In Minerva Navigation Inc v Oceana Shipping AG (the “Athena”) the Commercial Court upheld the appeal by owners against an arbitration decision which concluded that the vessel was off-hire under an amended clause 15 of the NYPE 1946 form. The fact that clause 15 is a “net loss of time” off-hire clause is well-established. However, this decision has confirmed that charterers need to demonstrate that there was, in fact, a net loss of time to the chartered service in order to benefit from the clause, as opposed to a mere loss of time in performance of the services immediately required of the vessel.
Background facts
The vessel had loaded a cargo of wheat at Novorossiysk for carriage to Syria but the cargo was rejected at the discharge port. The charterers ordered the owners to discharge at
Benghazi, Libya, but because of delays while the bills of lading were re-issued, the vessel did not proceed directly to the new discharge port and instead drifted some 50 miles off Libya. In total the vessel drifted for a period of around 11 days in international waters until the bills of lading were reissued to allow discharge in Libya. The vessel then proceeded to Benghazi for discharge.
The vessel had been chartered on an amended NYPE 1946 charterparty. Clause 8 required the captain to prosecute the voyage with the utmost despatch, and stated that the captain was under the orders and directions of charterers as regards employment and agency. The off-hire provision provided (clause 15):
“.... in the event of loss of time from . . . default of master . . . or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost . . . and all extra expenses directly incurred including bunkers consumed during period of suspended hire shall be for Owners' account . . .”
(emphasis supplied)
Charterers claimed the vessel was off-hire for the drifting period outside Libyan waters because owners had not performed the service then required of the vessel – to proceed to the discharge port. Owners argued that because of the bill of lading issue there had been no net loss of time as the vessel would not, in any event, have berthed at Benghazi any earlier than, in fact, it did.
Arbitration
By a majority the arbitrators agreed with charterers that at the start of the drifting period the vessel was obliged to continue to proceed to Benghazi, but wrongfully failed to do so until the end of the drifting period. Their view was that the relevant test was, following the “Berge Sund” [1993] 2 Lloyd’s Rep. 453; whether there was an “immediate loss of time” in relation to the service then required. That is, all that charterers needed to demonstrate was:
1. that there was a default on the part of the master; and
2. that in consequence, there was an immediate loss of time
In their view, clause 15 was not concerned with the time the vessel would have waited at Benghazi before berthing.
They did, though, dismiss charterers’ alternative claim for damages for breach of owners’ obligation of utmost despatch under clause 8 because there was no overall loss of time.
Appeal
The question on appeal was:
“Whether under clause 15 of the NYPE charterparty (and of the present Charterparty) the Vessel is off-hire for a particular period merely because the Vessel is not efficient for the services then required during that period, or whether the Charterers have to further show a net loss of time resulting thereby.”
After a review of the authorities – including Hogarth v Miller, the “Apollo”, the “Pythia”, the “Berge Sund”, the ”Ira”, and the” TS Singapore” – Mr Justice Walker decided that:
(i) clause 15 (as it applied in this case, since it is always necessary to consider the specific wording of the off-hire clause in every case) permitted charterers to deduct time for the duration of the off-hire event, but only to the extent that there was a net loss of time to the chartered service, and
(ii) for this purpose it is not sufficient for charterers merely to show that, as regards the service immediately required, there was a net loss of time.
Therefore, the vessel remained on-hire.
It is understood that charterers were given leave to appeal to the Court of Appeal
The October Court of Appeal decision in this case can be read at http://www.steamshipmutual.com/publications/Articles/TheAthena1113.htm
