Arbitration
The Owners commenced LMAA arbitration proceedings against the Charterers to recover for the time and expense incurred spent carrying out the underwater cleaning. In doing so, the Owners relied on the allocation of risk agreed by the parties in clause 86 of the Charterparty which provided that underwater cleaning was to be ‘Always at Charterers’ time and expense’.
In their defence, the Charterers contended (a) that they were not obliged to carry out cleaning after redelivery of the vessel; (b) that Owners were not entitled to the cost of hire since there was no longer an obligation to pay it; and (c) that in any event, the Owners’ claim should be constrained to one in damages to put them in the position they would otherwise have been in.
The Tribunal was unconvinced by the Charterers’ arguments and found in the Owners’ favour.
In arriving at its decision, the Tribunal analysed the purpose of clause 86, which it considered to be to assign responsibility for the risks associated with marine growth forming on the hull if the vessel spent an extended period of time idle pursuant to the Charterers’ orders.
The Tribunal referred to The Nicki R [1984] 2 Lloyd’s LR 186 as authority for the proposition that the Owners were not required to demonstrate loss of time regardless of whether the cleaning was performed before or after redelivery. In that case, it was held that if a clause allocates liability for the time to the charterer, then the owners do not have to prove any actual loss of time.
Applying that approach, the Tribunal found that clause 86 created a debt claim in relation to the time element and that the Charterers remained liable in debt since they had assumed liability for the time spent cleaning the hull and propeller ‘always’, regardless of the actual loss of time.
Further, the Tribunal considered that it was conceivable that the ‘first workable opportunity’ (as per the wording of clause 86) to arrange the cleaning could be after the final discharge.
The Charterers were directed to compensate the Owners at the hire rate for the time spent cleaning the vessel’s hull.
The High Court
The Charterers appealed the LMAA award on a point of law pursuant to Section 69 of the Arbitration Act 1996. The point of law which the High Court was required to address was whether under a clause in a charterparty, the owners are entitled to claim the hire rate (and related expenses) for the time used for cleaning a vessel’s hull after the charterers redelivered it, or whether they are confined to a claim in damages for breach of the charterparty.
The Charterers argued that the intention of clause 86 is for it to operate during the charterparty to give Owners a claim for hire in respect of the time taken for underwater cleaning (if hire is unpaid). As such, the Charterers asserted that given the hull cleaning was required after redelivery of the vessel, then the Owners’ claim must be confined to damages for loss of time (for example, by proving that the cleaning prevented the vessel being further chartered – and not the claim in debt which would be the case if the vessel remained on hire).
The Owners maintained that clause 86 meant that cleaning was to be ‘always’ at the Charterers’ time, such that the Charterers must always pay for the time associated with the underwater cleaning which had become necessary because of the Charterers’ orders to remain idle.
The High Court dismissed the Charterers’ appeal. In doing so, it agreed that The Nicki R was analogous and held that the Tribunal was correct in its conclusion as to what the parties had intended according to the express language of clause 86, its practical context and commercial purpose.
The High Court held that by the words ‘always at Charterers’ time and expense’, the parties had agreed that Charterers ‘always’ had to pay for the time associated with the underwater cleaning, and as such, the clause could not have the limited scope suggested by the Charterers. Further, it was considered that the phrase ‘at the first workable opportunity’ applied both before and after the charterparty. In the circumstances of this case, the charterparty was for a single trip, and it was likely that the ‘first workable opportunity’ would be after the termination of the charterparty and redelivery.
Comment
This decision confirms that where a hull fouling clause includes express wording which allocates that the responsibility for hull cleaning is to ‘always’ be for a charterers’ account, then the owners will not be required to demonstrate that there has been an actual loss of time – the charterers will be liable for the time and expense of the cleaning regardless.
That said, each case will turn on the construction and interpretation of the specific wording incorporated into the clause. Indeed, this decision serves as an important reminder that the courts will seek to give the proper construction and meaning to the express wording incorporated by parties into their charterparty clauses, having regard to the practical context and commercial purpose of the clause in question.
For further information, please contact:
Jack Redrup, Hill Dickinson
jack.redrup@hilldickinson.com
