Union of India v Compania Naviera Aeolus S.A. (Spalmatori)

JurisdictionEngland & Wales
JudgeLord Reid,Lord Cohen,Lord Morris of Borth-y-Gest,Lord Hodson,Lord Guest
Judgment Date08 October 1962
Judgment citation (vLex)[1962] UKHL J1008-1
Date08 October 1962
CourtHouse of Lords

[1962] UKHL J1008-1

House of Lords

Lord Reid

Lord Cohen

Lord Morris of Borth-y-Gest

Lord Hodson

Lord Guest

Compania Naviera Aeolus S.A.
and
Union of India

Upon Report from the Appellate Committee, to whom was referred the Cause Compania Naviera Aeolus S.A. against Union of India, that the Committee had heard Counsel, as well on Monday the 23d, as on Tuesday the 24th, days of July last, upon the Petition and Appeal of Compania Naviera Aeolus S.A. of Panama City, in the Republic of Panama, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 16th of February 1961, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of The Union of India, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 16th day of February 1961, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice McNair, of the 22d day of February 1960, thereby set aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Reid

My Lords,

1

The Appellants are the owners of the s.s. Spalmatori. Under a charter-party of 20th February, 1957, the vessel proceeded to Tacoma in the State of Washington, U.S.A. and there loaded a cargo of 9,950 tons of wheat, belonging to the Respondents, the Union of India. The bill of lading incorporated the provisions of the charter-party and that document provided that the provisions of the Strike Clause of the well known Centrocon charter-party should apply. The decision of this appeal depends on the proper construction of that Strike Clause.

2

The vessel duly arrived at Bombay to discharge this cargo. The lay time expired at 13.56 hours on 2nd July, 1957. Discharge was still proceeding and admittedly from that time onwards the Respondents were in breach of contract and demurrage at the rate of £200 per day became payable by them. Then discharge was interrupted by a strike which lasted from 07.00 hours on 5th July to 17.00 hours on 13th July. The question in this case is whether demurrage ceased to be payable for the period of the strike. The Respondents seek a declaration that they are not liable to pay to the Appellants the sum of £1,683. 6s. 8d. being demurrage for that period.

3

I think that this case must be decided on the proper construction of the Centrocon Strike Clause taken by itself. It was not suggested that we could look at it in its original context in the Centrocon charter-party, and I find nothing in the provisions of the charter-party or bill of lading in this case which would throw any clear light on the present question.

4

The clause is a single clause not divided into paragraphs, but it has been treated, I think rightly, as consisting of four parts, and for convenience I set it out so as to shew this division.

"If the cargo cannot be loaded by reason of Riots, Civil Commotions or of a Strike or Lock-out of any class of workmen, essential to the loading of the cargo or by reason of obstructions or stoppages beyond the control of the Charterers on the Railways, or in the Docks or other loading places or if the cargo cannot be discharged by reason of Riots, Civil Commotions, or of a Strike or Lock-out of any class of workmen essential to the discharge, the time for loading or discharging, as the case may be, shall not count during the continuance of such causes.

Provided that a Strike or Lock-out of the Shippers' and/or Receivers' men shall not prevent demurrage accruing if by the use of reasonable diligence they could have obtained other suitable labour at rates current before the Strike or Lock-out.

In case of any delay by reason of the before mentioned causes, no claim for damages or demurrage, shall be made by the Charterers, Receivers of the cargo, or Owners of the Steamer.

For the purpose, however, of settling despatch rebate accounts any time lost by the steamer through any of the above causes shall be counted as time used in loading."

5

I think that the meaning of the first part is clear. It deals with periods during which no work can be done in loading or discharging by reason of one or more of the causes mentioned. It does not deal with any period during which the operation of any of these causes merely slows down the work and it does not deal with consequential delay after these causes have ceased to exist. Clearly it applies if one of these causes exists at the beginning of the lay time or comes into operation during the lay time. Then in the first event the lay time does not begin to run until these causes have ceased or in the latter event the lay time is suspended. It was argued that this provision also applies if any of these causes first comes into operation after the lay time has expired and while demurrage is accruing. I cannot so read it. The words of the clause are "the time for … discharging … shall not count". I think that must mean the stipulated time, that is, the lay time. On this I agree with the Court of Appeal. But if the words are ambiguous this seems to me a typical case for the application of a well-established rule of construction of charter-parties.

6

Counsel were agreed that the general rule was accurately stated by Scrutton, L.J. in his work on charter-parties in words which now appear in the 16th Edition at p. 353:

"When once a vessel is on demurrage no exceptions will operate to prevent demurrage continuing to be payable unless the exceptions clause is clearly worded so as to have that effect."

7

This part of the clause is certainly not clearly worded so as to have that effect, and I therefore reject this argument.

8

The second part of the clause is a proviso which in certain events limits the application of the first part. Although the requirements of the first part are satisfied—there is a strike during the lay time and it prevents any work being done—nevertheless the lay time is not to be suspended but is to continue to count if other labour could have been obtained to carry on the work. The reference to preventing demurrage accruing is not happy, but I think that the meaning is clear enough. The existence of the strike is not to prevent demurrage from beginning to accrue at the end of the stipulated lay time if other labour was available. Without the proviso demurrage would not have begun to accrue then: the first part of the clause would have prevented that and demurrage would only have begun to accrue at the end of the stipulated lay time plus the time during which the strike prevented work.

9

The substantial dispute in this case is as to the meaning of the third part of the clause. The Respondents say that it operates independently of the rest of the clause and that they clearly come within its words. There was delay. The delay was by reason of a before-mentioned cause, that is, a strike. The Appellants are owners claiming demurrage. The clause says there shall be no claim for demurrage if there has been any such delay. What more can you want? But I do not think that the case is as simple as that. The whole clause—all four parts—must be read together, and moreover the third part itself requires closer examination.

10

The first question which occurs to me on reading the clause as a whole is this. If the third part was intended to operate independently of the rest of the clause why was it sandwiched into the middle of the clause? If it was intended like the second and fourth parts, to be ancillary to the first part there is no difficulty. It is fairly obvious that the third part is not an original part of the clause but is a later addition: I cannot imagine even the least legally minded draftsman drafting the clause as a whole in its present form. We were informed that the cases shew that fifty years ago the clause was in use without this third part, but I prefer to base my conclusions on the clause as it stands now.

11

Perhaps I should make good my statement that the second and fourth parts are only ancillary to the first part. The second part is in the form of a proviso to the first part and the normal function of a proviso is to qualify what precedes it. No doubt it could do more if that was clearly to be inferred from its language, but I have already explained what I think the proviso means, and if I am right it does not in fact do more than add a qualification to the first part. I think that the same applies to the fourth part. Suppose a case where the lay time is six days and a strike interrupts the lay time for four days. The first part then provides that the lay time is not to expire until the tenth day. But suppose that in spite of the strike the work is completed in nine days. Then without the fourth part the operation of the first part would give rise to a claim for despatch rebate. The fourth part prevents that but clearly it can have no application to a case where a strike occurs after demurrage has begun to accrue.

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