Noranda Inc. v Barton (Time Charter) Ltd [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Colman J. |
| Judgment Date | 27 October 1995 |
| Date | 27 October 1995 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Colman J.
Stephen Tomlinson QC and Simon Picken (instructed by Hill Taylor Dickinson) for the charterers.
Gavin Kealey QC (instructed by Ince & Co) for the owners.
The following cases were referred to in the judgment:
Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd (“The Saxon Star”)ELR [1958] AC 133.
Cargill International SA v CPN Tankers (Bermuda) Ltd (“The OT Sonja”)UNK [1993] 2 Ll Rep 435.
Interbulk Ltd v Ponte dei Sospiri Shipping Co (“The Standard Ardour”)UNK [1988] 2 Ll Rep 159.
Navigazione Alta Italia SpA v Concordia Maritime Chartering AB (“The Stena Pacifica”)UNK [1990] 2 Ll Rep 234.
Reliance Europe Ltd v Exmar Ltd NVUNK (unreported) 18 November 1994.
Seven Seas Transportation Ltd v Pacifico Union Marina Corp (“The Satya Kailash” and “Oceanic Amity”)UNK [1984] 1 Ll Rep 588.
Charterparty — Arbitration — Periodic time charter — Incorporation of Hagueor Hague-Visby Rules — Cargo contaminated on voyage — Claim for damages for breach of time charter — Whether Hagueor Hague-Visby Rules incorporated into time charter — Whether time bar available to owners as defence — Whether arbitration validly commenced in time.
This was an originating summons as to the effect of incorporating the Hague or Hague-Visby Rules into a periodic time charter. The issue was the extent to which the owners could rely on the time bar in art. III, r. 6 as a defence to the charterers' claims for damages for breach of the time charter.
The plaintiff charterers entered into a time charter on 13 February 1991 in respect of a new vessel, the “Marinor” which was under construction. The charter was for ten years with a five-year extension option. The vessel, intended for the carriage of sulphuric acid from Quebec to US east coast ports and clay slurry on the reverse voyage, was delivered to charterers on 14 November 1992. From August 1993 on four consecutive voyages the sulphuric acid arrived contaminated with chrome, which was unacceptable to the charterers' customers. The next cargo was shipped on an alternative vessel, but one final acid cargo which could be used in the fertiliser industry even if contaminated, was shipped on the “Marinor”(voyage 32). When that cargo was contaminated on discharge, substitute vessels were then chartered from November 1993 to transport the cargoes of sulphuric acid, but the charterers continued to ship clay in the “Marinor”. Discussions took place between the parties, and remedial action was taken to reduce the contamination. The vessel was treated as having gone back on time as from 11 March 1994. Acid shipments resumed in April and continued.
The charterers began arbitration proceedings on 6 February 1995. They alleged that the contamination of the cargo resulted from defects in the vessel's equipment and inadequate training of the crew in breach of the express terms of the time charter. They did not claim damages in respect of loss arising from any particular cargo carried. The charter contained a Canadian clause paramount expressly attached “to form part of this charterparty”, under which the Hague Rules were incorporated by the Canadian Carriage of Goods by Water Act, as amended. In 1993 that Act was repealed and a new Act enacted the Hague-Visby Rules. The time bar in art. III, r. 6 of each of the rules, was expressed differently, but each provided for a time bar of one year from delivery of the goods or the time when delivery should have taken place.
The charterers contended that since the Canadian Carriage of Goods by Water Act was repealed not amended in 1993, the time charter did not incorporate the Hague-Visby Rules and therefore the time bar did not operate. The owners relied on the time bar to defeat the charterers' claims.
Held, ruling accordingly:
1. The obvious purpose of the Canadian clause paramount was to ensure that throughout the period of the time charter the current Canadian carriage of goods by sea legislation was contractually incorporated. The express words attaching the clause operated as general words of incorporation. It followed that the 1993 Canadian Act was incorporated and through it, the Hague-Visby Rules, by October to November 1993. The time bar provisions, which did not differ in material respects, therefore applied for the duration of the time charter.
2. The charterers' claims in relation to voyage 32 asserted owners” liability for breach of the charter causing financial loss sustained in relation to goods shipped or intended to be shipped on a specific voyage under the charter, where such loss was referable to what was done with such goods or was directly associated with them. Accordingly the art. III, r. 6 time bar applied to the voyage 32 claim, which at the date of commencement of the arbitration was time-barred. (Adamastos Shipping Co Ltd v Anglo-Petroleum Co Ltd (“The Saxon Star”)ELR[1958] AC 133andSeven Seas Transportation Ltd v Pacifico Union Marina Corp (“The Satya Kailash” and “Oceanic Amity”)UNK[1984] 1 Ll Rep 588 applied.)
3. The substitute tonnage claims were not one claim or a series of claims in respect of particular cargoes on particular voyages, but a claim for damages for loss of use of the vessel at times when its services as an acid carrier ought to have been available to the charterers. Similarly, the investigatory expenses claims were in respect of the general condition of the “Marinor” and its crew. The commencement of the claims from which time would run were too uncertain to be ascertainable. Accordingly the time bar did not apply to the substitute tonnage or the investigatory expenses claims. (Adamastos Shipping Co Ltd v Anglo-Petroleum Co Ltd (“The Saxon Star”)ELR[1958] AC 133andSeven Seas Transportation Ltd v Pacifico Union Marina Corp (“The Satya Kailash” and “Oceanic Amity”)UNK[1984] 1 Ll Rep 588 applied.)
Colman J:
This originating summons raises fundamental questions as to the effect of incorporating the Hague or Hague-Visby Rules into a periodic time charter. The issue which particularly arises is the extent to which owners can rely on the protection of the time bar contained in art. III, r. 6 as a defence to time charterers' claims for damages for breach of the time charter. The plaintiff charterers ask for a declaration that, in respect of certain of their claims, they have validly commenced arbitration within time. Alternatively, if any of their claims are subject to the art. III, r. 6 time bar, they ask orders extending time under s. 27 of the Arbitration Act 1950. Consideration of the latter point has been adjourned.
The time charter in question was entered into on 13 February 1991. It was in respect of a new building then still in the course of construction and ultimately called Marinor. The vessel was delivered to charterers on 14 November 1992. The period was ten years with a five-year extension option and the service for which the vessel was mainly intended was the carriage of sulphuric acid from the plaintiffs' plant at Gaspy in Quebec to US East Coast ports and the carriage of clay slurry on the reverse voyage, as reflected in particular in cl. 31 and 53.
Up to August 1993 all went well under the charter, but there then began a series of sulphuric acid voyages after which the cargo out-turned in a contaminated condition. In particular, it was found to contain chrome. This happened on four consecutive voyages. Acid in this condition is said to have been unacceptable to the plaintiffs' customers in the US. The parties were unable to agree on what caused the contamination or how it could be prevented. Faced with this difficulty, the charterers decided in October 1993 that they should send the next cargo of sulphuric acid which was to be delivered to customers in Savannah in mid-November by an alternative vessel and for this purpose they chartered in a vessel called Chembulk Trader. They also decided, and so informed the owners, that they would, in effect, give the Marinor one more chance, by shipping on its next acid voyage — voyage 32 — cargo of sulphuric acid consigned to Tampa where the acid could be used in the fertilizer industry even if it were discharged in a contaminated condition. If, however, the Marinor once again out-turned a contaminated cargo at Tampa, the charterers said that they would not be prepared to ship any further sulphuric acid cargoes on board.
The vessel duly carried the acid to Tampa on voyage 32 and on discharge it was once again found to be contaminated by chrome. Thereupon the charterers, on 14 November 1993, gave notice that they would use substitute tonnage to enable them to transport sulphuric acid cargoes to their customers in the US; substitute vessels concerned were the Chembulk Trader and the Aurum.
Meanwhile, discussions took place between the parties. The charterers continued to ship clay from the US to Quebec and paid the owners rateable hire for these voyages, subject to an agreement under which charterers reserved their right to keep the vessel off-hire, pending a solution to the contamination problem being found. In March 1994 following certain remedial action being taken, the parties agreed that the vessel would be treated as having gone back on time as from 11. March 1994. Acid shipments recommenced in April. The contamination was much reduced and the charterers have since then continued to ship acid.
The plaintiff charterers commenced arbitration on 6 February 1995.
The time charter contained the following provisions:
“Owner warrants that at the time the vessel is placed at charterer's disposal, the vessel shall fulfill (sic) the descriptions, particulars and capabilities set forth in cl. 53, and shall be tight, staunch and strong, in thoroughly efficient order and condition and in every way fit, manned, equipped, and supplied for the service contemplated, with holds, cargo tanks, pipelines, and valves clear, clean, and...
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