Double Trouble for Owners – a Cancelled Charter and a Damages Claim

A recent Court of Appeal decision has confirmed that an owner has an absolute obligation to commence the approach voyage by the required time even where there is no expected time of arrival or readiness to load in the charterparty. A failure to commence the approach voyage will ordinarily be a breach of the voyage charterparty allowing for damages and the ability to cancel the charter.

“Pacific Voyager”: The Facts

The voyage charterparty required the vessel to perform the charter service with utmost despatch and to proceed to the load port. Whilst the charterparty did not contain an Expected Ready to Load (“ERL”) date or Estimated Time of Arrival (“ETA”), it did contain details of the anticipated timetable for completion of the voyage under the previous charter. This timetable included the expected date of discharge of the cargo under the previous charter at Antifer on the basis “IAGW / WP” (interpreted by the court as “on the basis if all goes well / weather permitting”). There was also a cancelling clause in the charterparty.

On her way to the discharge port under the previous charter, the vessel came into contact with a submerged object in the Suez Canal. This caused significant damage, which would require months of repairs. The charterers cancelled the charter in accordance with the cancelling clause, but also claimed damages due to owners failing to commence the approach voyage to the load port.

The Decision

Under English law, where there is an ERL and/or ETA date in the voyage charterparty and it contains a clause requiring that the vessel proceeds with utmost despatch/all convenient speed, there is an absolute obligation on the owner to start the approach voyage by a date so as to reasonably ensure the vessel arrives by the ERL/ETA date.

This case does not change that. However, it is now apparent that even where there is no ERL/ETA date in the charter, there will still be an absolute obligation on the owner to commence the approach voyage. A failure to do so will be a breach allowing for damages. This obligation attaches at a particular point in time and where there is no express date given in the charterparty then it will either start, depending on the facts, forthwith, or within a reasonable period of the date of the charter.

In this case, this meant such time as it was reasonable to suppose the vessel would depart Antifer for Rotterdam (the load port under the charter in question) after a reasonable period of discharge.

Charterparty Drafting: Who will bear the risk of delays prior to the approach voyage?

This decision, which will be a welcome one for charterers, allocates the risks of delay to the owner. However, given that the decision may be appealed, it is still in charterers’ interests to have ERL/ETA dates included in the charterparty.

An owner will want to resist the inclusion of ERL/ETA dates in a voyage charter or indeed any other dates that could be deemed equivalent. However, even in the absence of such information there will still be an obligation to commence the approach voyage “forthwith” or “within a reasonable period” of the date of the charter, assuming this decision is not successfully appealed.

It is also worth pointing out that, while an owner may wish to weaken any despatch obligation to proceed to the load port, the incident which caused the delay to the vessel in the Pacific Voyager occurred before the approach voyage. Therefore, the owner was not protected by an excepted perils clause, which would have required an amendment to cover delays occurring prior to the approach voyage.

Finally, it was made clear that if an owner wants to make the beginning of the chartered service contingent on the conclusion of the previous voyage then clear words will be required. “IAGW” and “WP” will not be sufficient. In this regard, the latest Gencon revision uses the following wording in clause 1:

The vessel shall, as soon as her prior commitments have been completed, proceed to the loading port(s)….and there load a full and complete cargo….

However, this wording may only protect owners in relation to prior commitments existing at the time the charter is made and is yet to be tested in the courts.

If you wish to discuss any of the issues arising out of this case then please get in touch with your usual FD&D contact.

Read the full judgment CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd (“Pacific Voyager”) [2018] EWCA Civ 2413 here.

Author: Helen Barden
Professional Support Lawyer (FD&D)