Antiparos ENE v (1) SK Shipping Co. Ltd. (2) SK Holdings Co. Ltd. (3) SK Energy Co. Ltd. [2008] EWHC 1139 (Comm)

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
[2008] EWHC 1139 (Comm)Case No Case No: 2007 FOLIO 1331Venue Royal Courts of Justice, Strand. London. WC2A 2LL
Between
Antiparos ENEClaimant(1) SK Shipping Co. Ltd. (2) SK Holdings Co. Ltd. (3) SK Energy Co. Ltd.Defendants
Before
Mr Justice Andrew SmithAndrew Baker QC and Julian Kenny (instructed by Ince & Co.) for the ClaimantLuke Parsons QC and Guy Blackwood (instructed by DLA Piper UK. LLP) for the DefendantsHearing dates: 1 May 2008
[1]MR JUSTICE ANDREW SMITH: This case is about the interpretation and effect of clause 4(c) of the Asbatankvoy form of charterparty. Clause 4 is headed "Naming Loading and Discharge Ports" (although the headings in an Asbatankvoy charter do not affect its construction). Clause 4(a) provides that the charterer shall name the loading port(s) "at least twenty-four (24) hours prior to the Vessel's readiness to sail from the last previous port of discharge, or from bunkering port for the voyage, or upon signing this Charter if the Vessel has already sailed ...". Clause 4(b) deals with nominating the discharge port(s). Clause 4(c) provides, "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".[2]The claimant is the Owner of the vessel MT Antiparos. I shall refer to the defendants, who are all members of a Korean group of companies, simply as the Charterer. The charter was made with the second defendant or "its guaranteed nominee" and after the charter had been concluded the second defendant nominated the first defendant as charterer but remained liable to the Owner as a guarantor. As a result of a corporate reorganisation the second and third defendants are jointly and severally liable in respect of the second defendant's obligations.[3]The charter was made on 9 March 2007 and is recorded in a recap telex of that date. The Owners agreed to let and the Charterer agreed to hire the vessel on Asbatankvoy terms for a single voyage from the Arabian Gulf to South Korea or Japan. The freight was specified by reference to the World Tanker Nominal Freight Scale (usually known as "Worldscale"). The recap telex specified "load: 1/2/3SP(S) in AG", that is to say the load ports were specified as up to three safe ports in the Arabian Gulf. It provided for discharge at up to two safe ports in the Korean/Japan range. The laycan was 28 to 29 March 2007 and was to be narrowed to one of those days by 18.00 hours on 16 March 2007.[4]At the time when the charter was made, the vessel was discharging at Daesan in South Korea. She left Daesan on around 10 March 2007 bound for Fujairah with an estimated time of arrival of 26 March 2007. On 13 March 2007 the Charterer asked to be advised of the vessel's maximum capacity and for a stowage plan for a cargo from Ras Laffan in Qatar and Ras Tanura in Saudi Arabia, and this was provided. On 14 March 2007 the Charterer requested a second stowage plan for a cargo from Ras Laffan and Mina Al-Ahmadi in Kuwait. On the same day, the Master was asked whether he had enough fuel to load at both ports and to take bunkers on the outbound voyage at Fujairah: the enquiry was directed first to the position if the cargo was loaded at Ras Laffan and Ras Tanura and then to the position if it was loaded at Ras Laffan and Mina Al-Ahmadi. The Master advised that the vessel would require 4,000 mt of fuel oil on the basis that the cargo was loaded at Ras Laffan and Mina Al-Ahmadi and that she would not have enough fuel to take bunkers on the outward voyage. The Master was told that arrangements were being made for 4,000 mt of bunkers at Fujairah on the inbound voyage, but he was also asked whether the vessel had enough bunkers to reach Ras Laffan and Mina Al-Ahmadi and to take bunkers there. He confirmed that she did. On 16 March 2007 the Charterers declared the laycan spread as 00.01 to 23.59 on 29 March 2007.[5]On 21 March 2007 the Charterer gave voyage instructions to the Owner and nominated the load ports of Ras Laffan for loading on 28/29 March and Mina Al-Ahmadi for loading on 29-31 March. On the same day, 21 March 2007, the Owner arranged to bunker the vessel at Mina Al-Ahmadi for US$301 per mt., and so informed the Charterer. On 23 March 2007 the Owner received an e-mail from Clarksons, the intermediate brokers, indicating that the Charterer might change the voyage instructions and require that the vessel load at Ras Laffan and Ras Tanura, and not at Mina Al-Ahmadi. The Owner replied that it had already placed a bunker stem at Mina Al-Ahmadi and would require compensation for any additional costs resulting from a change of voyage instructions. The Charterer responded on 26 March 2007 that it did not regard itself as responsible for any extra costs or time resulting from the revised instructions and confirmed instructions to load at Ras Laffan on 28/29 March and at Ras Tanura on 4 April.[6]Accordingly arrangements to bunker at Mina Al-Ahmadi were replaced with arrangements to bunker at Ras Tanura. It proved possible to cancel the Mina Al-Ahmadi bunkers without penalty. The Ras Tanura stem was not at a fixed price: at Ras Tanura bunkers are priced by reference to the price published on the date when the delivery is completed, regardless of when they are ordered. In the event the bunkers supplied at Ras Tanura cost US$355 per mt, or US$217,721.52 more than they would have done had they been supplied at Mina Al-Ahmadi as originally arranged.[7]The Owner says that, had the Charterer originally nominated Ras Laffan and Ras Tanura as the load ports, then it would have not have had the vessel bunker at Ras Tanura, but at Fujairah on or shortly after 26 March 2007, and that the bunkers there would have cost US$304 per mt. (or possibly US$305 per mt.) so that the bunkers would have cost some US$205,626 less than they did. The Owner's case is that on 21 March 2007 it could have arranged for the vessel so to bunker and would have done so if it had received orders to load at Ras Laffan and Ras Tanura. The Charterer disputes that the Owner would have done so and says that bunkers would not then have been available in Fujairah. This is the only dispute of fact between the parties, and, although it does not affect my decision, I should determine it.[8]The Charterer called evidence from Mr Joseph Bradley, an experienced tanker chartering and bunker fuel broker who is a director and co-owner of JB Marine Limited London. His evidence was that he had made enquiries about the availability on 21 March 2007 of bunker supplies in Fujairah for delivery on or about 26 March and whether they could have been secured for a price of US$304 per mt. (It is not in evidence when he made these enquiries but it is clear that it was some time after March 2007.) Most suppliers told him that their records would not provide this information, but FAL Energy ("FAL") responded, through an associate of Mr Bradley and not directly to him, that it would not have been able to deliver supplies "in that window". Mr. Bradley also produced the market reports of his company which indicated that on 21 March 2007 FAL would not deliver at Fujairah before 30 March 2007.[9]I do not doubt that there was some difficulty in the supply of bunkers around this period, and the Owner has not produced evidence of any actual bunkering arrangement comparable to that which it says that it could and would have made. Nevertheless, I am unable to accept that the market was as tight as Mr Bradley understood it to be. On 21 March 2007 Platts' Bunkerwire report stated that the "supply situation [of bunker fuel] in Fujairah has returned to normal, an industry source said, after Iran resumed exporting the normal volume of fuel oil to Fujairah recently". It is of some interest that Mr Bradley's report for 23 March 2007 was that FAL was then not agreeing to supply bunkers before 2 April 2007, but in fact, as I shall explain, on that day the Owner's agents, Andros Maritime Limited ("Andros"), made two arrangements for bunkers to be supplied before then.[10]The Owner called three witnesses: Mr Roger Green, who is a director of its agents in London, Andros; Mr John Turner, who is employed by Andros in its operations department; and Mr Bill Wakeling, who is a broker employed in London by OceanConnect UK Limited, a bunker and trading company. Andros has a well established business relationship with OceanConnect, its other main brokers being Socomet, and Mr Wakeling knew that Andros bought bunkers at Fujairah mainly from FAL and Emirates National Oil Company ("ENOC").[11]There is no dispute that on 21 March 2007 Mr Green instructed Mr Wakeling to arrange for the vessel to bunker on around 31 March 2007 at Mina Al-Ahmadi for US$301 per mt, and that Mr Wakeling arranged for bunkers so to be supplied by Kuwait Petroleum Corporation ("KPS"). This is reflected in an exchange of e-mails between them on 21 March 2007 and a confirmation document sent by Mr Wakeling on behalf of KPS on 22 March 2007. It was the evidence of Mr Green and Mr Wakeling that the background to these arrangements was this: that, when the Charterer gave instructions to the vessel to load at Mina Al-Ahmadi and Ras Laffan, Mr Green contacted Mr Wakeling by telephone on 21 March 2007 and asked about availability of bunkers for delivery on around 26 March 2007 at Fujairah and for delivery on around 30-31 March 2007 at Mina Al-Ahmadi. Mr Wakeling made enquiries of FAL and ENOC about the availability of bunkers in Fujairah on around 26 March 2007, and was told by both suppliers that bunkers would be available. The lower price was put forward by FAL, who quoted US$305 per mt, but indicated that it would "probably do US$304 per mt". Mr Wakeling also ascertained the position about availability at Mina Al-Ahmadi. He then telephoned Mr Green confirming availability of bunkers at Mina Al-Ahmadi on 30-31 March 2007 and at Fujairah on around 26 March 2007, quoting for Fujairah a price of US$304 to US$305 per mt. Mr Green decided that the vessel should stem at Mina Al-Ahamdi while she was loading cargo and instructed Mr Wakeling to make arrangements accordingly.[12]The Charterer challenges this account. First, it refers to an e-mail that was sent on 23 April 2007 to Clarksons by Mr Constantine Joicey, who worked in Andros' operations department. It referred to the changed instructions from the Charterer that the vessel should load at Ras Tanura instead of Mina Al-Ahmadi and the fact that the Owner had arranged to stem bunkers at Mina Al-Ahmadi, and continued, "Having just checked, we have now been informed that there are no bunkers available at Fujairah until early April and we are making enquiries for bunkering at Ras Tanura". He warned of a significant increase in bunker costs and sought confirmation that the Charterer would compensate the Owner under clause 4(c).[13]Mr Joicey was not called to give evidence and there is no information about what checks he did make before sending this e-mail. He worked as an assistant in the operations department of Andros. He did not work for Mr Green at the time, but if he was checking the availability of bunkers, Mr Green would have expected him to have spoken to him and he did not do so. Mr. Joicey had no dealings with Mr Wakeling or other brokers.[14]I do not consider that Mr Joicey's email provides any real basis for doubting the evidence of Mr Green and Mr Wakeling. First, his enquiries were made on 23 March 2007 and the position with regard to the availability of bunkers at Fujairah might well have changed since 21 March 2007: Fujairah is, as Mr Wakeling told me and I accept, a "fast-changing market". Secondly, whatever might have been the source of Mr Joicey's information, clearly, as Mr Bradley's evidence demonstrates, there were those in the market who understood that supplies at Fujairah were not available, and it adds little that Mr Joicey shared this understanding. Thirdly, I cannot accept that bunkers at Fujairah were in as short supply as Mr Joicey apparently thought: Mr Green told me, and I accept, that on 23 March 2007 he arranged through Socomet bunker stems at Fujariah from FAL for two other vessels, in one case for the supply of 2,000 mt on 30 March 2007 and in the other for the supply of 2,800 mt on 1 April 2007 (although in the event the second stem was supplied on 2 April 2007). The former arrangement shows that, contrary to Mr Joicey's e-mail, on 23 March 2007 bunkers were available in Fujairah before April 2007, and while this does not itself show that supplies would have been available on 26 March 2007, it does dissuade me from relying on Mr Joicey's understanding of the position.[15]However, the Charterer has another, and to my mind more persuasive, basis for challenging the Owner's evidence. Mr Green dealt with the bunker arrangements for the vessel on 21 March 2007 because Mr Turner was then on holiday, but Mr Turner returned to work on Monday 26 March 2007, and on 26 and 27 March 2007 he spoke to Mr Wakeling on the telephone. It is the conversations of 27 March 2007 which are relevant for present purposes. Mr Turner said that he had not been asked to make these calls but was "just recapping on events that happened while [he] was away".[16]The conversations were, in part, recorded by Ocean Connect. OceanConnect's practice is to record conversations that take place over some of their telephones, including Mr Wakeling's, but its recording equipment is rather old and, as Mr Wakeling explained, it does not always operate, particularly at the start of some calls. Whether it be for this or some other reason, the transcript of the conversations on 27 March 2007 is incomplete. Mr Wakeling also explained that there is no recording of his conversations with Mr Green on 21 March 2007 because on that day he was working from home.[17]In a conversation at 10.07am, Mr Turner confirmed that the stem at Mina Al-Ahmadi was cancelled, and enquired about stemming at Ras Tanura. In a later conversation at 10.51 am Mr Wakeling said to Mr Turner, "I understand what you are asking for. You want to know if we stemmed any ship on the 21 st and what would be the price at Fujairah?" Mr Turner's response was, "Yes, the same day we stemmed for Mina at 301, had we stemmed at Fujairah, what was the cost there? Have you got an actual cost you stemmed on that day or what you estimate it to be?" Mr Wakeling, referring to the cost of bunkers at Mina Al-Ahmadi, replied, "Yes, I think the price was at 301. I remember that Fujairah was about $3 higher." It was agreed that Mr Wakeling should check what he had said about that price and telephone Mr Turner back.[18]Their next conversation was at 11.19am. Mr Wakeling said that he knew "from the papers that we were looking at, when I was up to 301 it was 304 to 305. That's what was being quoted by Adnoc". The reference to Adnoc was a slip of the tongue on Mr Wakeling's part: he intended to refer to ENOC. Mr Turner responded by asking whether Mr Wakeling had done any business that day himself, and Mr Wakeling replied that he had not "seen" it but was trying to make another enquiry about what the "fixing prices were that day". Mr Turner said that he had got until 11.30am before he was to go into a meeting and that it would be helpful to have "an actual figure". The meeting was a weekly meeting of the directors of Andros to which Mr Turner, although not a director, was invited.[19]At 11.27am Mr Wakeling telephoned Mr Turner. He said that, although he had done one deal at "a fantastic price" of $298.50, generally the market was "about 304-ish".[20]As far as appears from the transcripts, there is no reference in any of these conversations to Mr Wakeling speaking with Mr Green on 21 March 2007 about the possibility of stemming bunkers at Fujairah, and Mr Turner had no recollection of any discussion with Mr Wakeling of conversations between Mr Green and Mr Wakeling the previous week. There is no reference to an enquiry of FAL about the availability of bunkers in Fujariah, nor to the date of 26 March 2007 or thereabouts as the date when bunkers at Fujairah might have been required, and Mr Turner had no recollection about discussing on what date bunkers stemmed on 21 March 2007 could be delivered.[21]The Charterer submits that the inference from these conversations is that Mr Turner was seeking to ascertain the price on 21 March 2007. I accept this: notes that Mr Turner took of his discussions with Mr Wakeling reflect this. The Charterer goes on to argue that it is therefore improbable that on 21 March 2007 Andros had obtained a quotation from Mr Wakeling for that supply: if it had done so, Mr Turner would not have needed to make the enquiries of Mr Wakeling that are recorded, and if he had nevertheless made them, Mr Wakeling would have alluded to the quotation that he had given to Mr Green the previous week. It is also pointed out that, although in a recorded conversation Mr Wakeling referred to "the papers that we were looking at" with regard to the price being offered for bunkers at Fujairah, the Owner has produced no document relating to a quotation obtained on 21 March 2007: as I understood it, Mr Wakeling's evidence was that he would have disposed of any notes that he made on 21 March 2007 that related to stemming at Fujairah and that he must have mis-expressed himself on the telephone. The evidence of Mr Wakeling about these telephone conversations is, as it seems to me, the less convincing because, when he was asked in cross-examination about saying that he could "see what you are trying to do", he denied that he thought that this might be to do with making a claim for compensation. I find it difficult to think what else Mr Wakeling could have been referring to, and he gave no other explanation of this remark that I can accept.[22]I therefore see much force in the Charterer's submission that the recorded conversations are inconsistent with the evidence of Mr Green and Mr Wakeling that on 21 March 2007 Andros obtained a quotation from OceanConnect for the supply of bunkers at Fujairah on around 26 March 2007. Mr Luke Parsons QC on behalf of the Charterer submitted that their evidence about that must have been mistaken. I am unable to accept that: they both gave detailed accounts, and Mr Wakeling gave evidence not only about speaking to Mr Green but of asking both FAL and ENOC about availability of supplies. The reality of the matter, it seems to me, is that, unless their evidence is essentially correct, both witnesses have deliberately concocted a false account. I have found this issue difficult to resolve, but in the end, although in many ways I find Mr Wakeling's conversations with Mr Turner strange in view of the rest of his evidence, I am not prepared therefore to reject as dishonest the account of Mr Green and Mr. Wakeling, the more so because my impression was that both witnesses were honest (albeit Mr Green was at times rather argumentative) and because it was not put to them that they were dishonest as opposed to mistaken in their evidence.[23]On the basis of this evidence, I find that on 21 March 2007 bunkers were available for delivery at Fujairah on 26 March 2007 at a price of US$304 or US$305 per mt, and that Mr. Wakeling would have been able to secure them for Andros at US$304 per mt. I also accept that, had Andros then understood that the vessel was to load at Ras Laffan and Ras Tanura, it would have arranged for her to take bunkers at Fujairah on 26 March 2007.[24]The Owner claims US$217,721.52 as money due under clause 4(c). It says that an increase in bunkering expense such as it incurred falls within the clause and the "extra expense" is determined by comparing what expenses were incurred under the revised orders and what expenses would have been incurred under the original orders. The Charterer contends that clause 4(c) is directed to when a vessel deviates from her course after she has set out for the nominated port and as a result incurs extra expense by way of fuel consumption and loses time, and that the loss of the opportunity to stem bunkers more cheaply in Mina Al-Ahmadi is not within clause 4(c). Further, it says that, if the additional cost of bunkers incurred by the Owner in these circumstances does fall within clause 4(c), then the "extra expense" is the difference between that incurred and the expense that would have been incurred had the revised nomination been the original nomination. Upon the basis of my findings of fact, if the Charterer succeeded in this second argument, it would only reduce the claim from one for US$217,721.52 to US$205,626 (although, had I made the findings of fact for which the Charterer contended, it would mean that the Owner had not proved that any sum is recoverable).[25]The Owner has an alternative claim for damages on the basis that the revised voyage instructions were given in breach of the charter. This raises the question whether on the true construction of the charter the Charterer is entitled to change the load ports that it has nominated. Where a charter provides that a ship is to load or discharge at a port that is to be nominated, once the port has been effectively nominated its status will be as if it had been in the contract from the outset: Scrutton on Charterparties (1996) 20 th ed. Article 67, page 125. The Charterer contends that clause 4(c) changes the position because by implication it confers a right to re-nominate load (and discharge) ports. It accepts that, if this is not the case, it acted in breach of contract in purporting to give the revised instructions (see Batis Maritime Corporation v Petroleos del Meriterraneo SA , [1990] 1 Lloyd's Rep 345). In that case, a further question arises, whether the consequences of that breach are defined by clause 4(c) and any recoverable damages so limited.[26]Although these issues identify different aspects of what I have to decide, they all turn upon the true construction of clause 4(c). I first consider whether clause 4(c) entitles the Charterer to change the nomination of loading or discharge ports, because it seems to me that the ambit of the provision for the Charterer to pay "any extra expense incurred" should be considered in light of whether it refers to expense incurred in connection with a breach of contract.[27]There is, as the Owner points out, nothing in clause 4 of the Asbatankvoy form (or elsewhere in the Asbatankvoy form or the Charterparty) that expressly confers upon the Charterer a right to revise a nomination, and this could readily have been expressed had it been the parties' intention. The Charterer, however, argues that the implication of clause 4(c) is that it has such a right because otherwise clause 4(c) has no application unless the charter has departed from the standard Asbatankvoy form and provided for a right to revise a nomination.[28]The Charterer cites the American arbitration award in The Clairhill , SMA 1002 (1976) at p. 5, where the Tribunal said of clause 4(c), "The contract expressly provides for compensation to the vessel in the event charterer elects to change the discharging port; therefore charterer implicitly has the right to make such a change unless the contract elsewhere limits this". This reasoning (supported as it is by introducing a reference to an election which is not found in clause 4(c)) is not, to my mind, persuasive. The clause applies when the Owner accedes to a request by the Charterer to change a nomination. It is true that, unless the charter provides for a right to change a nomination, the Owner would not be obliged to accede to such a request or could, if it did accede to the request, expressly do so upon terms that the Charterer give an indemnity in the terms of clause 4(c) (or indeed on other terms), but it does not seem to me improbable that the parties should anticipate this and provide in the charter for an indemnity in the event that the Owner does not insist that the Charterer perform in accordance with a nomination that he has made. As Staughton LJ said in Total Transport Corporation v Arcadia Petroleum Ltd (The "Eurus") , [1998] 1 Lloyd's Rep 351 at p.358:
"There is ... a long history of charter-party clauses dealing with liability of one party or the other for what would without the clause in question still be a breach of contract. To the lawyer, this is surplusage; but to commercial men it is a way of making sure that there is no mistake or misunderstanding and to emphasise their rights and liabilities"
. So viewed, it does not seem to be that there is a sufficient basis to imply into clause 4(c) a right to change a nomination.[29]Cooke on Voyage Charters (2007) 3 rd Ed. (loc cit) at para 55.6 supports the view that clause 4(c) introduces a right to revise a nomination, but a qualified right (albeit one sufficient for the Charterer on the facts of this case):
"Whilst any interpretation of the clause is open to formidable objections, it is submitted on balance that clause 4(c) does by clear implication confer a right of renomination, but limited to ports that can fairly be said to be within the same range as the port originally nominated"
. The qualification recognises that "a general and unlimited right to change a nomination could have far-reaching effects especially where the charter provides for several alternative ranges of ports at a considerable distance from each other", and I agree that for this reason the parties cannot have intended to confer an unqualified right to revise a nomination. However, the suggested qualification to my mind introduces unnecessary uncertainty that the parties are not to be taken to have intended. I am unable to accept clause 4(c) confers a right to revise a nomination, either with or without the qualification that the editors of Voyage Charters suggest.[30]There is a further reason that, as it seems to me, on the facts of this case the Charterer did not have a right to change a named loading port as it did. The revised nomination was made after the date by which the loading ports were to be named under clause 4(a). It seems to me that, if clause 4(c) is understood to confer a right to change a nomination at any time, it would undermine the effect of clause 4(a), and if (contrary to my view) clause 4(c) affords any right of revision, it is not only qualified by the geographical restriction suggested in Cooke on Voyage Charters but also subject to limitations reflecting clause 4(a) as to when it can be exercised. It is true that in this case the Owner apparently accepted the original nomination of load ports without complaint that it was made late, but that does not mean that it waived any objection to the timing of a revised nomination.[31]I come therefore to consider what is covered by the expression "any extra expenses incurred in connection with any change of loading or discharge port...". The Owner's argument is straightforward: clause 4(c) is couched in wide language, referring to " any extra expense", and while Mr. Andrew Baker QC, who represented the Owner, accepts that the expression "in connection with" contemplates a causal connection between the change of nominated port and the expense (just as the second limb of the clause refers to time "thereby" lost), as a matter of its ordinary and natural meaning the first limb of the clause is to be understood to cover any extra expense incurred by the Owner that results from the Charterer changing the choice of loading or discharging ports after they have been nominated. Nothing in the wording of the clause confines its application to particular types of expenses, nor, as Mr. Baker submits, does its commercial purpose. As a matter of ordinary construction, the clause calls for a comparison between what expenses would have been incurred if there had been no change of the nominated ports and the expenses incurred as a result of the change. Just as the Owner would have been able to claim under the clause had a charge been incurred for cancelling the bunkers arranged at Mina Al-Ahmadi (for example, because the cost of bunkers had fallen since the arrangements were made), so too it is entitled to claim because the cost of the bunkers at Ras Tanura was higher than bunkers at Mina Al-Ahmadi would have been.[32]The Charterer argues that principles of construction require clause 4(c) should be more narrowly interpreted, and submits that as a matter of its ordinary and natural meaning in its commercial and contractual context it is intended that "the claim for extra expenses covers out of pocket deviation costs". First, Mr. Parsons submits that, being an indemnity provision, clause 4(c) is to be construed contra proferentem in the manner of exemption clauses, citing Lewison, The Interpretation of Contracts (2007) 4 th Ed at para 12.15. The question whether a provision is strictly to be characterised as an indemnity can give rise to fine distinctions (see Total Transport Corporation v Arcadia Petroleum Limited, (The "Eurus") , [1996] 2 Lloyd's Rep 408 per Rix J and [1998] 1 Lloyd's Rep 351 ) but it is not necessary to explore that question. In argument before me, both parties characterised clause 4(c) as an indemnity, and I am prepared to accept that principles of construction that restrict the ambit of an indemnity apply to it.[33]The Charterer can therefore submit that, at least in the context of charterparties and in particular the liability of charterers to compensate for the consequences of compliance with their orders, the court will restrict the application of indemnities and comparable clauses in two ways: see Triad Shipping Co v Stellar Chartering & Brokerage Inc (The "Island Archon") . [1994] 2 Lloyd's Rep 227. First, it requires a sufficient causative link between the order and the consequence giving rise to the claim. Thus, as Colman J said in Ulisses Shipping Corp v Fal Shipping Co Ltd. (The "Greek Fighter") . [2006] EWHC 1729 (Comm) at para 302, "it is in a commercial setting improbable that a charterer would be prepared to assume the risk of eventualities remote from his own orders". One application of this approach is that in the absence of express language an indemnity will not generally cover loss caused or contributed to by the negligence of the party invoking it. Secondly, a provision of this kind will not usually be held to cover ordinary expenses and losses of trading, the risk of which rests upon the owner. I add that, at least where the indemnity is given in respect of a breach of contract (as, in my judgment, in this case), the court will be reluctant to interpret it as covering loss that would be too remote to be recoverable as damages: see Total Transport Corporation v Arcadia Petroleum Ltd (The "Eurus") . (cit sup).[34]Accordingly, the Charterer submits that clause 4(c) is directed to extra expenses by way of "out of pocket deviation costs", and, while it covers a claim directly linked to the consequences of a revised nomination, the loss for which the Owner claims, which the Charterer characterises as "a lost opportunity to stem bunkers more cheaply", is causally remote from the Charterer's orders, and the parties are to be taken to have intended that the price at which the Owner purchases bunkers and when it does so remain matters for the Owner's account.[35]The Charterer reinforces its argument that the Owner's claim is for expenditure of a kind that the charter contemplates the Owner will bear by pointing out that the freight is payable by reference to the Worldscale. It is a premise of the Worldscale schedule that, "Bunkers are deemed to be available at every port at the bunker price stated ...", in this case at US$318.25 per mt. The Charterer therefore argues that, since the freight was payable by reference to Worldscale, the Owner assumed the risk that bunkers will be more expensive at any particular port than the fixed price paid as part of the freight. The charter is entered into on the basis that the Charterer is not interested in what bunkering arrangements are made by the Owner, and the Charter does not assume any part of the risk of an unfavourable bunker price by changing a nominated load or discharge port. On the other hand, in the Worldscale schedule, "No allowance is made for deviation for any purpose whatsoever", and it is therefore readily understandable that the Charterer should bear under clause 4(c) the cost of any deviation resulting from a change in the nominated ports. Thus, as the Charterer argues, the second limb of clause 4(c) is directed to loss of time caused by a deviation and provides that it is treated as used laytime, and the first limb deals with costs directly associated with a deviation of this kind and only such costs.[36]To my mind, it does not assist the Charterer that usually the cost of bunkers is for the Owner's account and the Owner usually bears the risk that the price of bunkers will move against it or be more expensive in one port than another. Clause 4(c) is designed to transfer from the Owner to the Charterer "extra expense" because, although it is of a kind that the Owner would usually bear, it is incurred as a result of the Charter revising its choice of loading or discharge port. Similarly, the fact that the Worldscale rate is calculated on the basis that usually the Owner bears particular risks does not support an argument that the Owner continues to bear them in the particular circumstances contemplated by clause 4(c). Indeed, in the case of deviation, the Charterer recognises that clause 4(c) transfers to the Charterer expenses of a kind that normally the Owner will bear because they are incurred as a result of changing the nomination of a port.[37]There is a dearth of judicial authority on the meaning of clause 4(c). Cooke on Voyage Charters suggests at para 55.8 that clause 4(c) is intended to include the costs of additional fuel consumed by the main engine, but the editors do not suggest that the application of clause 4(c) is confined to expenses of this kind. However, Mr. Parsons drew my attention to the award in the American reference, TT Grand Corp v Vela International Marine Limited ("The Grand") , 2 March 1989, SMA 2548. The tanker voyage charter under consideration in that case contained a clause that allowed the Charterer to use the vessel for floating storage. The vessel was originally directed to discharge at the United States Gulf/Loop, but then the Charterer changed the voyage orders to direct the vessel to Dakar for storage. It later directed that she proceed to discharge at the United States Loop. The arbitrators rejected claims by the Owner for the cost of cleaning the vessel's bottom after it was fouled because she had been in storage, saying this: "The distinction drawn by the Charterers between extra expenses incurred because the vessel was used as floating storage and extra expenses incurred by reason of the change of instructions appears to us to be valid because we do not believe that [the relevant clauses] were intended to shift on to the Charterers part at least of the financial risk involved in the use of the vessel for storage".[38]The arbitrators also rejected an argument by the Owner that it should recover loss of bunkers based upon actual consumption of the vessel although this was increased because of the fouling of the ship's bottom. In this context, the Tribunal cited an English award in the "Brazilian Splendor" , a reference that apparently raised similar issues, in which it was said: "The state of the vessel's hull and its effect on her performance would normally be a matter of no concern whatsoever to a voyage Charterer. We do not think that on a proper construction the words "extra expense" in Clause 4(c) of the Asbatankvoy form could have been intended to cover a claim for diminished performance. They would seem to apply to a situation such as that in which a charterer changes his loading or discharge port instructions after the vessel has already set out for the port first named: the owner then claim as "extra expense" time spent and fuel consumed in the "back tracking" - such expenses not otherwise being covered by the Worldscale calculation which he would make once the actual loading or discharging port was fixed". (I rely upon the passage cited in the American award: the award in the Brazilian Splendor itself was not before me.)[39]There is nothing in the wording of clause 4(c) that indicates that it is to be confined to expenses arising by way of deviation resulting from a change of nominated port: if the first limb of clause 4(c) dealing with expenses were so restricted, consistency would require that the second limb regarding time be similarly restricted but nothing in either limb supports this interpretation. If the English and American tribunals intended so to limit the application of the clause (although I observe that the passage cited refers to "a situation such as that in which a charterer changes his loading or discharge port instructions after the vessel has already set out for the port first named"), I cannot agree with them (although the decisions themselves, so far as I can tell from the award in The "Grand" , seem to me to be correct). Indeed, Mr. Parsons did not, in the end, contend that clause 4(c) is limited to cases in which a change of nominated port causes a deviation. He accepted, rightly in my judgment, that it covers "costs that were incurred in reliance upon the initial nomination", and therefore accepted that if, for example, the Owner had incurred a charge for cancelling the bunkers stemmed at Mina Al-Ahmadi, that expense would have fallen within clause 4(c). He also submits that the expenses that are recoverable in the event that a deviation is occasioned are to be assessed by reference to the difference between the expenses incurred and what would have been incurred if the revised nomination had been given initially: that is to say, by reference to the additional expense incurred because the Owner relied upon the original nomination.[40]This submission, introducing the notion of reliance into the interpretation of clause 4(c), does not seem to me properly to respect its wording. The clause entitles the Owner to any extra expenses incurred in connection with any change in nomination: there is no justification, to my mind, for requiring that connection be one of reliance, and moreover the Charterer's narrow interpretation focuses on the original nomination rather than upon the change to which the clause refers.[41]Further, the restriction upon the interpretation of clause 4(c) that the Charterer proposes would, as Mr. Baker pointed out, have anomalous consequences. If the facts of this case had been slightly different and the proper commercial judgment of the Owner had been to maintain the stem at Mina Al-Ahmadi so as not to suffer the extra expense resulting from the movement in oil prices, any expense (and time lost) would, as the Charterer acknowledges, be recoverable under clause 4(c). It would be surprising if, in order to avoid expense of that kind, the Owner sensibly changes the stem arrangements; it is to bear the extra expense.[42]I conclude that the cost of the bunkers at Ras Tanura is an expense falling within clause 4(c). It was incurred as a direct result of the revised nomination of Ras Tanura as a loading port, and it is readily within the contemplation of parties to a charter that a change of loading port will lead to different and potentially more expensive bunkering arrangements. I reject the argument that expenses of this kind fall outside clause 4(c) because they are of a kind that normally would be borne by the Owner. The purpose of clause 4(c) is to transfer from the Owner to the Charter expenses of a kind that the Owner usually bears when they are incurred as a result of a change of nomination.[43]The clause requires the Charterer to bear extra expenses incurred in connection with a change of nomination, and extra expenses to be assessed by comparing the expenses incurred with what would have been incurred had the original nomination not been changed. In this case, the Owner incurred extra expenses in the sum of US$217,721.52 and is entitled to that sum as due under clause 4(c). The Owner does not have a further claim in damages because, while the change of nomination was made in breach of the charter, clause 4(c) defines what is recoverable when the Owner accedes to the change of instructions.

Cited in 1 later judgment