KRITI AKTI SHIPPING Company S.A. and PETROLEO BRASILIERO S.A. [CA (Civil), 20/02/2004]
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance |
| Judgment Date | 20 February 2004 |
| Neutral Citation | [2004] EWCA Civ 116 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 February 2004 |
| Docket Number | Case No: A3/2003/1654 |
[2004] EWCA Civ 116
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(COMMERCIAL COURT) (MOORE-BICK J.)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Brooke
Vice-President of The Court of Appeal (Civil Division)
Lord Justice Mance and
Mr. Justice Park
Case No: A3/2003/1654
Mr Steven Berry QC (instructed by Messrs Holman Fenwick Willan) for the Appellant
Mr Christopher Hancock QC & Mr Lawrence Akka (instructed by Messrs Ince & Co.) for the Respondent
This appeal relating to an arbitrators' award takes us back to two decisions of this Court in the 1970s: The Alma Shipping Corporation of Monrovia v Mantovani (The 'Dione') [1975] 1 Lloyd 's Rep. 115 and Gulf Shipping Lines Ltd v Compania Naviera Alanje S.A. (The 'Aspa Maria') [1976] 2 Lloyd 's Rep. 643. The inter-change between arbitrators and the Commercial Court was then more frequent than it is today, and I note in passing that the prominent arbitrators in this case (Mr Baker-Harber, Mr Sheppard and Mr Coghlin) expressed regret that they "no longer [had] available to them the fast and convenient consultative case procedure that Lord Denning MR commended" in The Aspa Maria.
The appeal is from Moore-Bick J, who on 9 th July 2003 determined appeals on two preliminary questions of law which had been the subject of an interim final award made by the arbitrators on 21 st November 2002. The questions arise under a charterparty made on 17 th February 2000 on the Shelltime 3 form with amendments and additions between Kriti Akti Shipping Co. SA, owners of the tanker Kriti Akti, and Petroleo Brasiliero SA as charterers. The vessel's chartered service commenced on 25 th May 2000.
The charter provides as follows:
"Period and Trading Limits
3. Owners agree to let and Charterers agree to hire the vessel for a period of 11 (eleven) months, 15 days more or less in Charterers' option…….
………………..
Final Voyage
18…….. Notwithstanding the provisions of clause 3 hereof, should the vessel be upon a voyage at the expiry of the period of this charter, charterers shall have the use of the vessel at the same rate and conditions for such extended time as may be necessary for the completion of the round voyage on which she is engaged and her return to a port of redelivery as provided by this charter………
………………..
CLS 50 – EXTENTION [sic]
Any loss of time during which the vessel is off hire shall count as part of the charter period and may be used by charterers at their option as an extention of the aforesaid charter period."
The words "11 (eleven) months, 15 days more or less in Charterers' option" in clause 3 and the whole of clause 50 were typewritten, rather than printed.
During the charter the vessel was off hire on various occasions, the charterers say for 36 days, the owners say for only 17.6 days. For present purposes we are to assume that charterers' figure is correct. On owners' figure the preliminary issues are academic.
The 11 month period provided by clause 3 expired on 24 th April 2001. On 13 th March 2001 the charterers told the owners that they were exercising their option to extend the final date of the charter to 14 th June. That was on the basis that they were entitled to add to the 11 month period the further 15 days provided for in clause 3 and 36 days off-hire under clause 50. While the vessel was discharging at Saó Sebastiaó on 29 th May 2001, the charterers issued voyage instructions for a voyage to New York, revising or substituting them on 1 st June 2001 in favour of a voyage from Saó Sebastiaó to Santos and then to New York. On each occasion the owners took the view that the charter period had already expired and would only perform the proposed voyage at an increased rate of hire. Charterers rejected this and owners therefore took back the vessel at Santos.
The proposed voyage could not have been completed until well after 14 th June 2001. So the charterers' case depends upon clause 18, and upon the construction put upon the same clause in this Court in Chiswell Shipping Ltd and Liberian Jaguar Transports Inc v National Iranian Tanker Co (The 'World Symphony' and 'World Renown') [1991] 2 Lloyd 's Rep. 251. Clause 3 of the Shelltime 3 charter in that case was completed so as to provide for a charter period "of six months fifteen days more or less in Charterers' option". A voyage was ordered during the six months which could not have been completed until well after the expiry of the six month fifteen day maximum referred to in clause 3. This Court held nonetheless that the effect of "the crucial words 'notwithstanding the provisions of clause 3 hereof' in clause 18" was to enable the charterers to order a last voyage which would overrun the time otherwise stipulated for re-delivery under clause 3. In the "colourful phrase" used by Mr Gee QC and adopted by Lord Donaldson MR, a round trip charter could in this way be "bolted on" a charter for what would otherwise have been a fixed term. The Court was influenced by amongst other matters decisions to like effect by New York arbitrators. It is common ground that we are in this Court bound by this construction of the effect of clause 18 of what is a standard form. Indeed, the present arbitrators noted that "the abnormality of that result is well understood", and it appears that there has existed for some time (we were told by Mr Hancock QC since the 1990s) a Shelltime 4 form with an amended wording, which has been held to achieve a different effect by Mr Peter Gross QC (as he was) in The Ambor (2000) LMLN 549. In the present case for whatever reason the parties used the Shelltime 3 form, and, however the position might be elsewhere, we must follow the construction already put upon this form in this Court in The World Symphony.
Proceeding on that basis, the charterers' case depends upon treating both their (asserted) 36 day off-hire period and the 15 day hire period as relevant additions to the basic eleven month period, to arrive at a total period within which charterers may exercise a right to send the vessel under clause 18 on a final voyage likely to extend beyond the end of that total period.
The arbitrators decided two questions, which I can adapt to reflect the way the arguments developed, as follows: (i) whether the "period of this charter" in clause 18 includes any additional period for which charterers elect to extend the charter under clause 50 and (ii) whether, if so, the period of the charter as so extended also includes [for the purpose of clause 18] a further 15 days at charterers' option under clause 3. The arbitrators answered the first question in charterers' favour, but they concluded that The Aspa Maria bound them to answer the second in owners' favour. Moore-Bick J answered both questions in charterers' favour. Owners represented by Mr Berry QC now appeal with his permission. Put shortly, owners' first position is that "the expiry of the period of this charter" in clause 18 refers simply and solely to the expiry of the basic 11 month charter period identified in clause 3. Their alternative position is that, even if it refers to the basic period as extended in charterers' option by the off-hire days under clause 50, there cannot be, or alternatively clause 18 cannot refer to, any further 15 days margin period under clause 3.
The charterers, when claiming to extend the charter until 14 th June 2001, took first the 15 day margin allowed by clause 3 and then the 36 days off-hire that they asserted had been incurred. However, the logic of clauses 3 and 50 dictates that the off-hire should be added first, and that, if and in so far as the 15 day margin has any effect in a charter containing clause 18, it should apply around the terminal date arrived at by adding the number of off-hire days to the basic period. That is also the way in which the questions decided by the arbitrators approach the matter. The essential reason is that the 15 day margin gives a margin either side of the re-delivery date. Clause 50 restores to the charterers, at their option and as part of the charter period, whatever number of days may be lost off-hire during the charter period. The re-delivery date is thus correspondingly postponed.
It is unnecessary to consider to what extent a clause 50 extension could be claimed to make good time lost not only during the running of the basic 11 month charter period (as extended by any off-hire), but also within the running of any 15 day period, if that runs cumulatively to a clause 50 extension – although there is attraction in the view that off-hire during the period of 15 days more after the basic 11 month period should extend the 15 day margin period. The arbitrators observed that the scope for dispute about whether and when a vessel is off-hire may create difficulties in operating clause 50. But they pointed out that that is also the case, independently of whether "the period of this charter" in clause 18 includes a period for which the charter is extended under clause 50. Both the arbitrators and the judge had no real difficulty in concluding that any period which charterers elect to take as an extension of the basic period under clause 50 counts as part of "the period of this charter" for all relevant purposes, including specifically those of clause 18. In my view, they were clearly right.
It follows that any extension period under clause 50 is added first. Further, apart from clause 18, the new terminal date arrived at by adding off-hire days to the basic 11 month period must carry with it the 15 day margin. It...
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