Asbatankvoy - an Insight into the Interpretation of Clause 4(c)

The recent judgment in Antiparos Ene v SK Shipping Co Ltd and Others (The “Antiparos”)[1] , concerned a dispute as to whether owners were entitled under clause 4(c) of the Asbatankvoy Form to recover extra costs incurred as a direct consequence of charterers’ change in load port nomination, where those extra costs arose in relation to bunkering arrangements.

On 9 March 2007, the owners of the MT “Antiparos”  fixed the vessel on a voyage from the Arabian Gulf to either South Korea or Japan (at charterers’ option) on the Asbatankvoy Form. Clause 4 of the form was headed “Naming Loading and Discharge Ports” and provided under sub-clause (c) that “any extra expense incurred in connection with any change in loading or discharging ports (so named) shall be paid for by the charterer and any time thereby lost to the vessel shall count as used lay-time”. 

The charterers ordered the vessel to proceed to the Arabian Gulf for loading at Ras Laffan and Mina Al-Ahmadi. The owners made arrangements for bunkers to be taken onboard for the voyage at Mina Al-Ahmadi at US$ 301.00 per mt and advised the charterers accordingly. 

Some days later, the charterers informed that they might have to change the nomination and in the end ordered the vessel to proceed to first Ras Laffan and then Ras Tanura for loading. The owners advised that they had already placed a bunker stem at Mina Al-Ahmadi and held the charterers liable for any additional costs they would have to incur due to this change, pursuant to Clause 4(c) of the charterparty. 

The owners managed to find bunkers at Ras Tanura, but at US$ 355.00 per mt, making  bunkers US$ 217,721.52 more expensive overall than at Mina Al-Ahmadi. Owners claimed for this difference under Clause 4(c). 

The charterers attempted to argue that (a) the mere fact that Clause 4 laid down a mechanism for additional expenses incurred during a change of nomination impliedly allowed charterers the option to change a named port without being in breach and (b) that the term “expenses” did not include a difference in bunker prices but was limited to costs incurred by way of deviation due to a revised nomination.  

Andrew Smith J rejected both arguments and judged that (a) there was no clear basis on which to allow an implied option to charterers for changing a nomination and (b) that, on the true construction of Clause 4(c), the additional costs incurred in having to purchase the more expensive bunkers would be regarded as an expense under the said clause. The court thus ruled in favour of the owners and their claim was allowed. 

Although this case establishes authority on the construction and interpretation of Clause 4(c) of the Asbatankvoy Form, it might also offer some ground, in obiter, to argue that a prejudice to owners in having to stem more expensive bunkers as a direct result of charterers’ change in nomination is also recoverable in damages under other forms of voyage charterparty. 

The court makes it clear that the owners in this particular matter had no other right to damages for charterers’ breach because Clause 4(c) already laid down the mechanism for the measure of recoverable expenses that arise as a consequence of a change in nomination. In other words, Clause 4(c) both defines and limits these damages. There is still therefore the question of whether an owner would be able to recover such expenses in the absence of Clause 4(c). While Mr Justice Smith neither mentions any other charterparty forms nor does he generalise his conclusions, he does nevertheless consider that, on the one hand, the charterers were in breach by changing nomination and, on the other, that the difference in bunker price was within the contemplation of the parties at the inception of the contract. 

This formula fits quite neatly with the common law test of what damages can be awarded for a breach of contract and in a similar situation where two parties have fixed a voyage on a form other than the Asbatankvoy, it could still be considered by virtue of these comments that such expenses would fall within the scope of recoverable damages. 

Overall, The “Antiparos” case might, not on its face, appear to be of much interest to owners and charterers who do not fix any business on the Asbatankboy; after all, the judgment itself starts off by expressing that the issue before the court is the analysis and interpretation of Clause 4(c). However, it may possibly be utilised in a more broad context on cases that deal with other forms of voyage fixtures as one could find enough premise in the judge’s obiter comments to attempt a generalisation of the court’s conclusions outside the scope of the Asbatankvoy and into the realm of all voyage charters. 

[1] [2008] EWHC 1139 (Comm)