“USGTT is declared and paid to the U.S. Treasury only once for each voyage or transportation as is apparent from the evidence adduced in this reference. Claims made to the effect that USGTT is levied upon each party in the charter party chain involved in a single voyage have not been evidenced and are not correct.”
“20 The Circular provided an example of [sic] whereby the shipowner bareboat chartered his vessel to another company; which in turn time chartered the vessel to a third company; which in turn voyage chartered the vessel to a fourth company. By incorporating the U.S. Tax Reform 1986 Clause in the bareboat charterparty the shipowner transferred the tax liability for the bareboat hire to the bareboat charterer. With the Clause inserted in the time charterparty, the bareboat charterer transferred tax liability for the time charter hire to the time charterer. Finally, by inserting the Clause in the voyage charterparty, the time charterer transferred the tax liability for freight revenues to the voyage charterer that required the vessel to call to a U.S. port. The intention and operation of the Clause is directly applicable to this reference and, to quote the Circular, its purpose is that “...the tax is transferred on a reimbursed basis according to the wording of the last two lines i.e. …’U.S. source gross transportation income, shall be reimbursed by the Charterers.’” 21 The Charterparty incorporated the U.S. Tax Reform 1986 Clause in clause 112. It provides that the Charterers will reimburse the Owners and nowhere does it require the Owners, as disponent owners, to have paid the United States Treasury directly before the clause applies. As is described in paragraph 20 above, provided the clause is incorporated in each of the charterparties down the chain, the eventual liability for the U.S. Freight tax is transferred from the shipowner to the eventual charterer who requires the vessel to carry a cargo to or from a United States port. As the BIMCO circular makes clear, it is important to recognise that the tax liability is transferred only on a “reimbursed basis.””
“Any taxes on hire earned under this Charterparty or its sub-hires, or sub-freights, freight or cargo to be for Charterers' account except for taxes if any levied on Charter Party hire by the Nation of the vessel, Flag or Ownership.”
“31 The words of clause 112 “… levied on income attributable to transportation under this Charter party…” (our emphasis), makes it as clear as it is possible to do that it is only USGTT which is levied on income attributable to transportation under the charterparty to which the claimant owner and respondent charterer are a party for which the charterer is liable to the owner. A charterer is not liable for USGTT for which an owner or disponent owner is liable under a charterparty higher up the charterparty chain.” 32 This seems to us to be a perfectly sensible provision for distributing the burden of USGTT on each of the charterers in a charterparty chain. It is at least as sensible as imposing the entire burden of USGTT on the charterer at the end of the charterparty chain. In our view, we have to give effect to the express words used by the parties. It is certainly not obvious from the circumstances in which the charterparty was made or from the other terms of the charterparty, that the parties could not have intended the words in clause 112 to have the meaning which they appear on their face to bear and that the parties intended the term to have some other meaning. 33 To accept the Owner’s case on this issue would require one to read clause 112 as if the words quoted and underlined in paragraph 31 were not there. This was a carefully drafted clause produced by BIMCO for general use in all types of charterparty. There can be no conceivable reason for concluding that the parties who incorporated clause 112 did not intend the words used to bear their obvious and natural meaning.”