NYK Bulkship (Atlantic) NV v Cargill International SA (The 'Global Santosh')
| Jurisdiction | England & Wales |
| Judge | Lord Mance,Lord Clarke,Lord Neuberger,Lord Sumption,Lord Toulson |
| Judgment Date | 11 May 2016 |
| Neutral Citation | [2016] UKSC 20 |
| Date | 11 May 2016 |
| Court | Supreme Court |
[2016] UKSC 20
Lord Neuberger, President
Lord Mance
Lord Clarke
Lord Sumption
Lord Toulson
Appellant
Simon Rainey QC
Daniel Bovensiepen
(Instructed by Holman Fenwick Willan LLP)
Respondent
Timothy Young QC
Belinda McRae
(Instructed by Skinitis Maritime Law Firm)
Heard on 1 December 2015
(with whom Lord Neuberger, Lord Mance and Lord Toulson agree)
The Global Santosh was time chartered on terms that the vessel should be off-hire during any period of detention or arrest by any authority or legal process, unless the detention or arrest was "occasioned by any personal act or omission or default of the Charterers or their agents." She was arrested as a result of a dispute between the receiver of the cargo and a party who appears to have been a sub-sub-charterer, and which had nothing to do with the owners or the ship. The question which arises on this appeal is whether the arrest can be regarded as having been occasioned by the time charterer's "agents" in the sense in which that word is used in the proviso. The answer to this question turns on the language of the particular charter-party, but it has wider implications of some importance. Arbitrators appointed under the terms of the time charter have held by a majority that it cannot. The matter comes before the courts on an appeal under section 69 of the Arbitration Act 1996.
The facts can be taken from the arbitrators' award and the agreed statement of facts and issues. By a time charter-party dated 11 September 2008, NYK chartered the vessel Global Santosh to Cargill for one time charter trip "intention cement via Sweden to West Africa Nigeria. Intended cargo bulk cement. Duration 35 days without guarantee." The charter was on the Asbatime form, which was a variation of the New York Produce Exchange 1946 form. There were a number of typed additional clauses.
Against the side note "Sublet" the charter reads at lines 31–33:
"Charterers shall have liberty to sublet the vessel for all or any part of the time covered by this Charter, but Charterers shall remain responsible for the fulfilment of this Charter."
By clause 8, NYK undertook that the master would be "under the orders and directions of [Cargill] as regards employment and agency", and Cargill undertook to "perform all cargo handling at their expense".
There are no less than three off-hire clauses. The printed form includes an off-hire clause (clause 15) in standard terms covering
"loss of time from deficiency and/or default and/or strike or sabotage by officers or crew or deficiency of stores, fire, breakdown of, or damages to, hull, machinery or equipment, grounding. detention by average accidents to ship or cargo unless resulting from inherent vice, quality or defect of the cargo, dry-docking for the purpose of examination or painting bottom, or by any other similar cause whatsoever preventing the full working of the vessel."
Typed clause 48 is a further off-hire clause which largely overlaps with clause 15. It relates to
"loss of time either in port or at sea, deviation from the course of the voyage or putting back whilst on voyage, by reason of breakdown of machinery, collision, stranding, fire or any other accident or damage to the vessel, or dry-docking or periodical survey, or sickness or accident to the Master, Officers, Crew or any person on board the vessel other than persons travelling by the Charterers' requests or by reason of sending stowaway or salvage, or by reason of the refusal of the Master, Officers or Crew to do their duties, or any Owners' matters."
Typed clause 49 is an additional off-hire clause relating specifically to detention resulting from capture, seizure or arrest. It provides:
"Should the vessel be captured or seizured [sic] or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents. Any extra expenses incurred by and/or during the above capture or seizure or detention or arrest shall be for Owners' account." (emphasis added)
On 18 August 2008, before they entered into the time charter, Cargill had entered into a voyage charter-party as disponent owner with Sigma Shipping Ltd ("Sigma") as charterer, under which the performing vessel was to be nominated.Cargill nominated the Global Santosh. Pursuant to Cargill's orders, the vessel carried a cargo of bulk cement from Slite in Sweden to Port Harcourt in Nigeria. The cargo was one of six shipments of cement sold by Transclear SA to IBG Investments Ltd on C & FFO terms under a sale contract dated 14 December 2007. IBG was named as the notify party in the relevant bill of lading, which also named the discharge port as "Port Harcourt (Ibeto Jetty)". The majority arbitrators held that it seemed likely that Transclear was the sub-charterer of the vessel but, whether by way of charter from Sigma or by a more indirect link, was not apparent.
The FO element of the sale terms stands for "free out". Under free out sale terms, the buyers/receivers (here, IBG) undertake to perform, or procure and pay for the performance of, the unloading of the cargo from the carrying vessel. By the sale contract between Transclear and IBG demurrage was payable by IBG to Transclear for delay in discharge beyond the laytime agreed in that contract and Transclear was purportedly granted a lien over the cargo in respect of unpaid demurrage.
The contractual position as regards cargo handling was accordingly as follows. By clause 8 of the time charter Cargill undertook to perform all cargo handling at their expense. It follows that, as between Cargill and NYK, it was for Cargill to perform the discharge operation at its expense. As between Cargill and Sigma, it was for Sigma to do so. In fact, neither Cargill nor Sigma themselves carried out any discharging obligations. They were left to others. It appears that it was ultimately IBG's obligation, owed to Transclear under the contract of sale, to carry it out.
The vessel arrived at Port Harcourt on 15 October 2008 with a cargo of 30,324 metric tons of cement in bulk ("the cargo") and tendered notice of readiness at 0635 hours local time on the same date. However, as the majority arbitrators held at para 9 of their reasons, due to congestion at Port Harcourt, she was instructed to remain at Bonny Town Anchorage. The congestion was caused at least in part by the breakdown of IBG's off-loader. No discharge operations took place at the anchorage, and the vessel did not proceed to a berth until 18 December 2008. During that period the vessel remained on hire under the charter and Cargill continued to pay hire.
The vessel did not in fact berth on 18 December because she was turned away by the port authority and ordered to return to Bonny Town inner anchorage. The authority gave those instructions pursuant to an order dated 17 December 2008 (the day before) made by the Federal High Court of Nigeria. The majority arbitrators did not spell the facts out in any greater detail than to say at para 11 of their reasons (as amplified in para 36) that the order arose from an application brought by Transclear to secure a claim for demurrage against IBG, that what should have been arrested was the cargo, but that by an obvious mistake the order directed the arrest of the vessel. The arbitrators added that the order and subsequent notice of arrest of the same date expressly prohibited any and all persons from interfering with and/or attempting to discharge the cargo. Accordingly, the master returned to the anchorage and waited for the arrest to be lifted. On 18 December 2008, Cargill gave these orders to the master in writing:
"Dear captain Good Day. Pls do not commence cargo disch until you get written confirmation from us. Pls call me back once you receive this message. Best Regards. Ritesh Chandra."
Subsequently, an agreement in respect of the outstanding demurrage was reached between Transclear and IBG which allowed the vessel to berth and discharge her cargo. Following the issuance of an appropriate order by the presiding judge of the Court of Nigeria authorizing the cargo's release, discharging operations began at 2230 hours (local time) on 15 January 2009 and were completed at 2235 hours (local time) on 26 January 2009.
Cargill withheld hire for the period of arrest but recommenced the payment of hire when actual discharge began. Cargill relied on clause 49 of the charter to justify non-payment of hire but, in answer, NYK relied on the proviso
"unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents."
The majority arbitrators held that the proviso did not apply and that the vessel was off-hire during the period when she was under arrest. On 23 May 2012, Hamblen J granted NYK leave to appeal under section 69 of the Arbitration Act 1996 on the question "whether the arrest or detention of a time chartered vessel by or because of the acts or omissions of sub-contractors, involved to perform the time charterer's charter-party obligations, fall within the meaning of an off-hire clause excluding time from off hire if 'occasioned by any personal act or omission or default of the Charterers or their agents'".
Loss of time due to the arrest or detention by authority of a time chartered vessel is a long-standing problem, aggravated by the difficulty in obtaining compensation for an arrest or detention which proves to be unjustified or is made...
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