Suek AG v Glencore International AG (The “Hang Ta”) [2011] EWHC 1361 (Comm)
This case looked at the impact of competing causes of delay to a vessel on the allocation of risk. Notably the contract in question was not a charterparty but a CIF contract of sale. The claimant sellers, Suek AG, and the defendant buyers, Glencore International, had essentially agreed the facts. The dispute in question turned on the interpretation of the following clause:
“Clause 7.13: Upon arrival at the Discharge Berth the Master of the Carrying Vessel shall give a Notice of Readiness to discharge at any time during the day or night SSHINC whether in Free Pratique or not, and whether customs cleared or not, by telex radio or email. Except for Wilhelmhaven [sic] where notice of readiness to be tendered within office hours Mon-Fri 8am – 5pm and Sat 8am – Noon. In case the berth is occupied on arrival, vessel can tender NOR at the usual waiting place ATDN SSHINC, whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.”
And in particular, the interpretation of the 3rd sentence of the clause, termed by Burton J, “The Clause 7.13 Exception”.
The sale contract stated that the seller would provide a cargo of unclean coal to the buyer in six shipments on a CIF basis. On the particular voyage, when the nominated vessel, the “Hang Ta”, arrived at the discharge port of Amsterdam, the berth was occupied. The Master tendered NOR at the usual waiting place. It was common ground that the vessel was also prevented from entering the berth by virtue of the tidal conditions.
Having in mind that clause 7.13 allowed NOR to be given at the usual waiting place, the issue for Burton J was where would responsibility for delay lie? On the buyer, who did not have the berth available, or on the seller, whose vessel could not access the berth?
The buyers argued, by reference to the House of Lords decision in The “Kyzikos” ([1989] 1 Lloyd’s Rep 1), a case involving a berth charterparty, that the second part of “The Clause 7.13 Exception” governs the first, namely that the Exception should apply only where the unavailability of the berth is the sole reason why the vessel cannot proceed to the berth. In The “Kyzikos”, the House of Lords discussed the meaning of the shorthand phrase ‘WIBON’ and determined that when written out in full, it had the meaning, “whether in berth (a berth being available) or not in berth (a berth not being available)”, thus: “the phrase ‘whether in berth or not’ should be interpreted as applying only to cases where a berth in not available and not also to cases where a berth is available but is unreachable by reason of bad weather.” (Page 8 col. 1). Therefore, it is only where the delay is caused by the absence of an available berth that NOR can be served.
As such, the buyers’ position was that since the berth was not available, because it was both occupied and inaccessible as a consequence of the tidal conditions, NOR was invalid and responsibility for the delay was the sellers’. Their view was that the contract meant that the seller had a primary obligation to carry the cargo to the berth and as such “The Clause 7.13 Exception” should be read restrictively.
In contrast the sellers took the position that the clause was straightforward and should be read as such. Counsel for the sellers pointed out that this was not a berth charterparty and the obligation under the contract was to nominate a vessel and to carry the cargo to the discharge port. Not, as alleged by the buyer, to carry the cargo to the berth. Thus NOR could be tendered at the usual waiting place if the berth was unavailable.
The buyers also contended that even if their interpretation of the Exception was rejected, that NOR could be tendered only if the sole cause of delay was berth unavailability, this could result in prejudice to them. For example, if both congestion and bad weather were operative and the Master was entitled to tender NOR, when the berth became available, but the weather conditions did not change until some time later, the laytime clock would run and the buyer would lose time unfairly.
The sellers’ view was that the clause amply, and fairly, provided for every eventuality. Where the berth was inaccessible due to the weather, the NOR cannot be tendered; where the berth is unavailable, NOR can be tendered and the delay falls to the buyer; where the berth is both inaccessible and unavailable and NOR can be tendered, if the weather lifts before the berth becomes available, the buyer is no worse off; and if congestion disperses before the weather lifts, the buyers can make use of the time to prepare for the arrival of the vessel.
In the event, Burton J preferred the arguments of the seller. The clause was, he concluded, capable of being read without rewriting and there should be no meaning implied to the clause where it was already capable of interpretation. The Judge was not willing to accept the argument put forward by the buyer that “The Clause 7.13 Exception” should only apply where unavailability of the berth was the sole operative cause. He further held that while he accepted there may be some inconvenience to the buyer where both causes were operative, the clause as drafted provided no favour, nor disadvantage, to either party, and as such he concluded (at para 15): “ …that, notwithstanding the presence of tidal conditions also preventing access to the berth, the unavailability of that berth entitled the master of the Hang Ta to give NOR.”
The case is important not only because of the distinction to be made between sales contracts and voyage charters for the purpose of NOR but, moreover, the general principle that contracts, whatever they may relate to, need to be construed on their terms.
