Voyage Charter - Entitlement to Lump Sum Freight Based on Loading "Full And Complete Cargo"

Freight is then calculated on the basis of that "full and complete cargo".

In a recent case the Commercial Court had to consider how much freight is earned by owners and payable by charterers where the vessel was unable to load a full and complete cargo in circumstances where loading was interrupted due to bad weather and the charterers ordered the vessel to sail to the discharge port, part loaded, rather than wait for the weather to abate in order to complete loading.

The dispute was referred to London arbitration and although several other issues were raised before the tribunal at first instance, the sole ground of appeal by charterers to the Commercial Court was whether, in those circumstances, owners were in breach of their obligations under clause 1 of the Asbatankvoy form because a full and complete cargo had not been loaded, with the result that charterers were only obliged to pay freight on the quantity actually loaded.

The Court accepted the tribunal's finding of fact that the decision to terminate loading had been taken by the mooring master on behalf of the terminal, that this decision was based solely on the weather and that the terminal's refusal to allow the vessel to re-berth and resume loading for several days (which prompted the charterers to order the vessel to sail for the discharge port) was also based solely on the weather. (This is important to a proper understanding of the decision as the charterers had alleged that the vessel was ordered off the terminal due to alleged defects of the vessel herself.)

The Court found that Clause 1 of the Asbatankvoy form imposed a mutual obligation on the owners to receive on board and on the charterers to supply a full and complete cargo. There was no absolute obligation on owners to load; their obligation was contingent on and could not be performed without performance by the charterers of their obligation to ship or tender for shipment a full and complete cargo. The vessel did not load a full and complete cargo because the charterers chose not to wait until loading could be resumed but chose instead to order the vessel to sail for the discharge port when only part full. There was no breach of contract by the owners in failing to load cargo which was not tendered to them for shipment. Accordingly, the owners were entitled to the full lump sum freight on the contractual quantity of cargo intended to be loaded.

The case does not create any new law but serves as a useful summary of the way in which a widely used clause in an industry standard charter form is intended to work in practice. It is also a reminder to charterers that clear evidence of a breach of contract by owners will be required in order to undermine the owners’ right to receive full freight.