July 2001
An Aframax tanker was chartered on Shelltime 4 "minimum 15/maximum 30 days in Charterers’ option". The vessel was delivered on 14 November 1996 and was therefore due for redelivery on 14 December 1996. The actual redelivery date was 7 March 1997.
In London Arbitration the owners’ claim was for damages representing hire for the period from the due date of redelivery to the actual date of redelivery. Allowing 2 days off-hire, the period was calculated as 80 days for which the owners claimed hire at the prevailing market rate. Owners relied on The Johnny, The Dionne and The Black Falcon* as authorities for their claim.
The charterparty rate was $10,000 per day. For the subsequent period, the owners claimed a rate of at least $15,500 per day, representing the average between the spot charter rate and short-term charter rate for the period, but argued for a figure closer to $17,700 (the spot market rate) on the basis that the vessel usually traded on the spot market.
The charterers argued that the owners were not entitled to the full 80 days because they would not have traded for the whole of that period. They also argued that the appropriate market rate was $ 13,000, taking into account the vessel’s age, condition and usual trade.
As a final issue, the charters also claimed that they need only pay the charterparty rate for part of the excess employment on the basis that for a period of 10 days the vessel was on its final voyage within the terms of Clause 19 of the charterparty, which provides:
"…
If at the time this charter would otherwise terminate in accordance with Clause 4 the vessel is on a ballast voyage to a port of redelivery or is upon a laden voyage, Charterers shall continue to have the use of the vessel at the same rate and conditions as stated herein for as long as necessary to complete such ballast voyage, or to complete such laden voyage and return to a port of redelivery as provided by this charter, as the case may be.
…"
The charterers were trying to argue that clause 19 allowed them to pay hire at the charterparty rate for the 10 day period on the basis that this was length of time that the vessel would have taken to travel from Port Sudan to redelivery at Fujairah.
It was held:
1. The Black Falcon and The Dionne both supported the owners’ claim. They were entitled to market rate for the period from the due date of redelivery for a period of 80 days. To allow the charterers’ argument that the vessel would not have been chartered for the full 80 day period would be to allow them the use of the vessel for exactly that period but at less than the market rate. The Johnny was authority that in determining the applicable rate, one must compare like with like. The rate allowed was $13, 000 baring in mind the age and condition of the vessel and the arbitrators’ view that it was most often chartered on the short-term market.
2. As to the charterers’ argument that for a 10 day period of the excess employment clause 19 would give them the benefit of paying the lower contractual rate, this was disallowed. First, it was hard to see how the voyage could be construed as a final voyage when between leaving Port Sudan and redelivery at Fujairah the vessel stopped at both Aden and Minah al Fahal to load cargo before eventually returning to Fujairah. Second, the orders to take that voyage were given long after the charterparty had expired and, as such, without any expectation that the voyage itself could be completed prior to expiry. The provisions of clause 19 gave protection only in circumstances where there was a reasonable expectation that the final voyage would be completed within the period of the charter. **
London Arbitration LMLN 557 15.3.2001
*The Johnny [1977] 2 Lloyd’s Rep 1, The Dionne [1975] 1 Lloyd’s Rep 115 and The Black Falcon [1991] 1 Lloyd’s Rep 77.
**The issue of a legitimate final voyage for the purposes of Clause 19 of Shelltime 4 was also considered in Marimpex Mineraloel -Handelsgesellschaft MBH &Co KB and ors v Compagnie de Gestion et D’Exploitation Ltd [2000] All ER (D) 1523. Click here to see a report of that case.
