Torvald Klaveness A/S v Arni Maritime Corporation (The Gregos)

JurisdictionEngland & Wales
JudgeLORD JUSTICE SIMON BROWN,LORD JUSTICE HIRST
Judgment Date27 May 1993
Judgment citation (vLex)[1993] EWCA Civ J0527-11
Date27 May 1993
CourtCourt of Appeal (Civil Division)

IN THE MATTER OF THE ARBITRATION ACT AND IN THE MATTER OF AN ARBITRATION

Torvald Klaveness A/S
Plaintiffs
and
Arni Maritime Corporation
Defendants
"Gregos"

[1993] EWCA Civ J0527-11

(The Honourable Mr Justice Evans)

Before: Lord Justice Russell Lord Justice Hirst and Lord Justice Simon Brown

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

MR T YOUNG for MR B RIX QC (instructed by Messrs Sinclair Roche & Temperley, London, EC2) appeared on behalf of the Appellant.

MR P GROSS QC (instructed by Messrs Ince & Co., London, EC3) appeared on behalf of the Respondent.

LORD JUSTICE HIRST
1

This is an appeal by Torvald

2

Klaveness A/S, who were the respondent charterers of the vessel "Gregos", against the judgment of Evans J. (as he then was) given on 31st January 1992 in favour of the claimant owners Arni Maritime Corporation, upholding an arbitration award of

3

Mr Mark Hamsher in the owners' favour in the sum of approximately $300,000 damages, together with interest and costs, and reported at (1992) 2 Lloyds Law Reports 40.

4

The main question at issue in the appeal, which forms the first of the two questions certified by the learned Judge as of general public importance, is at what date ("the operative date") the legitimacy of an order by a charterer for a last voyage under a time-charter has to be judged. Is it, as the charterers submit, the date when the order is given? Or is it, as the owners say, as the arbitrator decided and as the learned Judge in effect held, the date when it becomes effective, and the vessel is required to comply with it, ie., at or immediately prior to the outset of the final voyage?

5

It is of course well settled that if an order for a last voyage is given which, on a reasonable estimate, will enable the voyage to be completed in time for the vessel to be re-delivered to the owners prior to the end of the charter period, that order is legitimate, and the owners must obey it. If, on the other hand, the order does not fulfil this requirement, the order is illegitimate and the owners are entitled to refuse to obey it.

6

In the present case the charterers on 9th February 1988 ordered the vessel on a voyage which, at that date, was reasonably expected to be completed by 18th March 1988, which was the final re-delivery date under the charter; however, because of a subsequent unforeseen blockage in the river on 12th February 1988, by the time the vessel was free of her cargo on the penultimate voyage on 25th February, the last voyage became one which would prospectively have overrun the final redelivery date by some two to four days. The order of 9th February was acknowledged in writing by the Master, in accordance with the charterers' request, and was not questioned by the owners; the owners' refusal was on 25th February, after the vessel had finished discharge of her penultimate cargo, and was about to shift a short distance up river to her final loading port, and after notice of readiness to load.

7

If, therefore, the charterers are right as to the operative date, the order in the present case was legitimate; if on the other hand the owners are right, it was illegitimate.

8

The second question was as follows:- "If the last voyage is legitimate at the time when the order is given but subsequently becomes illegitimate before the time for the performance of the voyage, what are the respective rights and obligations of the parties in the changed circumstances?"

9

Both the arbitrator and the Judge concluded that the giving of an illegitimate last voyage order amounted per se to a repudiatory breach, entitling the owners to rescind the charter and re-let the vessel forthwith. The Judge turned down a request by the charterers to certify this issue as a third question, but recognised that it might nonetheless be bound up to some extent with the second question, and for reasons given hereafter we found it necessary to consider it.

10

The first question has been touched on in a number of authorities, though their effect is highly controversial, it being Mr Gross's submission that they establish binding precedent in the owners' favour, whereas Mr Rix for the charterers submits that they settle nothing and that the question is still completely open.

11

It is common ground that, short of binding authority, the correct approach is for the court to weigh the general commercial considerations, together with the business requirements of both owners and charterers, in relation to last voyage orders in time-charters.

12

THE UNCONTROVERSIAL LEGAL BACKGROUND OF TIME CHARTERS.

13

This section is drawn from two Court of Appeal cases, the Dione 1975 1 Lloyds Law Reports 115 and the Peonia 1991 1 Lloyds Law Reports 100, where the underlying authorities are fully cited.

14

A time-charter is a contract under which the owner agrees with the charterer that during a certain specified period he will render services by his servants and crew to carry goods which are put on board his ship by the time-charterer. The charterer is free to decide, within the terms of the charterparty, what use he will make of the vessel for its duration, eg., by carrying goods himself or by sub-chartering. The vessel never leaves the possession of the owner, so that references to delivery and redelivery are not strictly accurate, but those expressions are regularly used to identify the time when the charter begins and ends.

15

When a time-charter stipulates a date for the termination of the charter, without laying down any express margin or tolerance, the courts imply a reasonable margin or tolerance to allow for the exigencies of maritime business. Where on the other hand the parties have expressly agreed a margin or tolerance, no further implication of flexibility will be made.

16

Every time-charter has a final terminal date, ie., a date by which, in the absence of an exonerating clause, the charterer is contractually obliged to re-deliver the vessel. Where a margin or tolerance on the stipulated expiry date is implied in law, the final terminal date comes at the end of such implied extension, but where there is an in-built margin or tolerance, the final terminal date is at the end of such agreed period. The charterer is, in the absence of an exonerating clause, obliged to re-deliver the vessel to the owner on the final terminal date reckoned in accordance with these principles.

17

THE SALIENT FACTS AS FOUND BY THE ARBITRATOR

18

The Gregos is a bulk carrier. The charterparty, dated 30th December 1987, was on the very well-known and widely used NYPE form, and provided for a charter of a duration of

19

"about 50 to maximum 70 days to charterer's option", ETS being "Antwerp 7 January", with the vessel to be placed at the disposal of the charterer on "dropping last outward sea pilot, Antwerp, any time day or night Sundays and holidays included". Allowable bulk cargoes included bauxite and iron ore. Trading was to be "always within Institute Warranty limits always via safe berths/anchorages/ports", with stipulated geographical limits which are not relevant for present purposes. The hire rate was set at $9,500 daily, commencing on the date of delivery, and continuing until the day of redelivery in good order and condition "on dropping last outward sea pilot, safe port, or passing Gibraltar/Hamburg range, including Eire and the UK". The Laycan period was specified as 6th to 11th January 1988.

20

It followed that the maximum charter period was 70 days from the date of delivery, and the final terminal date and contractual date for redelivery was 18th March 1988, as the arbitrator held, the vessel having been delivered at Antwerp on 8th January.

21

The vessel's first voyage under the charter was in ballast from Antwerp to Trombetas, Brazil, where the vessel loaded a cargo of bauxite for Matanzas on the Orinoco in Venezuela. There followed a second voyage between Trombetas and Matanzas.

22

On 9th February, when the vessel was approaching Trombetas to load her second bauxite cargo, the charterers telexed the owners' Trombetas agents with instruction for the last voyage, namely the carriage of a cargo of iron ore from Palua on the Orinoco to Fos, which is a port on the French Mediterranean coast west of Marseilles. This telex, at the charterers' request, was passed to the Master, who signed a copy of it by way of acknowledging its receipt.

23

The vessel sailed from Trombetas on 12th February, bound again for the Orinoco.

24

However, on that same date day another vessel, the "Philippine Roxas", grounded in the main channel of the Orinoco, blocking it for several days and causing delays to other shipping, including the Gregos when she reached the Orinoco. This grounding, as the arbitrator held, was unusually severe, as groundings in the Orinoco, though common, do not usually last long.

25

As a result she was only able to discharge her second cargo of bauxite at Matanzas on 25th February, following which she tendered her notice of readiness at Palua at 1335hrs on 25th February. The sailing time from Matanzas to Palua is no more than about 1 1/2 hours.

26

Meantime the owners had begun to entertain doubts as to whether the charterers' planned use of the vessel would enable her to be re-delivered by 18th March, and the charterers responded on 25th February that their intentions had been perfectly clear in their earlier cables, including that of 9th February, and asserted that despite the grounding of the other vessel, they would be able to re-deliver the vessel on 17th March. The owners disagreed and, on the same day, advised the charterers that they were...

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2 books & journal articles
  • THE SAFE PORT PROMISE OF CHARTERERS FROM THE PERSPECTIVE OF THE ENGLISH COMMON LAW
    • Singapore
    • Singapore Academy of Law Journal No. 2006, December 2006
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    • Singapore Academy of Law Journal No. 2006, December 2006
    • 1 December 2006
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