When is a Trip not a Trip?

May 2016

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Gavel

The recent case SBT Star Bulk & Tankers (Germany) Gmbh & Co KG v Cosmotrade SA (The “Wehr Trave”) [2016] EWHC 583 (Comm) is likely to be a decision that would not have been anticipated by some owners. This was an appeal of an arbitration award concerning the scope of orders permitted to be given by charterers under a “one Time Charter trip”. The question considered was whether the charterparty entitled the charterers to load another cargo having discharged all its originally loaded cargoes. For the reasons explained in this article, the answer to this question was “yes”.

Facts 
The charter was on an amended NYPE 1945 form with additional typed clauses. The relevant clauses of the charter were:

  • “That the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for one Time Charter trip via via [sic] good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo, suitable for carriage in a cellular container vessel as described. Duration about 40-45 days without guarantee minimum 40 days without guarantee within below mentioned trading limits.”
  • “Vessel to be placed at the disposal of the Charterers on passing Skaw, Denmark dropping outward pilot Algeciras…”
  • “re-delivery…..on dropping last outward sea pilot one (1) safe port in Charterers’ option Mumbai/Colombo range or in Charterers’ option one (1) safe port East Coast India range, not north but including Chennai Colombo/Busan range including China not north Qingdao…”

The vessel was delivered into charter at Algeciras on 16 October 2013. Voyage orders were given by charterers to owners as follows:

  • “Loading ports rotation: Sevastopul (Ukraine) + reverting (probably Gemlik/Turkey).”
  • “Discharging ports rotation: probably will be (Jeddah + Muscat + Hamriyah + Jebel Ali + Dammam.”

The vessel loaded cargo at three ports and then proceeded on her route, discharged at one port in the Red Sea, one port in the Gulf of Oman and three ports in the Persian Gulf. The vessel berthed at her final disport in the Persian Gulf on 7 December 2013 and on the following day charterers ordered her to proceed to Sohar, Oman (the second disport) to load another cargo for delivery on the West Coast of India.

It was this final order to load in Oman which caused the dispute between the parties. It was the owners’ position that this order was not a permissible order under the terms of the charter as the contract was for “one time charter trip”. The arbitration tribunal found in favour of charterers and reached the conclusion that their orders were lawful. Owners appealed this decision.

Owners’ Arguments in the Appeal

The owners’ argued that charterers’ were entitled to load in “eastmed/blacksea”, and that the term “via” identified the range where cargo could be loaded, for a trip to discharge “redsea/pg/india/far east”. Their position was that the “trip” came to an end at the final disport in the Persian Gulf and that if it was not limited to one trip, it would have been open ended allowing charterers to employ the vessel on as many voyages with load and discharge ports within the permitted range as they liked.

Charterers’ Arguments in the Appeal

Charterers’ arguments focused on the defining characteristics of a time charter. They submitted that time charters fall within one of two categories: (i) term time charters for an agreed period; and (ii) a charter defined by a trip within a geographical range. However, for both types the key characteristic of the contract is that the vessel is under the orders and directions of the charterer for the period. Charterers relied on the observations of Popplewell J in The Wisdom C [2014] EWHC 1884 (Comm), [2015] 1 WLR 1 that “A time charter is not [a voyage charterparty]: the owner does not agree to carry goods from and to specific or nominated ports, but rather to make the vessel and her crew available to the charterer, in return for hire, as a means for the charterer to transport goods…This is as true of a trip time charter, such as the charterparty in this case, as of a term time charter. Although the length of the period of hire is limited by a trip defined within a geographical range (and sometimes, though not in this case, by a maximum duration)…”

The Decision

In reaching his decision, the Judge (Sir Bernard Eder) commented that there is no single definition of as to what constitutes a “trip” or “one trip” and that the concept of a trip time charter embraces a number of possible permutations. For example, a “trip” may be loading at A and discharging at X, or it may involve a number of loadports and/or a number of disports. Alternatively, it may mean several loading and discharging operations at different ports along a route from A to Z.

He noted that previous authorities would not be of general application and the scope of the particular “trip time charter” would depend on the specific terms agreed by the parties. In addition, he noted that the charterers’ entitlement to give directions and orders may be restricted, for example by reference to period, geographical route and number of load/disports.

When considering this specific charter, the Judge focused on whether the orders given by charterers were restricted by the terms of the charter. He reached the view that the words “one Time Charter trip” did not restrict the charterers as regards orders for loading and discharging provided that those orders were within the trading limits and the route was not inconsistent with the contractual route. His conclusion was that charterers were, in principle, entitled to call at such ports as they wished provided that the calls were within the trading limits and the route was not inconsistent with the contractual route for a voyage from Algeciras (the delivery range) to the Colombo/Busan range (the re-delivery range) via the East Mediterranean and/or the Black Sea and/or the Red Sea and/or the Persian Gulf and/or India and/or the Far East (always via the Gulf of Aden and always ending in the Colombo/Busan range). In reaching this decision, he commented that “via” meant by way of and “to” denotes the contractual route. Therefore, these terms did not restrict the load and disports.

The owners’ appeal was dismissed on the basis that the further order to load was a legitimate on the basis that it was within the trading limits and consistent with the contractual route.

Comment

Whist it is clear from this decision that it is not possible to define precisely what is meant by the term “time charter trip”, it emphasises the need to ensure that the wording of any recap and resulting charter is reflective of the parties’ intentions. For example, if the owner only intends to charter the vessel for one series of loadports and one series of disports along a particular route, this should be expressly and clearly stated.

  

Article by:

Heloise Clifford, Syndicate Manager.
Heloise.Clifford@simsl.com