Introduction
The High Court has clarified when a shipowner may disregard
charterers' voyage instructions without interrupting demurrage, in a decision
that underlines the obligation of voyage charterers to choose safe ports and
berths for vessels.
The recent High Court decision in CM P-Max III Ltd v
Petroleos Del Norte SA (the "Stena Primorsk") is a helpful
reminder as to when owners may disregard charterers' voyage orders without
preventing demurrage from running.
The owners (also the claimants) chartered out the vessel
"Stena Primorsk" on a voyage charter based on the Shellvoy 6 form.
Pursuant to the terms of the charterparty (CP), the charterers had a total
allowance of 72 hours of laytime for both loading and discharge.
The cargo was loaded onto the vessel in the port of Bilbao. It
was undisputed that this loading process took 68 hours and 54 minutes of
laytime. The vessel subsequently proceeded towards Paulsboro, the nominated
discharge port situated on the Delaware river.
Since the vessel's freshwater draft only exceeded the depth of
the discharge berth by four centimetres and the tide was expected to vary by
1.6 metres, the master applied for a waiver under the vessel's keel clearance
insurance policy prior to berthing. The waiver was granted on a one-off basis
and on the assumption the vessel's draft would be equal to or less than the
river's declared safe draft at high tide and that discharge would commence
promptly after arrival.
Once the vessel arrived at the discharge berth on 31 March 2019,
the master was informed that discharge could only take place at a reduced rate
initially (for seven to eight hours). Taking into account the fluctuations in
the tide and the rate of discharge, the master concluded that the vessel would
not be able to maintain a sufficient keel clearance and there was a risk that
the vessel could touch bottom. The vessel then departed the berth, returning to
anchorage 12 minutes after arrival.
On 1 April 2019, another discharge berth which could facilitate
a higher rate of discharge became available. The charterers therefore gave the
owners orders to proceed to this berth to complete the discharge of the cargo.
Before proceeding to the newly available berth, the owners
applied for another waiver under the insurance policy. The request had no
allowances for delays, berthing, connections or technical failures. The request
was declined on the basis that the risk that the vessel could touch bottom was
too great. Proceeding to the berth would have constituted a breach of the insurance
policy. As a result, the master did not comply with the charterers' orders.
Eventually, part of the cargo was lightered on 4 April 2019, and
the balance was discharged at the discharge berth on 6 April 2019. The whole
discharge process took an additional 154.63 hours, with the aggregate laytime
used for loading and discharge amounting to 226.63 hours. The owners claimed
for demurrage amounting to $143,153.64 at the applicable demurrage rate under
the CP.
It is also worth highlighting that the CP contained the
following clauses which were relevant to the dispute.
Clause 3(1):
Subject to the provisions of this Charter the vessel shall
perform her service with utmost despatch and shall [having loaded the vessel]
proceed as ordered on signing bills of lading to such berths as Charterers may
specify, in any port or ports within Part I clause (E) nominated by Charterers,
or so near thereunto as she may safely get and there, always safely afloat,
discharge the cargo.
Clause 3(2):
Owners shall be responsible for and indemnify Charterers for any
time, costs, delays or loss including but not limited to use of laytime,
demurrage, . . . due to any failure whatsoever to comply fully with Charterers'
voyage instructions . . . Owners shall adhere to Charterers' voyage
instructions as long as such orders are considered safe by the Master of the
ship.
Clause 4 – "Charterers shall exercise due diligence to
order the vessel only to ports and berths which are safe for the vessel and
where the vessel will always be afloat".
Clause 7:
If requested by Charterer, Vessel shall load and/or discharge
more than one grade simultaneously if Vessel is technically capable of doing
so. Any delay resulting from the failure by Owners to provide such personnel,
equipment and facilities shall not count as laytime or, if the vessel is on
demurrage, as demurrage.
Clause 13(1)(a) provided that time at the port of discharge
would commence to run six hours after the notice of readiness had been tendered
by the master or owners' agents to charterers or their agents and/or the vessel
was securely moored at the specified loading or discharging berth, whichever
occured first. If the owners:
fail to obtain free pratique unless this is not customary prior
to berthing . . . either within the 6 hours after notice of readiness
originally tendered or when time would otherwise normally commence under this
Charter, then the original notice of readiness shall not be valid.
Clause 14: "Time shall not count when: . . . (c) lost as a
result of: (i) breach of this Charter by Owners".
Clause 15(2):
Any delays for which laytime/demurrage consequences are not
specifically allocated in this or any other clause of this Charter and which
are beyond the reasonable control of Owner or Charterer shall count as laytime
or, if Vessel is on demurrage, as time on demurrage. If demurrage is incurred,
on account of such delays, it shall be paid at half the Demurrage Rate.
The CP also contained a warranty confirming that the information
set out in the Q88 questionnaire appended to the CP was "an integral
part" of the CP. The questionnaire contained a detailed list of
information on the vessel that the charterers would require to utilise the
vessel safely (including the vessel's draft, its insurers and the owners'
guidelines for keel clearance).
Dispute
The dispute centred around whether laytime continued to run after:
- the initial departure from the discharge berth on 31
March 2019; and
- the owners' refusal to comply with the charterers'
orders the following day to proceed to the alternate discharge berth.
Given the factual matrix, the owners' claim was for demurrage
and lighterage costs, rather than for damages for breach of the safe port
warranty. The charterers in turn counterclaimed for lighterage costs.
Experts from both sides agreed that the original departure from
the berth on 31 March 2019 was a reasonable decision made on safety grounds.
It followed that this action was reasonable and did not put the
owners in breach of the CP. Therefore, time continued to run after the
departure from the first berth.
With respect to the masters' decision not to proceed to the
second discharge berth on 1 April 2019, during the discussion of the legal
position, Judge Bird highlighted the following with respect to the terms of the
CP:
- The obligation to proceed with "utmost
dispatch" was qualified by the requirement for the vessel to remain
safely afloat.
- The obligation of the owners to comply with the
charterers' voyage instructions was also not an absolute one.
- The master had a right not to comply with voyage orders
that he did not consider to be safe.
- The charterers were obliged to exercise "due
diligence" in choosing ports and berths to ensure that they would be
"safe for the vessel" to proceed to.
- It was "apt" to refer to the Q88
questionnaire as an integral part of the CP which could not be ignored.
The discussion also referred to Fontevivo decision, which
established that for demurrage to stop, a charterer must establish that the
owner be at "fault". In that case, demurrage stopped running where
the owner's decision to move off the berth was not reasonably necessary.
Consequently, the owners were entitled to rely on the keel clearance
policy as justification for refusing to comply with the charterers' orders to
proceed to the second discharge berth. The owners' actions were deemed to
comply with clause 3(1) of the CP.
As a result, laytime continued to run for the purposes of demurrage.
It also followed that the charterers' counterclaim for lighterage costs failed.
This judgment is helpful authority that:
- the master can refuse to comply with voyage
instructions where they give rise to reasonable safety concerns; and
- laytime will continue to run unless the charterers can
establish that there has been a "fault" in non-compliance with
their instructions.
