Dias Compania Naviera S.A. v Louis Dreyfus Corporation
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Viscount Dilhorne,Lord Edmund-Davies,Lord Fraser of Tullybelton,Lord Scarman |
| Judgment Date | 26 January 1978 |
| Judgment citation (vLex) | [1978] UKHL J0126-1 |
| Date | 26 January 1978 |
| Court | House of Lords |
[1978] UKHL J0126-1
Lord Diplock
Viscount Dilhorne
Lord Edmund-Davies
Lord Fraser of Tullybelton
Lord Scarman
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Dias Compania Naviera S.A. against Louis Dreyfus Corporation, That the Committee had heard Counsel on Monday the 19th day of December last, upon the Petition and Appeal of Dias Compania Naviera S.A. of Panama City, Panama, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 16th day of February 1977, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the Case of Louis Dreyfus Corporation, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 16th day of February 1977, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the judgment and Order of the Honourable Mr Justice Mocatta of the 14th day of January 1976, set aside by the Court of Appeal, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Courts below, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
This appeal is about a dispute between shipowners and charterers which arose under a voyage charter for the carriage of 26,500 tons of wheat from the United States to China. As is generally the case with charterparties, the subject of the dispute is laytime and demurrage; and the answer to the question that is involved is to be found by applying well-established principles of construction to the particular clauses of the charterparty.
The charterparty, dated 10th August 1973, was a berth charter on the Baltimore Berth Grain Charterparty printed form. The place of discharge was "one or two safe berths, one or two safe ports, China". The clauses, numbered 12 to 17, relating to arrival and discharge of the cargo at its destination, were not in standard form. They were type-written and special to the charterparty; they included a "time lost" clause, viz. "Time lost in waiting and/or shifting for berth and/or discharge to be counted as discharging time".
The clause which lies at the heart of the dispute is clause 15: —
"At discharging, Charterers/Receivers have the option at any time to treat at their expense ship's holds/compartments/hatchway and/or cargo and time so used to not count. The Master to co-operate with the Charterers/Receivers or their representative with a view to the treatment being carried out expeditiously."
It is common ground that "treat" in this clause means fumigate and that fumigation is an operation that has to be performed while the cargo is still on board or at any rate before it has been fully discharged.
What happened was that the vessel was ordered to Hsinkang as the discharging port. She anchored in the roads waiting her turn for a berth. Laytime expired on 26th October 1973. A fortnight later on 9th November fumigation started. It continued for 16 days 6 hours until 25th November. Discharge into lighters started on 30th November and at berth on 6th December. So no additional delay was caused by the work of fumigation.
The only question in this appeal is whether demurrage is payable for the period of 16 days 6 hours during which fumigation was being carried out. So the laytime involved in the dispute is laytime for discharge. The dispute between the parties, which at that time was more extensive, went to arbitration in London, under the Centrocon arbitration clause included in the charterparty. The umpire, in an award in the form of a special case, held that demurrage was payable for that period. Mocatta J. agreed: so did Browne L.J. in the Court of Appeal, but his was a dissenting judgment. The majority of the court (Lord Denning M.R. and Sir John Pennicuick) both held that demurrage was not payable, though their reasons for doing so were not the same.
My Lords, the principles that apply to laytime and demurrage under voyage charterparties are clear. What "laytime" and "demurrage" mean was stated succinctly by Lord Guest (with the substitution of "lay days" for "laytime") in Union of India v. Compania Naviera Aeolus S.A. [1964] A.C. 868 at p. 899:
"Lay days are the days which parties have stipulated for the loading or discharge of the cargo, and if they are exceeded the charterers are in breach; demurrage is the agreed damages to be paid for delay if the ship is delayed in loading or discharging beyond the agreed period."
For the purposes of the adventure in four stages contemplated by a voyage charterparty, laytime is that period of time, paid for by the charterer in the freight, for which the shipowner agrees to place the ship at the disposition of the charterer for carrying out the loading operation or the discharging operation. Laytime for discharging is generally based upon an estimate of the time which will be needed to carry out the operation with reasonable diligence if everything else goes well. With dry cargoes the actual...
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