Triton Navigation Ltd v Vitol S.A.; the Nikmary
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance |
| Judgment Date | 02 December 2003 |
| Neutral Citation | [2003] EWCA Civ 1715 |
| Docket Number | Case No: A3/2003/0236 |
| Date | 02 December 2003 |
| Court | Court of Appeal (Civil Division) |
[2003] EWCA Civ 1715
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(Mr Justice Moore-Bick)
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
Lord Justice Simon Brown
Lord Justice Mummery and
Lord Justice Mance
Case No: A3/2003/0236
T Hill Esq & R Aswani Esq (instructed by Messrs Waterson Hicks) for the Appellant
Ms V Selvaratnam QC & P Richards Esq (instructed by Messrs Shaw Lloyd & Co) for the Respondent
Introduction
This is an appeal against that part of the judgment given by Moore-Bick J on 23 rd January 2003 which held the appellant charterers ("Vitol") liable for demurrage in the sum of US$291,691.75 in respect of the detention of the Nikmary at Sikka, India between 9 th December 2000 and 2 nd January 200There is no challenge to any of the judge's findings of primary fact.
The Nikmary was chartered by the respondent ("Triton") to Vitol on 3 rd November 2000 on the Asbatankvoy form, with a large number of amendments following from the incorporation of Vitol's own chartering clauses, which were themselves made subject to certain amendments. The material terms of the charter, taking into account such amendments, included the following:
""B. Laydays:
Commencing: 17 th November 2000
Cancelling: 22 nd November 2000
. . . . . . . . . . . . . . . . . . . .
6. NOTICE OF READINESS Upon arrival at customary anchorage at each port of loading or discharge the Master or his agent shall give the Charterer or his agent notice by letter, telegraph, wireless or telephone that the vessel is ready to load or discharge cargo, berth or no berth, and laytime, as hereinafter provided, shall commence upon the expiration of six (6) hours after receipt of such notice, or upon the Vessel's arrival in berth ….., whichever first occurs. However, where delay is caused to vessel getting in to berth after giving notice of readiness for any reason over which Charterers have no control, such delay shall not count as used laytime or demurrage.
7. HOURS FOR LOADING AND DISCHARGING. The number of running hours specified as laytime in Part I shall be permitted the Charterer as laytime for loading and discharging cargo; but any delay due to the Vessel's condition or breakdown or inability of the Vessel's facilities to load or discharge cargo within the time allowed shall not count as used laytime. . . . . . .
. . . . . . . . . . . . . . . . . . . .
18. CLEANING. The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of the Charterer's Inspector. . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
30. Operations Clause – Amended
. . . . . . . . . . . . . . . . . . . .
c) Inspection/Cleaning – Amended
i) The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of the Charterer's Inspector who shall inspect the Vessel as per local and/or Charterer's requirements prevailing at the time.
(ii) Notwithstanding whether or not the Vessel arrived and tendered NOR within laydays and notwithstanding any previous decision not to cancel the Charter, should, after inspection, the Vessel not be clean to the satisfaction of jointly appointed Inspector, the Charterer shall have the option of cancelling this Charter by giving Owner notice of such cancellation within 24 hours after rejection of the Vessel by jointly appointed Inspector.
iii) Alternatively, should the Charterer still decide not to cancel this Charter, despite the Vessel not being clean to other satisfaction of the jointly appointed Inspector, the Vessel will be required, at Owner's risk, time and expense, to carry out further cleaning, per (i) above, and represent for further inspection by jointly appointed Inspector.
iv) Should, after further inspection, the Vessel still not be clean to the satisfaction of jointly appointed Inspector, the Charterer shall have the option to either cancel the Charter, as per (ii) above, or to request further cleaning, as per (iii) above.
v) Owner shall indemnify Charterer for all direct and/or indirect costs and consequences as a result of the Vessel not being clean to the satisfaction of jointly appointed Inspector and should the Charter not be cancelled, all time until connection of hoses, after the Vessel has been passed as clean to the satisfaction of jointly appointed Inspector, shall not count as laytime, or if on demurrage, as time on demurrage."
Vitol chartered the vessel in order to load a cargo of gasoil which it had contracted to buy from the refinery at Sikka operated by Reliance Petroleum Limited ("Reliance"). The purchase contract dated 31 st October 2000 provided inter alia:
"6. DELIVERY MODE: ONE SAFE BERTH/PORT FOB SIKKA DURING 17 TH to 21 ST NOVEMBER, 2000.
….
9. LAYTIME
LAYTIME SHALL BE 36 HOURS + 6 HOURS NOR, SUNDAYS AND PUBLIC HOLIDAYS INCLUDED (SHINC). LAYTIME SHALL COUNT FROM 6 HOURS AFTER N.O.R. TENDERED "OR ALL FAST WHICHEVER IS EARLIER"
10. DEMURRAGE
SHALL BE AS ACTUAL CHARTER PARTY RATE, TERMS & CONDITIONS OF VESSEL UTILISED. DEMURRAGE TO BE DECLARED AT THE STAGE OF VESSEL NOMINATION. …."
Reliance's refinery produces a continuous stream of gasoil, at that time of only one grade, though subject to slight variation in its detailed specification from time to time. The product passes after manufacture into Reliance's own storage tanks, which are linked to a land pipeline and to dedicated berths for shipments on coastal and export vessels. As a general rule, it appears that only one vessel would berth at a time. The storage tanks have only a limited capacity. In order to maintain continuous production, Reliance had therefore to ensure that product was moved continuously out of the storage tanks, either via the pipeline for Indian domestic use or by vessel for domestic use or export. Reliance supplied gasoil primarily to the domestic market, which it had an obligation to supply in accordance with quotas imposed on it by the Indian Oil Co-ordination Committee. The Committee notified Reliance of each month's quota early in the month. Reliance attached importance to meeting its monthly obligations in respect of the quotas so notified as well as any other commitments which it had undertaken for the month in question. Reliance had received its December quota from the Committee, according to the judge's finding, "by the evening of 5 th December 2000". During December 2000, Reliance produced about 968,000 tons of gasoil, of which about 745,000 tons went to the domestic market and the rest was exported. A large part of this gasoil would have met the specification required under Reliance's contract with Vitol (in particular a requirement for no more than 0.2% sulphur).
The Nikmary was delayed for reasons which were not suggested to be Triton's fault. Triton sought and obtained from Vitol extensions of the charterparty cancelling date, on 22 nd to 29 th November and on or about 27 th November to 2 nd December. Vitol did not exercise its right to cancel the charter after those extensions expired. Vitol did no more than keep Reliance informed of the vessel's updated ETAs, and make requests to Reliance to berth the vessel immediately on her arrival. The judge found (paragraph 32) that
"Vitol did not attempt to agree a corresponding extension to the loading period in its contract with Reliance, but even if it had done so such an extension would not have been granted. Mr Rajamaran [of Reliance] explained that when a vessel arrived too late to complete loading within the agreed shipment period it was not Reliance's practice formally to extend the period, although it would often agree to provide a cargo at a time convenient to itself. The reason for that is obvious: Reliance was generally unwilling at a late stage in the programming process to incur a new obligation to deliver cargo within a specific range of dates. Thus in the present case, although Reliance was still willing at the end of November to accept the vessel for loading at a time convenient to itself, it was not willing to undertake a formal commitment to supply a further cargo in December. Whether or not it is right in these circumstances to say that the delay to the vessel was caused by Vitol's failure to obtain an amendment to its contract with Reliance, it is the case that its failure to have in place effective contractual arrangements for a cargo to be loaded within a specific range of dates immediately following the vessel's presentation in readiness to load was ultimately responsible for her failure to load sooner than she did."
The vessel arrived outside the port on 30 th November and spent some time cleaning her tanks. She then entered the port and served a notice of readiness at 2200 hours on 2 nd December. Reliance arranged a berth to which she proceeded on 3 rd December, and where, the judge found, Reliance would have loaded her with suitable gasoil, had her tanks been appropriately clean. However, inspection by Intertek Testing Services Caleb Brett ("Caleb Brett"), surveyors jointly appointed by Reliance and Vitol, led to her rejection on the ground that her tanks were not clean. She returned to anchorage, and there undertook further cleaning. On 4 th December there was a further inspection, this time by both Caleb Brett appointed by Reliance and Vitol and another firm of surveyors, Admiralty Marine Services, appointed by the vessel's agents, Interocean Shipping (India) Pvt. Ltd. ("Admiralty"). The vessel was again rejected as unclean. The judge made no positive finding that Reliance would have been prepared to load her on 4 th or 5 th December, had...
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