Kriti Akti Shipping Company SA v Petroleo Brasileiro SA
| Jurisdiction | England & Wales |
| Judge | Moore-Bick J,Brooke,Mance L JJ,Park J. |
| Judgment Date | 20 February 2004 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 February 2004 |
Court of Appeal (Civil Division).
Moore-Bick J; Brooke and Mance L JJ and Park J.
Christopher Hancock QC and Lawrence Akka (instructed by Ince & Co) for Petroleo Brasileiro SA.
Steven Berry QC (instructed by Holman Fenwick & Willan) for Kriti Akti Shipping Co SA.
The following cases were referred to in the judgments:
Alma Shipping Corp of Monrovia v Mantovani (The Dione)UNK [1975] 1 Ll Rep 115.
Chiswell Shipping Ltd and Liberian Jaguar Transports Inc v National Iranian Tankers Co (The World Symphony and World Renown)UNK [1991] 2 Ll Rep 251; [1992] 2 Ll Rep 115.
Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria)UNK [1976] 2 Ll Rep 643.
Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia)UNK [1991] 1 Ll Rep 100.
Margetson & Co v GlynnELR [1893] AC 351.
Marimpex Mineraloel Handelsgesellschaft mbH & Co KB v Compagnie de Gestion et d'Exploitation Ltd (The Ambor and The Once) [2001] CLC 138.
Timber Shipping Co SA v London & Overseas Freighters Ltd (The London Explorer)ELR [1972] AC 1.
Shipping — Time charter — Period of charter — Final voyage — Extension for time off hire — Charter period of 11 months, 15 days more or less in charterers” option — Loss of time during which vessel off hire could extend charter period — Vessel on voyage at expiry of charter period — Whether final voyage could be commenced during margin period.
This Was An Appeal By Shipowners From A Decision Of Moore-bick J Determining Appeals From Arbitrators On Two Preliminary Questions Of Law On The Interpretation Of A Charterparty On The Shelltime 3 Form With Amendments And Additions Between Owners (“ka”) And Charterers (“pb”).
The Charter, By Clause 3, Provided For A Charter Period Of 11 Months, 15 Days More Or Less In Charterers” Option. Clause 18 Provided That, Notwithstanding The Provisions Of Cl. 3, Should The Vessel Be Upon A Voyage At The Expiry Of The Period Of The Charter, Charterers Should Have The Use Of The Vessel At The Same Rate And Conditions For Such Extended Time As Might Be Necessary For The Completion Of The Round Voyage On Which She Was Engaged And Her Return To A Port Of Redelivery As Provided By The Charter. Clause 50, A Typewritten Rather Than Printed Clause, Provided That Any Loss Of Time During Which The Vessel Was Off Hire Would Count As Part Of The Charter Period And Might Be Used By Charterers At Their Option As An Extension Of The Charter Period.
The 11 Month period provided by cl. 3 expired on 24 April 2001. On 13 March 2001 PB told KA that it was exercising the option to extend the final date of the charter to 14 June. That was on the basis that it was entitled to add to the 11 month period the further 15 days provided for in cl. 3 and 36 days claimed off-hire under cl. 50. While the vessel was discharging at Saó Sebastiaó on 29 May 2001, PB issued voyage instructions for a voyage to New York, revising or substituting them on 1 June 2001 in favour of a voyage from Saó Sebastiaó to Santos and then to New York. On each occasion KA took the view that the charter period had already expired and would only perform the proposed voyage at an increased rate of hire. PB rejected that and KA therefore took back the vessel at Santos.
The arbitrators decided two questions: (i) whether the “period of the charter” in cl. 18 included any additional period for which charterers elected to extend the charter under cl. 50 and (ii) whether, if so, the period of the charter as so extended also included (for the purpose of cl. 18) a further 15 days at charterers” option under cl. 3. The arbitrators answered the first question in charterers” favour, but they concluded that Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria)UNK [1976] 2 Ll Rep 643 bound them to answer the second in owners” favour. Moore-Bick J answered both questions in charterers” favour. Owners appealed arguing, first, that “the expiry of the period of this charter” in cl. 18 referred simply and solely to the expiry of the basic 11 month charter period identified in cl. 3. KA's alternative position was that, even if it referred to the basic period as extended in charterers” option by the off-hire days under clause 50, there could not be, or alternatively cl. 18 could not refer to, any further 15 day margin period under cl. 3. PB's case was that cl. 50 restored to charterers, at their option and as part of the charter period, whatever number of days might be lost off-hire during the charter period. The re-delivery date was thus correspondingly postponed. The 15 day margin then gave a margin either side of that re-delivery date.
Held, dismissing the appeal:
1. The arbitrators and the judge were right to conclude that any off-hire period which charterers elected to take as an extension of the basic period under cl. 50 counted as part of “the period of this charter” for all relevant purposes, including specifically those of clause 18. It followed that any extension period under cl. 50 was added first. Further, apart from cl. 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..
2. It was legitimate for a time charterer to give directions for the vessel's use on a voyage so long as it could reasonably be expected to be completed by the final terminal date, defined by taking into account any implied or express margin to which the charterer was entitled. The submission that it was the duty of a charterer to give instructions for a voyage which could reasonably be expected to complete on or at latest by the end of the basic period, excluding from consideration any implied or express margin, lacked supporting authority and any practicality. The submission that an express margin in terms ”15 days more or less in charterers” option” should be so confined seemed to run flatly contrary to the obvious significance of those words, which on their face give charterers valuable trading flexibility, when planning the vessel's use. The 15 day margin had value for the charterers when, and not merely after, giving directions for the vessel's use.
3. Apart from cl. 18, it was legitimate for a charterer to give directions, during a margin period of “days more in charterers” option”, for a voyage which could reasonably be expected to complete not later than the final terminal date constituted by the basic period plus the margin.
4. The effect of cl. 18 was to expose owners to a last voyage of uncertain length which, both when directed and as performed, could extend after the charter's terminal date. The words of cl. 3 were clear: the charterers had the vessel for all practical purposes for any period they wished between 11 months plus and 11 months minus 15 days and a voyage within cl. 18 might be commenced at any time during that period, up to its final terminal date of 11 months plus 15 days (or 11 months plus off-hire days plus 15 days).
5. The court was not bound by authority to conclude that any margin, such as the ”15 days more or less in charterers” option” in this case, constituted no more than “an express agreement as to the exact extent of the tolerance” and was “not an extension of the charter”. The judge was correct not merely to dismiss owners” appeal from the arbitrators on the first question, but also to allow charterers” appeal from arbitrators on the second question and to answer both the questions in the affirmative. (Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria)[1976] 2 Ll Rep 643 explained.)
Moore-Bick J:
1. This matter comes before the court by way of two appeals on questions of law arising out of an award made in an arbitration between Petroleo Brasileiro SA and Kriti Akti Shipping Co SA, the owners of the tanker Kriti Akti.
2. On 17th February 2000 the owners of the Kriti Akti chartered the vessel on the Shelltime 3 form with various amendments and additions to Petroleo Brasileiro for a period of 11 months, 15 days more or less in charterers” option. The vessel was delivered into service under the charter on 25th May 2000.
3. The charter contained the following three clauses which are of particular importance to the dispute which subsequently arose between the parties:
”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…
…
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
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.”
4. During the charter the vessel was off hire on various occasions. There is a dispute about the total period involved: the charterers say it was 36 days, the owners say it was only 17.6 days, but for the purposes of this appeal it is necessary to assume, for reasons which will become apparent a little later, that the charterers” figure is correct.
5. The 11-month period provided by clause 3 expired on 24th April 2001. On 13th March 2001 the charterers told the owners that they were exercising their option to extend the final date of the charter to 14th 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.
6. On 29th May while the vessel was discharging at Saõ Sebatiaõ the charterers ordered her to carry out another voyage with cargo from Saõ Sebatiaõ to New York...
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