Minerva Navigation Inc v Oceana Shipping AG [2012] EWHC 3608 (Comm)

[2012] EWHC 3608 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of JusticeDate 13 December 2012
Strand
London
WC2A 2LL
Before
MR JUSTICE WALKER
Case No 2011 Folio 1282 IN AN ARBITRATION CLAIM
Between
MINERVA NAVIGATION INCClaimantOCEANA SHIPPING AGRespondentCase No: 2011 Folio 1346 IN AN ARBITRATION CLAIMOCEANA SHIPPING AGClaimantTRANSATLANTICA COMMODITIES S.A.Respondent
Mr Richard Lord QC (instructed by Holman Fenwick Willan LLP) forthe Claimant in 2011 Folio 1282Mr Stewart Buckingham (instructed by Whale Rock Legal Ltd) forthe Respondent in 2011 Folio 1346
Judgment
[1]In this case I deal with two arbitration claims which have been consolidated by an order of Mr Justice Cooke sealed by the court on 6 June 2012. They arise out of two time charterparties of the M/V Athena (“the vessel”). The first was dated 13 January 2009 (“the head charterparty”) and made between Minerva Navigation Inc. (“Minerva”) as head owners and Oceana Shipping AG (“OCE”) as charterers. The second was dated 9th October 2009 (“the sub-charterparty”) between OCE as disponent owners and Transatlantica Commodities SA (“Transatlantica”) as sub-charterers. Both charterparties were on amended NYPE forms. The amendments were, save as to rate of hire, in all material respects identical. They included provision for the charterparties to be governed by English law with arbitration in London.[2]Disputes arose between Transatlantica and OCE which were referred to arbitration under the sub-charterparty. They were mirrored (save as to the rate of hire) by disputes between OCE and Minerva which were referred to arbitration under the head charterparty. All parties agreed to modify the provision for arbitration in the charterparties so that each reference was heard by the same tribunal of three arbitrators. Separate awards were issued in each reference.[3]No oral hearing took place. The awards were made after consideration of the papers by the three arbitrators. Each award incorporated a document entitled “Common Reasons for the Final Arbitration Awards”. I shall refer to this document as “the Common Reasons”.[4]The claim by Transatlantica against OCE in the sub-charterparty reference was for sums paid by way of hire, bunkers and cable, entertainment and victuralling expenses (“CEV”) for a period between 1338 hrs on 19January 2010 until 2214 hrs on 30 January 2010. It was common ground that, during this period, the vessel had ceased to comply with an order to proceed to Benghazi, and was instead drifting 50 miles off the Libyan coast. I shall refer to this period as “the drifting period”. In the head charterparty reference OCE passed on this claim to Minerva, substituting the rate of hire under the head charterparty for that in the sub-charterparty.[5]The claim in each reference was successful. Two of the three arbitrators rejected a contention that the vessel was entitled at the start of the drifting period to cease complying with the order to proceed to Benghazi. The majority conclusion was that the vessel was obliged at that time to continue to proceed to Benghazi, but wrongfully had failed to do so until the end of the drifting period. In the light of this majority conclusion the arbitrators went on to hold unanimously that the sums claimed were recoverable under the off-hire clause.[6]Leave to appeal one aspect only of the award in each of the references was granted by Cooke J. In relation to each award Cooke J refused leave to appeal the arbitrators’ majority conclusion that the vessel was not entitled at the start of the drifting period to cease complying with the order to proceed to Benghazi. The grant of leave to appeal, in relation to each of the awards, was on this question only: 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.[7]To save costs OCE have, since the leave to appeal stage, dropped out of the proceedings. Accordingly in the remainder of this judgment I shall for the most part simply refer to “owners”, “charterers” or “the charterparty” without distinguishing between head and disponent owners, head and sub-charterers or the head and sub-charterparty. At the hearing of the appeal Mr Richard Lord QC, instructed for Minerva, advanced arguments on behalf of owners and Mr Stewart Buckingham, instructed for Transatlantica, advanced arguments on behalf of charterers. B. Relevant contractual provisions[8]The off-hire clause in each charter was a modified version of the NYPE 1946 form clause 15. So far as material it read, with the addition of underlining to show additions to the wording of the NYPE 1946 form, as follows: … 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 …[9]Also relevant are clauses 8, which was identical to the wording used in the NYPE 1946 form, and 62, which was additional to the NYPE 1946 form. So far as material they stated: 8. … the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance … The Captain (although appointed by the Owners), shall be under the orders and directions of Charterers as regards employment and agency … 62. … Where Bill(s) of Lading show a destination … and/or shippers and/or receivers and/or consignees, Charterers are allowed to change destination … and/or shippers and/or receivers and/or consignees and have original bills of lading re-issued and signed by their agents, the original Bill(s) of Lading are always to be returned to the Owners and their agents prior to issuing new Bill(s) of Lading and Charterers hereby warrant that at no time shall there be more than one set of original Bill(s) of Lading in circulation. Charterers will indemnify Owners for all cost and consequence arising out of Charterers or their agents with their above mentioned authorities by submitting to Owners Charterers single Letter of Indemnity in accordance with Owners P&I Club wording. … C. The course of events[10]The facts set out below can be discerned from various passages in the Common Reasons. In one respect I have added some comments made by the arbitrators.[11]Pursuant to the charterparty in October 2009 the vessel loaded a cargo of wheat at Novorossiysk in Russia for carriage to Syria. Bills of lading were issued on 24 October 2009 showing the discharge port as Lattakia or Tartous, both in Syria.[12]The vessel sailed to Syria, arriving at Tartous on 1 November 2009, but the cargo was rejected by Syrian receivers on the ground that it was contaminated and the vessel thereafter remained in Syria for a substantial period. The arbitrators, relying on their own experience as well as the evidence from the parties, commented that it is common for Syrian receivers, often acting in concert with the local authorities, to refuse cargoes on the basis that they are unfit for human consumption, and that this is often a ploy to renegotiate contracts of sale.[13]The events at Tartous had the consequence that Syrian law prohibited re-export of the cargo other than to its country of origin. Contravention of this law was punishable with a substantial fine.[14]On 5 January 2010 charterers told the Master that discharge would be in Libya. On 12 January 2010 charterers asked owners to tell the Syrian authorities that the cargo would be returned to Novorossiysk, something which was clearly untrue.[15]The vessel departed Tartous on 16 January 2010, nominally for Novorossiysk. Once she had cleared Syrian waters two messages were sent at more or less the same time. First, the Master advised that owners had instructed him to proceed towards Libya without stoppage. Second, owners advised charterers that they had instructed the Master to proceed to international waters “just outside Libya and wait for further instructions.” Before and after these messages owners expressed concerns to charterers about the potential problems involved in proceeding to Libya, both because of the terms of the bills of lading and the provisions of Syrian law.[16]On 19 January 2010 owners drew attention to clause 62 (which, as set out above, concerned the position where charterers wished to change a destination specified in bills of lading). The charterers advised owners that the original bills of lading were held by their agents in Novorossiysk. An instruction by charterers to owners at 1725 hours on 19 January 2010 included the following: … we forbid berthing/discharging and releasing the cargo to receivers until our next written instructions. Hereby we confirm that receivers [have the] right to take samples only. Upon arrival please anchor at road port Benghazi and [await] our further instructions.[17]The vessel continued to proceed towards Libya. She then stopped in international waters about 50 miles from Libya at 2328 on 19 January 2010, when the drifting period began.[18]On 30 January 2010 problems with the returning of the original bills of lading were resolved. The drifting period ended at 22.14 on 30 January 2010, at which time the vessel proceeded to Benghazi.[19]The vessel berthed at Benghazi on 3 February 2010. Discharge of the cargo was eventually completed at about noon on 18 February 2010. D. Charterers’ alternative claims[20]Before turning to the issue under appeal it is important to note that charterers put their claim in three alternative ways. Reliance upon the off-hire clause was the second of these three alternatives.

D1. Hire not due while vessel not at their disposal

[21]The first of the three alternatives was described by the arbitrators in paragraph 3 of the Common Reasons as being: that no hire etc was due during the period in question because the vessel was not at their disposal …[22]The arbitrators dealt with this in paragraphs 69 to 75 of the Common Reasons: 69. Clause 4 of the charter provides:
“4. That the Charterers shall pay for the use and hire of the said Vessel at the rate of…”
Clause 5 provides:
“5. Payment of said hire to be made… every 15 days in advance…” 70. In relation to bunkers, Clause 2 provides: “That the Charterers shall provide and pay for all the fuel except as otherwise agreed…” and in relation to CEV, Clause 72 provides under the heading: “Victualling/Entertainment:The Charterers to pay US$ 1,250 (one thousand two hundred and fifty) per month or pro rata for all victualling, entertainment and cable expenses” 71. [Charterers’] argument is extremely simple and is that independently of the off-hire provisions in the charter, since the obligation is to pay hire for the use of the vessel, if they do not have the use of the vessel because she has been temporarily withdrawn from their service by … owners, the obligation to pay hire ceases. Likewise they argue that in relation to bunkers and CEV, there is to be implied into a charter, a term that the Charterers are only to be required to pay for these in respect of any periods when the vessel is in their service. 72. This is an extremely compelling argument and it would be most unjust to hold that the Charterers are liable to pay hire, for bunkers and CEV for periods when the vessel is not in their service. 73. However, we are not persuaded that that object is achieved if we construe the clauses to which we have referred independently of other provisions in the charter. 74. As the learned authors of Time Charters (6th edition) make clear at paragraph 16.2, citing Mr Justice Bingham, as he then was, in The Lutetian [1982] 2 Lloyd’s Rep. 140 at page 149, Clause 4 does no more than specify the rate of payment and Clause 5 provides for it to be paid in advance. Adjustments to the hire actually paid are therefore to be made in arrears. Similarly there is no need to imply any term into Clause 2 in relation to bunkers or into Clause 72 in relation to CEV. 75. We therefore prefer not to base the decision of the majority of the tribunal on any general notion that hire did not accrue during the period whilst the ship was drifting off Libya or implied term in relation [to] bunkers/CVE. “4. That the Charterers shall pay for the use and hire of the said Vessel at the rate of…”
Clause 5 provides:
“5. Payment of said hire to be made… every 15 days in advance…” “That the Charterers shall provide and pay for all the fuel except as otherwise agreed…” and in relation to CEV, Clause 72 provides under the heading: “Victualling/Entertainment:The Charterers to pay US$ 1,250 (one thousand two hundred and fifty) per month or pro rata for all victualling, entertainment and cable expenses”

D2. Damages for breach of clause 8

[23]The third of the three alternatives was described by the arbitrators in paragraph 3 of the Common Reasons as being a claim by charterers: that they are entitled to the sums claimed as damages for breach of clause 8 of the Charter in that: the Captain failed to prosecute the ordered voyage with the utmost despatch; and/or the Captain, who was under the orders and directions of [charterers] as regards employment, failed to comply with [charterers’] orders. the Captain failed to prosecute the ordered voyage with the utmost despatch; and/or the Captain, who was under the orders and directions of [charterers] as regards employment, failed to comply with [charterers’] orders.[24]As to this, the arbitrators held, consistently with the majority conclusion, that the Master was in breach of clause 8. There had been a failure to comply with a lawful order and a failure to proceed with the utmost despatch. However the arbitrators then unanimously held that no damages were payable for that breach. At paragraphs 89 to 91 of the Common Reasons they explained why this was so:89. As we have already found in relation to the off-hire claims, there was an immediate loss of time in that the vessel’s arrival at Benghazi was delayed for this period, but what we must now examine is whether there was any overall loss of time, in other words whether the cargo would have been discharged and the vessel redelivered any earlier.90. Clause 62 appears to call for the presentation of a single letter of indemnity covering both the change of discharge port and delivery of the cargo without presentation of an original bill of lading. The required LOI was provided on 22nd January 2010, and therefore TCA/OCE as charterers assert, any refusal by the Master to discharge thereafter would amount to a separate breach of Clause 8 of the charter. The problems with the Bill of Lading were not finally resolved until 30th January 2010 and although there were further delays before the vessel berthed at Benghazi on 3rd February 2010, this further loss of time does not form part of the claims relating to either reference91. We are not persuaded that had the Vessel proceeded directly to Benghazi arriving some time early on 20th January 2010 that the vessel would have berthed any earlier than she did. Notwithstanding … charterers’ assertion that they fully complied with Clause 62 in providing the required letter of indemnity by 22nd January 2010, we believe that there would have been the same problems with the Bill of Lading after her arrival and there is no reason to believe that these would have been resolved any earlier than they were on 30th January 2010, during which period hire would have remained payable since we are not persuaded that the delays which occurred between 22nd - 30th January 2010 irrespective of whether the ship had been at Benghazi or drifting off the coast during this period can be laid entirely at the door of the head owners. E. The issue under appeal[25]Paragraphs 78 to 80 of the Common Reasons set out the reasoning of the arbitrators in concluding that the claim succeeded under the off-hire clause:78. As is made clear at paragraph 25.2 of [Wilford] Time Charters, the ship must render the service immediately required of her, in which event, hire is payable continuously, but if she cannot or does not, hire is not payable for the time so lost. As is made clear in that paragraph, the off-hire clause operates entirely independently of any breach of contract by the owners, and a claim under the off-hire clause may lead to a different answer than would ensue in the case of a claim for damages for breach of contract.79. The Tribunal are satisfied that all [charterers] need to do in respect of their claim under the off hire clause is demonstrate that there was a default on the part of the Master (which we have already accepted there was) and that in consequence, there was an immediate loss of time. On this last, we are satisfied that the consequence of the Master’s failure to proceed directly to Benghazi was a loss of time by her delayed arrival at that port. Whether the same time would have been lost for other reasons had she proceeded directly to Benghazi is irrelevant to a claim under the off hire clause. The time was lost in relation to the service immediately required of her and that is sufficient. If authority is required for that proposition, we would refer to The Berge Sund [1993] 2 Lloyds Rep. 453. 80. We are also satisfied that the claim for the bunkers consumed and CEV payable during the period in question are “extra expenses directly incurred” during the period of suspended hire and therefore recoverable under Clause 15.[26]Mr Buckingham submitted that the issue as currently formulated (see section A above) would not affect the outcome of the Award. His skeleton argument said: The Tribunal did not decide that a net loss of time was unnecessary. The finding in paragraph 79 of the [Common] Reasons is a different one: that it was necessary that there had been a loss of time, in relation to the service immediately required, and the Tribunal held that such a loss of time had arisen. … It is therefore suggested that the issue could usefully be reformulated along the following lines: whether under clause 15 of the NYPE charterparty (and of the present Charterparty) the Vessel is off-hire where there has been a net loss of time in relation to the service immediately required of the Vessel, or whether it is additionally necessary that there has been a net loss of time to the adventure overall.[27]Mr Lord responded that it did not matter whether the issue was formulated in the broad way approved by Cooke J or in the narrow way proposed by Mr Buckingham. I agree that it does not matter, provided that the issue is read in the context of the award. My reasons are these:(1) Paragraph 79 of the Common Reasons notes the previous finding that there was a default on the part of the Master, and says that the tribunal are satisfied of a particular proposition, namely, that in respect of their off-hire claim all that charterers need do is demonstrate that in consequence there was an immediate loss of time. I shall refer to this as “the crucial proposition”. Paragraph 79 is not seeking to go through all the pre-requisites in clause 15. It sensibly focuses on the only issue remaining.(2) The only issue remaining was whether the owners could answer the off-hire claim by an assertion that “time lost thereby” in clause 15 referred to a particular concept: a net loss of time in performing the charter service overall. If so, then the finding in paragraph 91 of the Common Reasons would knock out the off-hire claim, for it showed that the Master’s default caused no delay in berthing and thus there was no net loss of time in performing the charter service overall.(3) The tribunal did not accept owners’ assertion. There was an immediate loss of time arising from the delayed arrival at the port, and that was enough. They did not need to examine whether the immediate loss of time was a “net” loss of time. A question of that kind might have arisen if the vessel had complied with the order to proceed to Benghazi, but the Master’s default had taken the form of steaming at quarter ahead rather than full ahead, so that the vessel required 20 hours rather than 5 hours to reach port. Full working of the vessel would then have been prevented during a period of 20 hours, but the net loss of time would have been 15 hours. On the facts of the present case, however, there was no assertion that the immediate loss of time was anything other than the drifting period.(4) Thus the tribunal held, in effect, that “time lost thereby” in clause 15 did not refer to the concept asserted by the owners. When the question on which leave to appeal was granted is read in context, “net loss of time” refers to that concept and plainly means “a net loss of time in performing the charter service overall”.[28]As regards the issue under appeal there is a separate point taken by Mr Buckingham. He suggested that this was a case where the outcome depended upon findings of fact by the arbitrators, and referred me to Forestships International Ltd v Armonia Shipping & Finance Corp (“The Ira”) [1995 1 Lloyd’s Rep. 103 as an example of such a case. There an appeal was dismissed because the arbitrator posed the right question to himself and answered it in accordance with the particular facts of the case. Whatever may have been the position in The Ira, however, it seems to me clear that the outcome in the present case turned on what the legal effect of clause 15 was when applied to the facts found by the arbitrators. The arbitrators held in paragraph 91 of the Common Reasons that in the circumstances of the case the drifting period caused no delay to berthing. That meant that the claim under the off-hire clause necessarily depended upon the accuracy of the crucial proposition. This was a proposition as to the true meaning of the charterparty, and thus a proposition of law. I add that in any event, as I explain in section G6 below, the judge in The Ira did not rest his decision solely on a proposition that the question in that case was one of fact only. F. The rival contentions[29]Owners relied upon the discussion of off-hire clauses in Wilford, Time Charters 6th edition (2008), including at paragraphs 25.53 and 25.54 25.53 It is usually the case that a ship is off-hire only if there has been a “loss of time”. That expression, however, can be used in two different senses.(1) On the one hand, the phrase “loss of time” is used to refer to the period of time during which the ship is prevented from working; so, in other words, “loss of time” means ‘loss of a period of service’.(2) On the other hand, “loss of time” or “time lost” is also used to refer to the period of time by which the progress of the charter service has been delayed; when used in this sense, “loss of time” or “time lost” means ‘delay to the progress of the adventure’. ‘Net loss of time’ clauses 25.54 In order to claim off-hire under Clause 15 of the New York Produce form, the charterers have to show that there has concurrently been a loss of time in both of the senses identified above. Clauses of this kind are called ‘net loss of time’ clauses. The Baltime form contains a net of loss of time clause. So, too, does the Shelltime 4 form.[30]Owners submitted that what was said in paragraph 25.54 of Wilford was directly contrary to what the arbitrators said in paragraph 79 of the Common Reasons. Owners’ first assertion was that the arbitrators had failed to take account of the difference between ascertaining the period of time during which the vessel was not fully performing and ascertaining as regards that period whether any of it constituted a net loss of time in the performance of the chartered service. In support of this assertion owners relied on The Ira and other authorities.[31]In paragraph 79 of the Common Reasons the arbitrators relied on Sig. Bereson D. Y. & Co. v Mobil Shipping and Transportation Co. (“The Berge Sund”). Owners’ second assertion was that nothing said in that case offered any support for the crucial proposition.[32]Charterers submitted that the correct approach to the off-hire clause in this claim, and to clause 15 of the NYPE form, could be set out in six numbered propositions in their skeleton argument and a seventh proposition also identified (but not numbered) in their skeleton argument:(1) The starting point is to identify the service immediately required of the vessel.(2) The identification of such service is critical in order to determine whether the full working of the vessel has been prevented. In this respect charterers referred to observations by Staughton LJ in The Berge Sund.(3) The identification of such service is equally critical in determining whether there has been a net loss of time. The relevant question is whether there has been a net loss of time in relation to the service immediately required : see observations by Robert Goff J in Western Sealanes Corporation v Unimarine SA (“The Pythia”) [1982] 2 Lloyd’s Law Reports 160, 168 and by Staughton LJ in The Berge Sund at p.459.(4) In determining whether there has been a net loss of time in relation to the service immediately required, the court should not engage in a precise comparison between the period which would have been occupied in performing the service had the off-hire event not occurred, and the period in fact occupied in performing the service. That would lead to intricate and speculative enquiries. The enquiry as to whether there has been a net loss of time is therefore restricted to the period of the inefficiency: see observations of Robert Goff J in The Pythia at p.168.(5) The point at which the vessel is once again fully efficient, is therefore a “terminal cut-off” point, after which the vessel cannot be said to be off-hire, even if subsequent delay is then caused by the previous inefficiency: see observations by Tuckey J in The Ira at p. 105. This must cut both ways, so that events after the terminal cut-off point ought not to be taken into account in determining whether there has been a net loss of time in relation to the service immediately required.(6) Therefore, in relation to the identification of a net loss of time, the enquiry is limited to the service immediately required of the vessel, and the period of inefficiency. There is good reason for such limitation: it avoids speculation as to knock on effects. The line has to be drawn somewhere.(7) Observations by Tuckey J in The Ira which suggested that computation of net loss of time under clause 15 should take account of the impact of an off-hire event upon the chartered service were wrong, and a contrary analysis by Burton J in TS Lines Ltd v Delphis NV (The TS Singapore) [2009] 2 Lloyd's Rep. 54 should be preferred.[33]Charterers’ propositions(1) and(2) were not in dispute. Nor was the first sentence of proposition (5). What was in dispute at the hearing before me concerned the remainder of charterers’ propositions(3) to (7). Do they, as charterers contend, show that, as regards the period of time during which the vessel was not fully performing the service immediately required of her, clause 15 puts the vessel off-hire for such part of that period as constituted a net loss of time only in relation to the performance of the service immediately required? If so, then in the present case there was, during the period of time when Athena was not fully performing the service immediately required of her, no element of partial performance which fell to be netted off, and in the circumstances the arbitrators’ crucial proposition was correct. Or are owners right to identify flaws in those propositions, with the result that as regards the period of time during which the vessel was not fully performing the service immediately required of her, clause 15 puts the vessel off-hire for such part of that period as constituted a net loss in the performance of the chartered service? If owners are right then the arbitrators’ crucial proposition is incorrect, there was no net loss, and these appeals must be allowed. G. Analysis[34]Whether the arbitrators’ crucial proposition is right depends on the true meaning of clause 15. For this purpose it is convenient to analyse clause 15 as involving two questions. The first is whether the clause is engaged. The second question concerns the consequences: what is to happen if the clause is engaged? These questions can be asked in relation to many contractual clauses. The first question involves identifying one or more pre-requisites, and the second involves ascertaining what the clause says should happen if a particular pre-requisite, or set of pre-requisites, is satisfied. Where there is more than one pre-requisite it will usually be possible to construct different analyses. One way of going about the analysis is to confine the first question to a single pre-requisite, so that all other pre-requisites are dealt with as part of the second question when examining the consequences if the answer to the first question is yes. Alternatively one or more of the other pre-requisites can be added to the first question, so that the remaining pre-requisites (if any) are dealt with as part of the second question when examining the consequences if the answer to the first question is yes.[35]In the present case the pre-requisites – both under the NYPE 1946 form and under the modified version used in the charterparty – include(1) that a cause prevents the full working of the vessel, and(2) the cause in question is what may shortly be described as a “prescribed cause”, i.e. a cause falling within the description in clause 15. I shall include both these pre-requisites in the first question, and thus for the purposes of analysis I shall treat clause 15 as being engaged when both these pre-requisites are met.[36]Both sides in the present case agree that as regards pre-requisite (1) the focus of the clause is on the ability of the vessel fully to perform the service immediately required of her. If she can do this, then an inability to perform some other service will be irrelevant: the clause will not be engaged unless and until there is some service immediately required of her which, by reason of a prescribed cause, she does not fully perform.[37]I turn to the second question, the consequences if clause 15 is engaged. It is here that the correctness of the crucial proposition arises. The modified clause in the present case envisages, in a passage which is an addition to the NYPE 1946 form, that there will be a “period of suspended hire”. It was not suggested that this addition makes any difference to the correctness or otherwise of the crucial proposition in the present case. It is plainly a reference back to passages earlier in the clause and forming part of clause 15 of the NYPE 1946 form, in particular: … in the event of loss of time from [prescribed causes] preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost …[38]The correctness of the crucial proposition depends upon the extent to which the clause identifies a consequence in which the words “loss of time” and “the time thereby lost” are to be linked with pre-requisite (1). The parties in the present case agree that the clause has consequences linked with pre-requisite (1) to this extent: the clause has the consequence that charterers cannot claim as off-hire any amounts in respect of delay arising after the vessel is fully efficient for the service immediately required under the charterparty. So there is a limiting feature: the claim can be for no more than the period during which the clause was engaged in the sense that I have described. The issue is whether time during that period has been “thereby lost” if charterers can show that the service immediately required was delayed but cannot show that, arising from the vessel’s failure by reason of a prescribed cause fully to perform the service immediately required of her, there was a net loss of time in performing the charter service overall.[39]The crucial proposition has the merit of simplicity: there is less likelihood of difficulty in working out the extent to which the relevant prescribed cause added to the time that would otherwise have been required to perform the service if the scope of this exercise is limited to the service immediately required. It also chimes with a notion of justice expressed by the tribunal in paragraph 72 of the Common Reasons: … it would be most unjust to hold that the Charterers are liable to pay hire … for periods when the vessel is not in their service.[40]As against that however, a lesser (or lack of) delay overall may have a substantial impact on notions of justice. The ordinary meaning of “time lost thereby” in a time charterparty involves consideration of the chartered service. While computation of overall delay may involve difficulty in some cases, it may equally, as in the present case, be straightforward. Moreover, there is good reason to deduct hire only to the extent that there was a loss of time overall, for otherwise the charterer will gain a windfall. It may be thought that the present case is a good example of commercial reasons which could lead the parties to agree that only an overall net loss of time can be deducted. In the present case the instruction to the Master to drift from 2328 hours on 19 January rather than enter Libyan waters was given by owners because of problems with the bill of lading, and ended at 2214 on 30 January when those problems were resolved. The tribunal held that even if the vessel had arrived at the port on 20 January the same problems with the bill of lading would have existed and would not have been resolved any earlier. Moreover there were other difficulties, for which owners were not responsible, preventing berthing before 3 February. In those circumstances any injustice to charterers in being required to pay hire during the period while problems with the bill of lading were resolved is rather less prominent, and the injustice to owners if they do not receive hire for that period becomes more prominent.[41]Of course notions of justice are not the only factors – perhaps not even the prime factors – in construing the clause. The correctness of the apparently straightforward approach adopted by the arbitrators in the crucial proposition depends upon the meaning of clause 15. In order to establish that meaning it is necessary to apply previous decisions of higher courts, and in so far as decisions of higher courts do not determine the outcome, to apply well established principles of interpretation in the context of this particular charterparty.[42]I add that as the arbitrators rightly pointed out in paragraph 78 of the Common Reasons, a claim under an off-hire clause may lead to a different answer than would ensue in the case of a claim for damages for breach of contract. Whether it does or not will require consideration of the particular terms of the clause and the particular facts of the case.[43]There have been many occasions when courts have considered what particular off-hire clauses mean. Consideration of what the clause means may, depending on the facts of the case, require the court to focus on one or other or both of the two questions (engagement and consequences) identified above. Sometimes the only issue is whether the clause is engaged. Sometimes it is clear that the clause is engaged and the only issue is as to the consequences which follow. In other cases the court may need to examine both questions.[44]With those preliminaries I turn to the authorities relied on by the parties.

G2. Hogarth v Miller

[45]The earliest case cited was Hogarth v. Miller [1891] AC 48. The House of Lords was there concerned with an off-hire clause in these terms: In the event of loss of time from deficiency of men or stores, break-down of machinery, want of repairs, or damage, whereby the working of the vessel is stopped for more than forty-eight consecutive working hours, the payment of hire shall cease until she be again in an efficient state to resume her service.[46]Lord Halsbury, with whom Lords Watson, Herschell and Morris agreed, said at pages 54 to 56: (p. 54) What the parties to this contract contemplated was this: The hirer of the vessel wants to use the vessel for the purpose of his adventure, and he is contemplating the possibility that by some of the causes indicated in the clause itself, namely, “the deficiency of men or stores, breakdown of machinery, want of repairs or damage,” the efficient working of the vessel may be stopped, and so loss of time may be incurred; and he protects himself by saying, that during such period as the working of the vessel is stopped for more than forty-eight consecutive hours, payment shall cease. (p. 55) … the test by which the payment for the hire is to be resumed is the efficient state of the vessel to resume her service; so that each of those words, as it appears to me, has relation to that which both of the parties must be taken to have well understood, namely, the purpose for which the vessel was hired, the nature of the service to be performed by the vessel, and the efficiency of the vessel to perform such service as should be required of her in the course of the voyage. (p. 56) I should read the contract as meaning this … that she should be efficient to do what she was required to do when she was called upon to do it …[47]In my view Mr Lord was plainly right to describe the clause in Hogarth as a “period of service” clause – see the passage from Wilford cited in section F above. Mr Buckingham submitted that it was not just a period clause. It contained, said Mr Buckingham, a first element that there must be a loss of time for 48 hours, and after that it was a period clause.[48]To my mind what Mr Buckingham describes as the “first element” is the part of the clause which sets out when it is engaged. The clause says that it applies if, by one of the prescribed causes, a particular state of affairs – “the working of the vessel is stopped” – comes about and lasts more than forty-eight consecutive hours. When that same state of affairs continues beyond forty-eight consecutive hours the consequence ensues. It is a simple and straightforward consequence:
“payment of hire shall cease until she be again in an efficient state to resume her service.”
[49]Lord Halsbury explains that the state of affairs contemplated by the clause is one in which “the efficient working of the vessel is stopped.” Nothing in what he said involved any concept of a net loss of time, for the very good reason that the clause plainly did not contemplate anything other than hire ceasing once the state of affairs had lasted more than forty-eight hours, and re-starting when the vessel was again in an efficient state to resume her service.[50]For all these reasons the Hogarth case does not assist charterers.

G3. The Apollo

[51]Turning to cases involving clause 15 of the NYPE 1946 form, the earliest that I was taken to in argument was Sidermar SpA v Apollo Corporation (“The Apollo”) [1978] 1 Lloyd’s Rep 200. Amendments to clause 15 in that case included the addition of the word “whatsoever” after the words “by any other cause”. The vessel was due to load a cargo at the Lamco Iron Ore berth at Lower Buchanan, Liberia. She anchored off the port of Lower Buchanan at 2224 hours on 27 March 1972. At that time and until 0500 on 28 March the berth was occupied by another vessel. At 0030 on 28 March free pratique was refused. The reason was that 2 former crew members, who had been hospitalised at the previous discharge port, had been diagnosed with typhus. Thorough disinfection of the vessel was required, and only when this was complete was free pratique granted at 1030 hours on 29 March.[52]An issue as to off-hire came before the court in the form of a consultative case asking in effect whether charterers could rely upon clause 15 to make deductions for the period from 0030 on 28 March to 1030 hours on 29 March, or some lesser period. The main issue in the case concerned whether the action taken by the health authorities was a prescribed cause. Mocatta J held, contrary to the submissions of Mr Siberry for the owners, that it was.[53]There was a second question which arose under the consultative case: could charterers rely upon clause 15 to make deductions for the whole of the period from 0030 on 28 March to 1030 hours on 29 March, or only for some lesser period? In the event, however, a concession by Mr Rix for the charterers meant that the judge did not need to decide this question, although he made some observations upon it. Below I set out what the judge said about the concession (at p. 203) and his observations (at p. 205): (Page 203) The charterers did not claim before me that no hire was payable for the whole of the period covered by … the question of law stated, since no berth was available until 05 00 hours on Mar. 28, and, therefore, subject to a minor point about steaming time … there was no loss of time before then. They did however claim they were entitled to make deductions in respect of 29 1/2 hours from 05 00 hours on Mar. 28, until the granting of free pratique at 10 30 on Mar. 29. They based their claim on the very wide words in the amended cl. 15 of the charter. (Page 205) … since the earliest the vessel could have entered the berth was 05 00 hours on March 28, it would seem that in answer to the second part of the question of law that the charterers are liable for hire, bunkers and stamps for the 4 1/2 hours between 00 30 and 05 00 hours on Mar. 28, since it appears that time would have been lost anyhow owing to the non-availability of the berth, whether the vessel had had free pratique or not.[54]Mocatta J’s observations on the second question were said by owners to illustrate that the correct approach was that charterers could only claim for a net loss of time in performing the charter service overall. Despite the language used by Mocatta J, however, I am not at all sure that these observations were intended to deal with consequences of the off-hire clause being engaged. Until 0500 hours, or a short time beforehand, the full working of the vessel required merely that she remain at the anchorage. It was only when the berth became free, or shortly beforehand, that the full working of the vessel would have involved steaming from the anchorage to the berth. Argument in the case proceeded on the basis that any question as to steaming time was a minor matter which could be dealt with by the arbitrators once the court had answered the consultative case. Accordingly Mocatta J’s observations proceed on the footing that 0500 hours was the time when, but for the difficulty in obtaining free pratique, the vessel would have left the anchorage. On this basis the off-hire clause was not engaged until 0500 hours. The reason is that it was only at 0500 hours that the action of the health authorities became a “cause … preventing the full working of the vessel”. Accordingly it seems to me that Mocatta J’s observations are likely to have been concerned with the identification of the point when the off-hire clause being engaged. This is all the more likely when one sees the way in which Mocatta J described Mr Rix’s concession: it was a concession that … no berth was available until 05 00 hours on Mar. 28, and, therefore, subject to a minor point about steaming time … there was no loss of time before then …[55]Charterers asserted that what Mocatta J said was consistent with the crucial proposition being correct. For similar reasons it seems to me that this assertion is not made out either. The observations by Mocatta J, and the concession made by Mr Rix, were in my view only concerned to identify the time at which the off-hire clause was engaged, and the result is that they assist neither side in the present case.

G3. The Pythia

[56]The next case concerning clause 15 which was cited to me was The Pythia. In that case a dispute between owners and time charterers was tried in the Commercial Court before Robert Goff J. It concerned responsibility for the discharge of the ship’s cargo and payment of hire following a collision in which the ship was involved just short of an up river discharging port. It was common ground that the ship, when she grounded immediately after the collision, went off-hire. When she was refloated, she ceased to proceed up river but, by reason of the accident, deviated to an anchorage at the mouth of the river, in order to discharge the cargo. The cargo was then carried by barge up river to the original discharge port. The owners said that the ship was off-hire only for the period when the ship was aground. The time charterers said that the correct approach was to ascertain the date when the ship would have been redelivered if there had been no casualty, and that hire would not be payable for a period equal to the difference between the period up to the time when the ship would have been so delivered, and the period up to the time when she was actually redelivered.[57]Robert Goff J noted that there were two relevant clauses in the charter party. The first was clause 15. This was in the standard NYPE 1946 form with some minor modifications which do not appear to have been relevant to the decision. The second clause, clause 38, was a typed clause, which read as follows: 38. If, during the currency of this Charter Party, vessel puts back whilst on voyage or any loss of time caused by accident, break-down, accident or sickness to crew (including Master) or any person on board the vessel (other than super cargo or passengers travelling under Charterers’ auspices) hire shall not be paid for the time so lost and the cost of extra fuel consumed and other extra expenses incurred shall be for Owners’ account until vessel is in the same position where deviation took place and voyage is resumed therefrom.[58]The issue in The Pythia was different from that which arises in the present case. The charterers were only partially successful in their claim. The reason why they were not wholly successful was that Robert Goff J held that under clause 15 (and also under clause 38 which for relevant purposes had the same meaning as clause 15) hire could only be deducted during the period when the full working of the vessel for the performance of the services immediately required of her was prevented. It might be that whatever had prevented the full working of the vessel would lead to further delay after the period when she had resumed full working (or in the words of clause 38, had resumed her voyage from the same position where deviation took place), but this would not be taken into account when assessing the period of off-hire.[59]Thus it was in The Pythia that the limiting feature mentioned in section G1 above was established. Both clauses 15 and clause 38 in The Pythia had consequences linked with pre-requisite (1) at least to this extent: charterers could not claim as off-hire any amounts in respect of delay arising after the vessel was fully efficient for the service immediately required under the charterparty. On the facts in that case, the ship was off-hire while she was aground, and during a period when she deviated by proceeding to the anchorage. However, from the time when the charterers acquiesced in that course of action the full working of the vessel for the performance of the services immediately required of her was no longer prevented, and she ceased to be off-hire.[60]In order to understand what Robert Goff J was concerned with in The Pythia I set out below four passages in his judgment. The first three are in the right hand column on page 168 of the report. For convenience I number them as follows:(1) Now it is customary to draw a distinction between what have been called "period" off-hire clauses and "net loss of time" off-hire clauses. Historically some time charters have contained period clauses under which in certain specified circumstances the ship goes off-hire for a certain period. The difficulty with such clauses has however been that the ship might be put off-hire during a period when by reason of a specified event her performance was impaired despite the fact that during such period she was partially capable of performing and did so perform the services required of her. See, for example, Hogarth v. Miller Brothers & Co., [1891] A.C. 48, and Tynedale Steamship Co. v. Anglo-Soviet Shipping Co., (1936) 54 Ll.L.Rep. 341; (1936) 41 Com. Cas. 206. However there are also, perhaps because of possible injustices of this kind, net loss of time clauses, under which the ship is only put off-hire for the "time lost thereby", so that the time charterers cannot escape all liability for hire in respect of time for which they have at least some use of the vessel for the services immediately required of her.(2) Even in the case of such clauses, however, it has not followed that a precise comparison will be made between the period which would have been occupied in performing the relevant service had the off-hire event not occurred and the period in fact occupied in performing that service. No doubt the making of such a comparison, with the consequence that the difference between the two periods constitutes the period of off-hire, would lead to a logical result; but it could also lead to the most intricate and speculative enquiries as to the course which events would have taken if the vessel had not gone off-hire, and perhaps for that reason we find that, in for example the Baltime charter, although no hire is to be paid in respect of "any time lost thereby", nevertheless on the form of words so used no deduction of hire is made in respect of any period after the ship is once again able to perform the service immediately required of her. That clause is therefore a net loss of time clause, but only in respect of time lost during a particular period.(3) Into which category does cl. 15 of the New York Produce Exchange form fall? In my judgment, both as a matter of construction of the clause and as a matter of authority, it falls into the same category as the off-hire clause in a Baltime charter. The clause contemplates the happening of a certain event which has the effect of preventing the full working of the vessel in the performance of the service immediately required of her. If such an event occurs, "the payment of hire shall cease for the time thereby lost". The clause therefore contemplates a cesser of the payment of hire during the period when "the full working of the vessel" is so prevented, but only to the extent that time is thereby lost.[61]The fourth passage, which for convenience I number in a similar way, is reported in the left hand column of page 169: (4) So far I have only considered the meaning of cl. 15, the printed clause. It is plain however that the typed clause, cl. 38, is to be construed in the same way, because although it provides that "hire shall not be paid for the time so lost", and the clause is therefore in form a net loss of time clause, nevertheless the relevant period is limited by the words "until the vessel is in the same position where deviation took place and voyage is resumed therefrom". Under that clause, therefore, if for example as a result of a relevant event delay was caused to the vessel after the time when the vessel had resumed her voyage from "the same position where deviation took place", such further delay would not be taken into account in assessing the period of off-hire. It is satisfactory to reach a conclusion, as a matter of construction, that both clauses are to be construed in the same manner, particularly as there is some measure of overlap between them.[62]Mr Buckingham submitted that the analysis in each of the first three passages was couched in terms of the service immediately required. I agree that the focus is on the service immediately required. That is hardly surprising, for the issue was whether or not charterers could claim for delay that had been caused to the redelivery of the vessel during the period which continued beyond the time when the collision had prevented the full working of the ship. The passage at (1) characterises a clause under which the ship is only put off-hire for the “time lost thereby” as a “net loss of time” clause. Robert Goff J points out that it will remove the injustice created by the clause in Hogarth, for the time charterers will not escape all liability for hire in respect of time for which they have at least some use of the vessel for the services immediately required of her. He does not, however, suggest that this is the only reason why the parties might consider that a net loss of time clause will avoid a possible injustice.[63]In the passage at (2) Robert Goff J notes that even in the case of net loss of time clauses it has not followed that a precise comparison will be made between the period which would have been occupied in performing the relevant service had the off-hire event not occurred and the period in fact occupied in performing that service. As it seems to me, this passage recognises that a net loss of time clause inevitably involves some comparison. Robert Goff J notes that under the Baltime charter the scope for “the most intricate and speculative inquiries as to the course which events would have taken if the vessel had not gone off-hire” is limited in that no deduction of hire is made in respect of any period after the ship is once again able to perform the service immediately required of her. To my mind the last sentence of the passage at (2) is making the point that the Baltime clause is not a full “net loss of time clause”, because deduction of hire can only be made up to the end of the period when the vessel is unable to perform the service immediately required of her. The passage at (2) is not saying that the result will be that all “intricate and speculative inquiries” will thereby be removed.[64]Turning to the passage at (3), again it seems to me that the focus is upon the question whether the time that charterers can claim as off-hire is limited to the period when a prescribed cause prevents the full working of the vessel for the service immediately required of her. Robert Goff J’s conclusion is that the position under clause 15 of the NYPE form is the same as that under the Baltime form: it “contemplates a cesser of the payment of hire during the period when ‘the full working of the vessel’ is so prevented, but only to the extent that time is thereby lost.”[65]Thus as regards clause 15 the facts in The Pythia did not require Robert Goff J to consider the question which arises in the present case. Nor did he enunciate any general proposition inconsistent with owners’ assertion in the present case. On the contrary, it seems to me that owners’ assertion is supported by Robert Goff J’s analysis, as is made clear in the fourth passage. He there explains that while clause 38 referred to “the time so lost” and was thus “in form a net loss of time clause”, nevertheless the relevant period is limited by other words – and clause 38 is thus to be construed in the same manner as clause 15. A period of delay after the vessel has resumed the voyage cannot be taken into account “in assessing the period of off-hire.” This analysis is not one which says that a net loss of time clause is concerned only with the service immediately required. It is an analysis which says that certain net loss of time clauses have a limitation, which means that they do not go as far as charterers might wish. Nothing in this analysis says that clause 15 of the NYPE form has the consequence that charterers do not need to show that there was a net loss of time in performing the charter service overall.

G4. The Berge Sund

[66]The LPG carrier Berge Sund was the subject of a time charterparty which provided, among other things: 8(a) In the event that a loss of time, not caused by Charterer’s fault, shall continue, … due to repairs, breakdown, accident or damage to the vessel, collision, stranding, fire, interference by authorities or any other cause preventing the efficient working of the vessel, for more than twenty-four (24) consecutive hours . . . then hire shall cease for all time so lost until the vessel is again in an efficient state to resume her service and has regained a point of progress equivalent to that when hire ceased hereunder.[67]After a voyage under the charterparty carrying a cargo with a high sulphur level, and completion of a subsequent ballast voyage, Berge Sund arrived at Ras Tanura with a view to loading a new cargo. Her tanks were inspected prior to berthing. The tanks were found, despite diligent cleaning during the ballast voyage, to be contaminated with sulphur. Additional cleaning was then carried out. A dispute as to the resultant delay in loading was referred to arbitration. The arbitrators found that she was off hire from arrival at Ras Tanura until she was able to load. Owners’ appeal from the arbitrators’ award was dismissed by Steyn J. In the Court of Appeal, however, owners succeeded. The reason was that the service immediately required by charterers was not loading. Instead it was additional cleaning. Berge Sund was fully able to carry out the additional cleaning, and thus there was no cause preventing the efficient working of the vessel.[68]The leading judgment was given by Staughton LJ, with whom Balcombe LJ and Sir Roger Parker agreed. Mr Buckingham referred me to pages 459 to 460, where Staughton LJ cited from passages in the Hogarth case set out in section G2 above, and added: The reasoning in that decision seems to me equally applicable in the present case, whether one is considering "loss of time", or "preventing the efficient working of the vessel", or "again in an efficient state." In each case one has to decide whether Berge Sund while at Ras Tanura, was in the words of Lord Halsbury "efficient to do what she was required to do" by the charterers. Unfortunately that is by no means the end of the problem, but only the beginning of it. … The question is not what the charterers hoped or expected their orders would be, but what service they actually required.[69]These passages were said by Mr Buckingham to show that the relevant enquiry is whether there has been a net loss of time in relation to the service immediately required. I do not agree. The only question which arose in the case was whether the off-hire clause was engaged. Once it was decided that the service immediately required was cleaning, this being in the ordinary way an activity required by a time charterer which might be more or less onerous depending on what cargoes were loaded, it followed that the clause was not engaged.[70]Thus the Court of Appeal’s decision in The Berge Sund had no concern whatever with any questions as to the consequences of an off-hire clause being engaged. It follows that it does not assist charterers in the present case. As Mr Lord rightly submitted, in relying on The Berge Sund to support the crucial proposition, the tribunal in the present case overlooked the distinction between the question whether the clause is engaged on the one hand and, on the other hand, questions as to the consequences which arise when the clause is engaged. Moreover, as Mr Lord also pointed out, the way in which the clause identified relevant consequences (“all time so lost”) is different from the terminology in clause 15 of the NYPE 1946 form.

G6. The Ira

[71]In The Ira an arbitration award held that charterers could not make deductions under clause 15 of the NYPE form for all the time which they said had been lost when the vessel drydocked. Discharge was completed at Ravenna on 11 January 1992 and by agreement the vessel proceeded to Piraeus where she was drydocked. On 24 January owners informed charterers that the vessel would be at their disposal on dropping outward pilot at Piraeus the following day at noon. On the same day charterers voyage chartered the vessel to load a cargo at Novorossiysk in the Black Sea. Piraeus was, with a very slight deviation, on the route from Ravenna to Novorossiysk. The dispute concerned the time spent on the voyage from Ravenna to Piraeus. Charterers claimed it as “time lost thereby” within the meaning of clause 15. However the arbitrator upheld owners’ submission that the time spent sailing to Piraeus was not lost to charterers because that voyage was en route to Novorossiysk and therefore not lost.[72]As noted in section E above, an appeal from the arbitration award came before Tuckey J, who decided the case on the basis that the arbitrator posed the right question to himself ("What time has thereby been lost?") and answered it in accordance with the particular facts of this case. Causation being a question of fact, Tuckey J said that he would dismiss the appeal on that ground alone.[73]Even so, however, Tuckey J went on to consider the position on the assumption that the matter did indeed raise a question of law. On that footing, Tuckey J cited from what was said by Robert Goff J in the Pythia, and said at pp. 151-152: … It seems to me that the question of whether the vessel was operating on the orders of owners or charterers is not to the point in calculating what time was actually lost to the charterers as a result of the off-hire event. Obviously during the time that the vessel is under directions to go to the port where it is to be drydocked and during the drydocking itself, an off-hire event has taken place. But the fact that it has taken place does not automatically supply the answer to the question of what time has been lost as a result of that occurrence … Were this a period off-hire clause, then … [one] could count the time, minute by minute, without regard to the consequences; but that is not the case here. Here the tribunal must obviously count the time and count the duration of the off-hire event but it must then go on to see what causative effect that has had upon the charterers in the particular circumstances of the case. … It is obvious that in certain circumstances it is not possible to determine what loss of time has occurred until the end of the off-hire event. If one asks the question at that stage in this case … there can only really, in my judgment, be one answer. They have not lost the time that it has taken for the vessel to sail from Ravenna to Piraeus, apart from the small amount of time involved in the deviation into that port for the purpose of drydocking.[74]Mr Buckingham recognised that what was said by Tuckey J in the passages cited above was directly contrary to charterers’ case before me, for in considering the causative effect of the off-hire event Tuckey J had regard to its impact upon the chartered service after the period when the vessel was not fully able to perform the service immediately required of her. Noting that the primary basis for Tuckey J’s decision was that the question in the case was one of fact, Mr Buckingham submitted that the passages cited above were obiter. I do not think it matters whether they were ratio or obiter. They are not binding on me either way. What is important to my mind is the compelling force of the reasoning in these passages. Mr Buckingham submitted that they were inconsistent with The Pythia, but for the reasons given in section G4 above I do not consider that what was said in that case supports Mr Buckingham’s argument.[75]Further, so far as relevant for present purposes, I cannot accept Mr Buckingham’s proposition that what was said by Tuckey J is inconsistent with The Berge Sund. For the reasons advanced by Mr Lord and accepted by me in section G5 above, that case is not concerned with consequences. I add that – although the point does not arise in the present case, and does not appear to have been argued in The Ira – there is a possible inconsistency on the question whether what I have called pre-requisite (1) under clause 15 was met. Under The Berge Sund that question involves asking, what service was immediately required by charterers of Ira when she left Ravenna? It seems that in The Ira the answer might well be “none”. That is, however, a digression which does not affect the analysis in the present case.[76]Of more interest to the present case is that the facts in The Ira could ordinarily be expected to bring clause 21 of the NYPE form into play. This provides for drydocking to be obligatory once every 6 months, using the following wording: … Vessel is to be docked at a convenient place, bottom cleaned and painted …, and payment of the hire to be suspended until she is again in proper state for the service.[77]Thus the form contemplates that, under clause 21, for the period spent by the vessel from the time she docks until “she is again in proper state for the service” there is to be no payment of hire. This will generally take effect as a “period of time” off-hire clause while drydocking itself is taking place. It contrasts with the clear intention – shown because clause 15 of the form includes the words “drydocking for the purposes of examination or painting bottom” – that charterers should also be able to utilise clause 15 to deduct hire and associated expenses for time lost by reason of drydocking over and above the period of suspension of hire under clause 21. On the assumption that – despite what was said in TheBerge Sund – an off-hire event starts when the vessel steams towards the drydock at a time when no employment for her has been identified, it plainly makes sense for the time lost thereby to be calculated by reference to what was required of the vessel after drydocking. In The Ira charterers’ requirements were known shortly before drydocking ended. No doubt for that reason Tuckey J focused on the position at the end of drydocking. His reasoning, however, would be equally apt if the order to go to the Black Sea had not been given until a few hours after dropping outward pilot at Piraeus.

G7. The TS Singapore

[78]In The TS Singapore [2009] 2 Lloyd's Rep. 54 there were, as in the present case, awards by arbitrators in references under two time charterparties on back to back terms based on the NYPE form. The disputes which arose, however, concerned two additional clauses not based on that form. The immediate dispute concerned entitlement to redeliver the vessel under an additional clause 81. This conferred such an entitlement if the vessel were off-hire for a period of 20 consecutive days. As to off-hire, the charterparties included an additional clause 57, which read: Any time lost, either in port or at sea, deviation from the course of the voyage, or putting back whilst on voyage caused by sickness of or any accident to the crew … or due to an accident or breakdown to the vessel, the hire shall be suspended from the time of inefficiency in port or at sea, deviation or putting back, until the vessel is again efficient in the same or equivalent position, whichever is the shorter distance to the port where the vessel is originally destined, and the voyage resumed therefrom … In the event of loss of time arising for arrest, government restrictions or boycott…payment of hire shall cease for the time thereby lost.[79]En route from Yokohama to Shanghai the ship anchored outside Yokohama because of an approaching typhoon. In the early hours of 7 September 2007 she dragged her anchor and collided with a breakwater, suffering substantial damage. As a result, the ship stayed at Yokohama until 10.48 on 22 September. Class imposed a condition on her departure from Yokohama, namely that she proceed direct to Hong Kong to discharge the entire cargo, after which she was to sail to Guangzhou for repairs.[80]The arbitrators accepted owners’ arguments that the vessel was off-hire from 7 September until 22 September, while the vessel remained in Yokohama, but came on-hire again from leaving Yokohama at 10.48 on 22 September. This was because, although she was en route to Hong Kong, the routes to Hong Kong and to Shanghai were initially identical. They held that it was only when the vessel diverted from the route to Shanghai, at 20.16 on 23 September, that the vessel went off-hire again.[81]Burton J allowed an appeal by charterers from the awards. He held that from the very beginning of the voyage from Yokohama the vessel was not intending to comply with the charterers’ instructions, and was not going to Shanghai, even though she might have been going towards Shanghai for the first day and a half. Going towards Shanghai was not carrying out the service required by the charterers.[82]In the course of his judgment Burton J dealt with a particular argument advanced by Mr Goldstone QC for charterers:38. The third submission that Mr Goldstone made at least had the benefit of giving me pause for thought, because it had a certain element of attraction to it, and that was what he called commercial injustice. If, says Mr Goldstone QC, the position is that the vessel goes off-hire the minute that it sets out on a voyage which does not comply with the charterers’ instructions, even if going in the general direction of where the charterer would have liked it to go, then if the charterparty is not cancelled, and if the vessel goes to a yard and is repaired, and is then either reloaded, or never discharges, and carries on with the charterparty, and with the voyage which had been so substantially interrupted, then different consequences would ensue, depending upon where the yard is.39. If, he submits, the yard is further away, such that the journey from the yard once the vessel goes back on-hire to the original destination is further than it otherwise would have been, then clause 57 limits the charterers’ obligation to no greater distance than the charterers would have paid for to start with, if there had been no diversion. If, however, the yard happens to be nearer to the ultimate destination, then, unless the charterer has had to pay something for that part of the journey which had been interrupted by the voyage to the yard, then the charterers will get the benefit of that voyage being shorter. This, of course, only arises if the charterparty is not cancelled in such a scenario, and that is unlikely, in my judgment, to be the majority of cases.40. Mr Siberry’s answer was a straightforward one, and that is that an off-hire clause is a blunt instrument, and does not necessarily always do justice. See, for example, the very case of Hogarth, to which such a degree of reference has been made, where the owner did not recover any hire, even though the cargo limped its way to the correct port of discharge and discharged. But the fact that in unusual cases an off-hire clause may not do entire justice does not, in my judgment, mean that I should conclude that a vessel is on-hire when it is plainly not. The answer might well have been different if the vessel had already set out from Yokohama before a decision was made to change its destination en route. It could well have been said in those circumstances that, until that decision was made, it was still carrying out the charterers’ instructions, and the vessel remained on-hire until that time. Thus Mr Goldstone’s fairness would trigger in. But that was not the case. There was here a change of route from one compliant with the charterers’ instructions to one non-compliant, and compliant rather with the instructions of Class, from the beginning.[83]Mr Buckingham noted that Burton J in The TS Singapore held that there was a loss of time whilst the vessel was not tendering services to the charterers (but heading to a repair port), and that this was so (in Mr Buckingham’s words) “notwithstanding that the direction of the vessel’s travel had, coincidentally, the effect of bringing the vessel closer to the charterer’s next disport.” He submitted that Burton J’s analysis was thus contrary to that of Tuckey J in The Ira. I cannot accept this submission. It is true that Burton J, in particular in the passage cited above, held that in that case the vessel was off-hire even though during the relevant period the cargo was being carried in the direction of the discharging port identified in charterers’ orders. However the only off-hire clause discussed in Burton J’s judgment is clause 57. It is very different from clause 15 of the NYPE form. The last part of clause 57 identifies certain prescribed causes which have the consequence that the vessel would be off-hire for a net loss of time. The relevant prescribed cause, however, was “accident … to the vessel”, and fell within the earlier part of clause 57, which as regards that earlier part was a “period of time” clause. No doubt for that reason there was no discussion in Burton J’s judgment of net loss of time. Nothing in Burton J’s judgment suggests that clause 15 of the NYPE form, or any contractual provision referring to “loss of time thereby”, was engaged. Accordingly nothing in Burton J’s judgment is in any way inconsistent with Tuckey J’s analysis in The Ira.

G8. The correctness of the crucial proposition

[84]For the reasons given above I consider that clause 15 in the present 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. 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. I do not consider that observations in other cases are inconsistent with this approach. I am not persuaded of charterers’ proposition (3) because Robert Goff J’s observations were concerned to identify a “period” limit by reference to the duration of the off-hire event, and because Staughton LJ’s observations were concerned only with the circumstances in which the off-hire clause in that case would be engaged. For the reasons given in section G5 above, proposition (4) is not, on analysis, supported by what Robert Goff J said in The Pythia. The notion in the second sentence of proposition (5) that the limitation to the duration of the off-hire event “must cut both ways” fails to differentiate between the logic of saying that hire can only be deducted for a period limited to the duration of the off-hire event, and the separate consideration that within that limit, there should be a deduction only to the extent that there was a net loss of time to the chartered service. It is also fails to acknowledge that Tuckey J’s judgment in The Ira saw no need for the limitation to “cut both ways”. Proposition (6) fails to recognise that the ordinary meaning of “time lost thereby” involves consideration of the chartered service, and the potential for good commercial reasons to restrict deduction of hire not merely to the duration of the off-hire event but also to the extent to which time was in fact lost to the chartered service. For the reasons given in section G7 above, proposition (7) misunderstands what was said by Burton J in The TS Singapore.[85]The result is that owners’ assertions are correct, and that the arbitrators’ crucial proposition was incorrect. H. The respondent’s notice[86]Charterers had indicated that they would seek to uphold the award on the basis that the arbitrators ought to have found in charterers favour on the first of the three alternative contentions they had advanced. This was that no hire was due because, during the period in question, the vessel was not at their disposal. Cooke J did not give permission for this point to be argued, but left over for consideration at the hearing the question whether permission to argue this point should be given. In the event there was no application for such permission. Instead, Mr Buckingham in his skeleton argument identified a different basis on which he submitted that the award could be upheld. His submission was that to the extent that the vessel was not made available for charterer’s service, but charterers were deprived of its use, then the hire paid in advance was not earned, and charterers were entitled to recover hire for the period of deprivation by way of damages.[87]However Mr Buckingham acknowledged that in order to be able to advance this submission he had to show that the point had been raised in the arbitration. He urged in that regard that this submission was, in substance, the same as the point which had been raised in the arbitration when advancing the first of the three alternative bases of claim, as described in the Common Reasons at paragraphs 71 to 75 (see section D1 above). I do not agree. The first alternative was a claim that hire was not payable because it was not due, and that there was an implied term to the like effect in relation to bunkers and CEV. In my view the submission for which permission is now sought is fundamentally different – it is in substance a new head of claim to damages. It was not included in the third alternative basis of claim (see section D2 above) where the claim to damages was put on an entirely different footing. Accordingly it would not be right to allow it to be raised now, and I refused permission to do so.

J. Conclusion

[88]For the reasons given above I conclude that the appeals by head owners and disponent owners must be allowed.

Cited in 2 later judgments