Smart Gain Shipping Company Ltd v Langlois Enterprises Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Ross Cranston |
| Judgment Date | 05 July 2023 |
| Neutral Citation | [2023] EWHC 1683 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2022-000595 |
[2023] EWHC 1683 (Comm)
Sir Ross Cranston
(sitting as a High Court judge)
Case No: CL-2022-000595
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Nigel Jacobs KC (instructed by Winter & Co Solicitors LLP) for the Claimant/Appellant
Stewart Buckingham KC and Tom Nixon (instructed by Ince & Co) for the Defendant /Respondent
Hearing date: 5 May 2023
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Wednesday 5 th July 2023.
Introduction
The short point which arises in this arbitration appeal is whether under a clause in a charterparty the Owners are entitled to claim the hire rate (and related expenses) for the time used for cleaning a vessel's hull after the Charterers redelivered it, or whether they are confined to a claim in damages for breach of the charterparty.
The context is that vessels at sea are at risk of experiencing the growth of marine life on the bottom of their hull if they remain idle in warm water for too long, which can cause issues with their speed and fuel consumption. To address that issue, the relevant clause in the charterparty in this case read as follows:
“ Clause 86 Hull Fouling
Owners not to be responsible for any decrease in speed/increase in consumption of the Vessel whether permanent or temporary cause [sic] by Charterers staying in ports exceeding 25 days trading in tropical and 30 days if in non-tropical waters. In such a case, underwater cleaning of hull including propeller etc. to be done at first workable opportunity and always at Charterers' time and expense. After hull cleaning vessel's performance warranties to be reinstated.”
The Charterers' case is that Clause 86 is intended to operate during the charterparty to give the Owners a claim for hire in respect of the time taken for underwater cleaning (if hire is unpaid). However, with hull cleaning after redelivery of the vessel the Owners' claim is confined to damages for loss of time — for example, by proving that the cleaning prevented the vessel being further chartered — and not the claim in debt which would be the case if the vessel remained on hire.
On the other hand, the Owners' case is that Clause 86 means what it says, cleaning is to be “always at Charterers' time”. That must mean that Charterers must always pay for the time associated with the underwater cleaning. The premise of clause 86 is that the fouling of the vessel has been caused by the Charterers' orders to remain idle, and they are to pay for the time and cost of remedying it.
Background
The appeal in this case is pursuant to section 69 of the Arbitration Act 1996 against a partial final award in October 2022 arising out of a charter of a bulk carrier the M/V GLOBE DANAE, with Langlois Enterprises Ltd as the Owners and Smart Gain Shipping Co Ltd as the Charterers. The tribunal found for the Owners.
Permission to appeal has been given to the Charterers in respect of the following question of law:
“If a clause in a time charterparty provides for underwater cleaning will be done at the charterers' time, does that provision give rise to a claim in debt (so that if the owners undertake cleaning after redelivery, they can claim for the cleaning time even if they have not suffered a loss of time)?”
During the hearing the issue arose as to whether the question was properly drafted in the abstract. In my view permission was given in relation to how that question is to be answered on the construction of the charterparty under appeal and I have proceeded on that basis: see Cottonex Anstalt v Patriot Spinning Mills Ltd [2014] 1 Lloyd's Rep. 615, [19], per Hamblen J.
The charterparty between the parties was entered on an amended NYPE form dated 9 June 2021 for a time charter trip via the east coast of India to Brazil with lawful harmless metallurgical coke/coke in bulk, the duration to be about 40 to 50 days. Clause 4 provided that hire would continue until the time of the day of the vessel's redelivery in good order and condition, fair wear and tear excepted. The captain was to prosecute the voyage with utmost despatch and was under the orders and directions of the charterers as regards employment and agency: clause 8. Disputes were to be referred to arbitration in London, subject to English law in accordance with the terms of the London Maritime Arbitrators Association: clause 70.
Clause 86 was a rider clause. It is of note that the phrase in clause 86 “at the Charterers' time” (or the equivalent “for Charterers' time”) appears in various clauses in the charterparty, clause 34 (delay caused by smuggling by Charterers “for Charterers' time”); clause 35 (bans arising out of sailing between China/Taiwan to be “on charterers' time”); and clause 41 (stevedore damage affecting seaworthiness to be repaired by Charterers “at their time”).
The phrase “loss of time” or the like occurs at various places in the charterparty — clause 15 (ceasing hire “in the event of the loss of time” from various causes, “for the time thereby actually lost”); clause 32 (dealing with “actual time so lost” due to boycotts); clause 33 (concerning “loss of time due to blockade or detention”); clause 38 (referring to “loss of time” due to accident/grounding); and clause 78(f) (Charterers to indemnify Owners in respect of “loss of hire” resulting from ship-to-ship operations).
The vessel was delivered to the Charterers on 10 June 2021. After proceeding to Haldia, India, and loading metallurgical coke in bulk, the vessel proceeded to Brazil, the bill of lading listing the port of discharge as “any Brazilian port”. The intended receivers rejected the cargo, and as a result the vessel remained idle in a laden state in tropical water ports in Brazil for at least 42 days so that clause 86 of the charterparty was engaged.
The vessel was redelivered to the Owners following completion of discharge at Acu, Brazil, at 14.00 hours on 4 September 2021 without the Charterers undertaking cleaning of the hull, despite the Owners' requests. The vessel's subsequent fixture required her to sail to Tubarao, where she arrived on 9 September 2021. The Owners therefore undertook underwater cleaning of the vessel's hull and propeller for a period of about 30 hours between 9 and 11 September before the vessel was delivered under her next employment on 16 September 2021.
The Owners' claim was in the sum of US $74,506.70 mainly comprised of loss of time (2.29 days) spent cleaning at the hire rate (US $55,103.13) and related costs.
The Award
The tribunal considered a number of issues which are not relevant to this appeal.
With respect to clause 86, the tribunal said that it was important to bear in mind when construing it what the purpose behind it was. It was to assign responsibility for the risks associated with marine growth forming on the hull if the vessel spent an extended period of time idle pursuant to the charterers' orders. The tribunal said that certain aspects of the clause were ambiguous but:
“17…overall, it is quite clear from the language of clause 86 that the intention of the clause is to assign that risk to the Charterers and make them responsible for the time and cost of remedial action whilst suspending the Vessel's performance warranties in the meantime.”
The tribunal regarded it as helpful background that the charterparty was part of a chain of charterparties, and the clause was back-to-back with the head charter which was apparently a long-term period charter: [18].
The Charterers argued that they were not obliged to carry out cleaning after redelivery of the vessel. Moreover, the Owners were confined to a claim in damages to put them in the position they would otherwise have been in and were not entitled to the cost of hire since there was no longer an obligation to pay it. In rejecting these submissions, the tribunal referred to The Nicki R [1984] 2 Lloyd's LR 186 as authority for the proposition that the Owners were not required to demonstrate loss of time regardless of whether the cleaning was performed before or after redelivery: [35]. Although that decision concerned stevedore damage rather than hold cleaning, the facts, clause, and issues were the same as in this case: [37]. As in The Nicki R, if a clause allocates liability for the time to the charterer, the owners do not have to prove any actual loss of time. The owners' claim was in debt: [38].
Applying that approach, the tribunal found that clause 86 created a debt claim in relation to the time element. The Charterers remained liable in debt since they assumed liability for the time spent in repairs “always”, regardless of the actual loss of time: [39]. Clause 86 imposed an obligation upon the Charterers to arrange underwater cleaning at the first workable opportunity at their time and expense, and it was conceivable that this could be after final discharge. The reason why it needed to be at the first workable opportunity was so the Owners could present the vessel to the next employment with a “thoroughly efficient hull”, for otherwise they would be exposed to a claim for underperformance: [40]. The tribunal then said that:
“41…Clause 86 imposed an obligation on the Charterers to arrange underwater cleaning at the first workable opportunity at their time and expense at the charterparty hire rate, regardless of when the vessel was redelivered, and that this obligation gives rise to a claim in debt.”
Legal framework
The principles of contractual construction were common ground and...
To continue reading
Request your trial