Illegitimate Last Voyage Orders: The Gregos
| DOI | https://doi.org/10.1108/eb025701 |
| Date | 01 March 1995 |
| Published date | 01 March 1995 |
| Pages | 170-172 |
| Author | Gerhard Oberholzer,Partha Pal |
| Subject Matter | Accounting & finance |
MARITIME AND TRANSPORTATION FRAUDS
Illegitimate Last Voyage Orders: The
Gregos
Gerhard Oberholzer and Partha Pal
Journal of Financial Crime — Vol. 3 No. 2 — Frauds
A time charter allows the charterer of a vessel to
have its use for a predetermined period of time.
The charterer is entitled, subject to certain restric-
tions,
to employ the vessel as he wishes during the
charter period, but is under an obligation to rede-
liver it to its owner upon the termination of that
period. Timely redelivery is of considerable com-
mercial importance to the shipowner, for the
vessel may have been committed to another char-
ter commencing immediately upon scheduled
redelivery. On the other hand, the charterer will
wish to maximise the number of voyages under-
taken during the charter period. Given the large
amounts of money involved in chartering a vessel
as well as the degree of profit or loss that could be
at stake in a single voyage, a charterer may find
himself in a position where he feels obliged to give
last voyage orders knowing full well that the vessel
cannot be redelivered within the contractually
agreed time. In Torvald
Klaveness
A/S v Ami Mar-
itime
Corporation,
The Gregos1 the House of Lords
attempted to reconcile the competing commercial
requirements of shipowners and charterers and
considered the effect in law of
a
charterer ordering
a vessel on a so-called illegitimate last voyage.
The
Gregos
was time chartered under the terms
of an amended New York Product Exchange form
by its owners, Arni Maritime, to the charterers,
Torvald Klaveness for 'about 50 maximum 70
days'
between 8th January, 1988 and 18th March,
1988,
at the latest. The vessel successfully com-
pleted its initial voyages, and on 9th February,
1988 the charterers ordered her on a final voyage
from Palua, a port on the Orinoco river, to Fos in
Italy. At that date — the order date — the vessel
could have performed the Fos voyage and could
have been redelivered to the shipowners on time.
The vessel arrived at Palua in order to load the
voyage cargo on 25th February — the commence-
ment date — by which time, however, the ground-
ing of another vessel in the Orinoco prevented The
Gregos from leaving Palua as scheduled. If the
vessel undertook the Fos voyage, she could not be
redelivered to the shipowners by the last permis-
sible date. The shipowners, who had arranged a
lucrative fixture for the vessel commencing
immediately upon redelivery, considered that they
were not bound to undertake the Fos voyage and
sought alternative final voyage orders from the
charterers. The charterers refused to give any alter-
native order and insisted on the performance of
the Fos voyage. The deadlock between the parties
was eventually broken by a without prejudice
agreement whereby the shipowners agreed to per-
form the voyage. The voyage was performed and
the vessel was finally redelivered on 26th March,
eight days late.
The House of Lords, before whom the matter
eventually came, was required to consider two
issues. The first issue was the date at which the
validity of the order for the Fos voyage fell to be
determined. Two possible alternatives existed: the
order date on 9th February or the commencement
date on 25th February. On the assumption that the
validity of the order was to be determined on the
commencement date, the second issue that con-
cerned their Lordships was the effect in law of the
charterer having given an order, which, if com-
plied with, would involve the vessel being redeliv-
ered late, and the effect in law of their refusing to
replace it with an alternative order.
Lord Mustill, who delivered the leading judg-
ment in the House of
Lords,
held on the first issue
that the validity of the order fell to be determined
at the commencement date. In reaching his con-
clusion his Lordship was motivated as much by
commercial good sense as by legal principle.2
As to the second issue, Lord Mustill recognised
that there were three possible arguments which a
shipowner, called upon by the charterer to per-
form an extra contractual service, might seek to
rely on in treating himself
as
discharged therefrom.
Page 170
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