Voyage Charter – Demurrage: Interpretation of the Phrase ''Any Other Causes Whatsoever Beyond the Control of the Merchant''

August 2000

(Sea Venture Volume 19)

In the Apostolis (No. 2)¹, a cargo of raw cotton bales was carried under a booking note between the charterers and owners of the vessel, providing that the merchant was to tender and load the goods at the rate of not less than 400 tonnes per weather working day, and further that 'Strikes lockouts…or any other causes whatsoever beyond the control of the merchant shall always be excepted, unless the vessel is already on demurrage. The cost of loading, stowing and discharging the goods shall be borne by the merchant.'

After part of the cargo had been loaded, a fire broke out, which destroyed or damaged the loaded cargo. General average was declared. The damaged cargo was discharged and further cargo was loaded, causing considerable delay. After the vessel had left the load port it was agreed between the parties that the cargo-owners ('merchants') should be substituted for the charterers under the booking note and that freight was payable on the whole cargo, including that damaged by fire and discharged.

The cargo owners sought to resist the owners' claim for loadport demurrage by arguing that the cause of the delay, namely the fire, was ''beyond the control of the merchant.'' The cargo-owners also argued that as it had been agreed to pay freight on the full cargo, extra laytime should be allowed for discharging the damaged cargo and loading new cargo.

The Commercial Court held:

1. It was more likely than not that a stevedore's cigarette caused the fire. Although the provision in the booking note relating to the loading rate was there to calculate laytime, that did not prevent it providing for responsibility for loading and stowage. Responsibility was thereby transferred to the merchant for carrying out loading and stowage with reasonable care. The mere fact however that the cargo owners may be contractually liable for the default of stevedores did not mean that acts of the stevedores were within the control of the cargo-owners. The only way in which it would be possible for cargo-owners to stop illicit smoking would be for them to have an employee patrolling the ship and the dock during loading. There was no evidence here that the cargo-owners had any presence at the port, other than their agents, and therefore the fire was beyond the cargo-owners' control. Accordingly the exceptions clause excused their liability for loadport demurrage claimed as a result of the outbreak of the fire.

2. As to the cargo owners' second argument, it was held that because of the method of calculating laytime, it was impossible to calculate the allowable laytime until loading was complete. At that stage, only the cargo that was loaded and intended to be carried was relevant. If the cargo had to be discharged for a reason which was not beyond the control of the merchant, there was no reason why additional laytime should be allowed for cargo loaded and discharged before loading was complete.

Although in this case the loaded cargo was discharged for a reason beyond the merchant's control, the subsequent agreement between the parties to pay freight on the entire cargo specifically stated that accrued rights and liabilities were not affected. Since by the date of the agreement the vessel had already left the loadport, the demurrage already accrued could not be affected by the subsequent agreement.

¹[1999] 2 Lloyd's Rep 292