Port Authority Interference - Off-Hire Event?

August 2000

(Sea Venture Volume 19)

The question of whether interference by Port Authorities is an ''off-hire'' event under the NYPE time charter party form was considered in ''SeaVenture'' Vol.17 in the light of the High Court decision in the ''Laconian Confidence''¹.

Similar considerations arose in relation to a voyage concerning the vessel ''Jalagouri''. The vessel was chartered on the 1946 NYPE form as amended for the carriage of general cargo from Japan to India. On route to the discharge port, the vessel suffered engine damage and collided with a breakwater. Following drydocking, the vessel proceeded to Kandla and discharge of sound cargo was completed in three days. However it was then found that a consignment of car components had been damaged as a result of the ingress of seawater in consequence of the collision with the breakwater.

The Port Authority suspended discharge because it was not prepared to allow the damaged cargo to be discharged unless it received a guarantee for the cost of storing or removing the damaged cargo from the port area. The vessel was immediately ordered off berth. Eventually security was provided and the vessel re-berthed and completed discharge. The Charterers contended that the vessel was off-hire for the 12 days during which the ship was off-berth and deducted approximately US$ 68,000 from hire. Owners submitted the case to arbitration.

In addition to the standard clauses 8 and 15 in the NYPE form, two further clauses were of relevance:-

Clause 53 provided that, should the vessel be seized or detained or arrested or delayed by any authority during the currency of the charter party, all time lost would be treated as off-hire.

Clause 72 provided that, should the vessel be detained or threatened to be detained by reason of arrest, the Owners would provide security to release the vessel or to prevent detention although the Charterers had discretion to arrange such security for the Owners with the Owners providing an indemnity in favour of the Charterers as a result of making such arrangements.

The arbitrators found in favour of the Owners, holding that the ship was not detained and that therefore clause 72 did not apply. The ship was delayed and therefore clause 53 did apply in principle. However, the arbitrators held that the delay was caused by the Charterers' omission or default for not providing the security because that was an expense of discharge which they were required to meet by virtue of clause 8 (Charterers to load, stow and trim tally at both ends secure and discharge the cargo at their own expense). Accordingly, the vessel was not off-hire under clause 53 and therefore the Charterers' deduction was unjustified.

On appeal to the High Court, Rix J² allowed the appeal deciding that the vessel was in fact detained so that the Owners were required to provide the security and the vessel was off-hire under Clause 53. Any delay was not caused by the Charterers' omission or default because Clause 8 did not require Charterers to provide security as an expense of discharge. The Owners appealed to the Court of Appeal.

The appeal was dismissed³ on the basis that the Charterers were not in breach of Clause 8 for failing to provide the security required by the Port Authority and that the vessel was detained within the meaning of Clause 72 and/or delayed and was therefore off-hire for the disputed period under the terms of Clause 53. The Charterers had required the vessel to discharge and not to sail away to some other port. There was a physical/geographical constraint of the vessel's movements in relation to her service under the charter and a constraint upon her movements in the Charterer's service. The order by the Authorities, which could have been backed up by force or by the imposition of sanctions, might be a physical constraint in itself and, in any event, the definition of detention included a legal restraint.

¹[1997] 1 Lloyd's Rep 139
²[1999] 1 Lloyd's Rep 903
³[2000] 1 Lloyd's Rep 515