Triton Navigation Ltd v Vitol S.A.; the Nikmary
| Jurisdiction | England & Wales |
| Judge | Moore-Bick J,Simon Brown,Mummery,Mance L JJ |
| Judgment Date | 02 December 2003 |
| Neutral Citation | [2003] EWHC 46 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 02 December 2003 |
[2003] EWHC 46 (Comm)
Moore-Bick J; Simon Brown, Mummery and Mance L JJ.
Queen's Bench Division (Commercial Court)
Court of Appeal (Civil Division).
Shipping — Laytime — Demurrage — Notice of readiness — Inspection and cleaning of tanks — Charterer's obligation to provide cargo available for loading — Charterer did not exercise right to cancel charter for presentation after agreed cancelling date — Delay at load port — Whether charterer liable for demurrage — Whether delay caused by vessel getting in to berth for reason over which charterer had no control — Whether contractual exclusion of laytime and demurrage operated where reason for delay after vessel ready to load was charterer's own breach — Whether delay caused by shipowner's fault — Whether charterer in breach of absolute duty to provide cargo to load vessel ready to load during laydays.
This was an appeal against that part of a judgment given by Moore-Bick J 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 December 2000 and 2 January 2001.
The Nikmary was chartered by the respondent (“Triton”) to Vitol on 3 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. 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 Ltd. Reliance produced a continuous stream of gasoil supplied primarily to the Indian domestic market by pipeline. Reliance had an obligation to supply the domestic market in accordance with quotas imposed by the Indian authorities. 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 by vessel. It appeared that in general only one vessel would berth at a time to load gasoil.
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. Vitol did not exercise its right to cancel the charter after those extensions expired. Vitol kept Reliance informed of the vessel's updated ETAs, and make requests to Reliance to berth the vessel immediately on her arrival. The vessel arrived outside the port on 30 November and spent some time cleaning her tanks. She then entered the port and served a notice of readiness at 2200 hours on 2 December. Reliance arranged a berth to which she proceeded on 3 December, and where, the judge found, Reliance would have loaded her with suitable gasoil, had her tanks been appropriately clean. However, inspection by surveyors 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 December there was a further inspection, but the vessel was again rejected as unclean. Finally, on 5 December, after yet further cleaning, the vessel was accepted. Following the third inspection, a (valid) notice of readiness was given at 19.30 hours on 5 December 2000. Reliance had by then received its December quota for domestic supply and was unwilling to provide a cargo for the Nikmary until after it had met all its commitments under that quota and in respect of contracts entered into for December shipments, and Reliance so informed Vitol. The vessel berthed on 2 January 2001 and loading commenced and was completed on 3 January.
Triton's case was that laytime ran from 01.30 hours on 6 December 2000 (six hours after the notice of readiness given on 5 December 2000); that the laytime of 84 hours expired at 13.30 hours on 9 December 2000; and that the vessel was accordingly on demurrage for 25 days, 8 hours and 45 minutes until 22.15 hours on 3 January 2001 (the time of supply of cargo documents following completion of loading). The judge awarded demurrage accordingly. Vitol appealed contending that time did not run for the purposes of laytime or demurrage until connection of hoses on 3 January 2001, so that no load-port demurrage was incurred. Vitol relied on three separate grounds to postpone the commencement of laytime: (i) the penultimate sentence of cl. 6 of the charter (notice of readiness) which provided that delay caused to the vessel getting in to berth after giving notice of readiness for any reason over which charterers had no control was not to count as used laytime or demurrage; (ii) the provisions of clause 30(c)(v) (inspection/cleaning) which provided for the owner to indemnify the charterer for all direct and/or indirect costs and consequences as a result of the vessel not being clean to the satisfaction of a jointly appointed inspector and that, should the charter not be cancelled, all time until connection of hoses, after the vessel has been passed as clean, should not count as laytime, or if on demurrage, as time on demurrage; and (iii) the common law principle whereby laytime and demurrage were interrupted where delay was caused by shipowners' fault. Triton argued that the delay arose from Vitol's failure to provide cargo available for loading.
Held, dismissing the appeal:
1. The obstacle to performance of the charter met by Vitol could not be categorised as one relating to loading, rather than provision of cargo; nor was the case one where the physical congestion of vessels occupying or waiting for berths prevented a vessel from reaching a loading berth. The problem faced by Vitol was not a problem in obtaining access to or loading immediately accessible cargo. The reason why the Nikmary was not permitted to berth was a contractual reason, namely that, in so far as Vitol had any continuing contractual right to cargo at all, it was one which postponed Vitol to all those other buyers to whom Reliance had or incurred December commitments. In the circumstances Vitol could not assert that it had satisfied its absolute duty to provide cargo to load a vessel which was ready to load during laydays commencing on 5 December 2000. Vitol had no cargo available for loading until early January 2001.
2. The court rejected Vitol's alternative submission that its duty was no more than a duty to provide cargo within a reasonable time, and that Vitol satisfied any such duty by providing cargo for loading at the time when the vessel was actually loaded in early January 2001. The concept of a reasonable time for provision of a berth and cargo did not extend to allow cargo to be provided when it was too late to load it within the stipulated laydays. As the judge concluded, the vessel's unreadiness for loading until late on 5 December involved no breach of charter. Vitol had a right to cancel the charter, for presentation after the agreed cancelling date, but it chose not to exercise that right. Once Vitol decided to maintain its charter from Triton in force, it continued to have the normal obligations under it regarding provision of cargo and the timing of such provision. It was for Vitol to ensure that it had appropriate back-to-back arrangements in force with both its suppliers, Reliance, and any sub-buyers.
3. Clause 6 was a standard exceptions clause, in terms which could not be read as embracing Vitol's duty to provide a cargo, and it therefore offered Vitol no protection in respect of its failure to have cargo ready for loading at any time between 6 December 2000 and 2 January 2001. Even in respect of loading, cl. 6 only assisted in the case of delay caused to the vessel getting into berth “for any reason over which charterer has no control”. Vitol's contractual arrangements with Reliance were clearly within Vitol's control. Delay because Vitol's only arrangement was for loading when Reliance became willing to load, or after Reliance had met its other December commitments, could not be delay caused for a reason over which Vitol had no control.
4. The judge excluded the application of cl. 30(c)(v) on the basis that on the facts there was no jointly appointed inspector, only a joint inspection by two separately appointed inspectors, but in any event, despite its unqualified language, cl. 30(c)(v) could not extend to circumstances of delay caused by a charterer's failure to provide cargo ready for loading. The parties could not have intended to exclude the running of laytime and demurrage even though the actual reason for any delay after the vessel became ready to load was charterer's own breach of charter. Even if cl. 30(c)(v) could prevent laytime and demurrage running Triton would have an equivalent claim for breach by Vitol of its duty to provide cargo available for loading.
5. The judge was right that there was nothing which could properly be regarded as either a breach of contract or relevant fault on the part of the shipowner, and therefore to reject each of the bases on which Vitol submitted that laytime and demurrage did not run.
The following cases were referred to in the judgments:
Ardan Steamship Co Ltd v Andrew Weir & CoELR [1905] AC 501.
Brightman (HA) & Co v Bunge y Born Limitada SociedadELR [1925] AC 799.
Budgett & Co v Binnington & CoELR [1891] 1 QB 35.
Gem Shipping Co of Monrovia v Babanaft (Lebanon) Sarl (The Fontevivo)UNK [1975] 1 Ll Rep 339.
Grant & Co v Coverdale Todd & CoELR (1884) 9 App Cas 470.
Nereide SpA di Navigazione v Bulk Oil International Ltd (The Laura Prima)UNK [1982] 1 Ll Rep 1.
Panaghis Vergottis (Owners of) v William Cory & Son LtdELR [1926] 2 KB 344.
Postlethwaite v FreelandELR (1880) 5 App Cas 599.
Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Co for Agricultural Products (The Aello)ELR [1958] 2 QB 385 (CA); [1961] AC 135 (HL).
SA Marocaine de l'Industrie du Raffinage v Notos Maritime Corporation (The Notos)UNK...
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