London Arbitration 24/16 provides a salutary reminder to owners that charterers may recover additional time to that allowed for under the off-hire clause, if the off-hire event is also a breach of contract by owners. A trip charter had been concluded on NYPE 1946 form with additional rider clauses, the relevant one being cl. 7. This provided: a warranty that on arrival at 1st loading port the holds should be clean and ready to receive charterers’ cargo in all respects; if the vessel failed the hold survey by the shippers’ surveyor then the vessel was to be placed off-hire from the time of rejection until the time of acceptance in all holds; any extra directly-related costs/expenses/time therefrom to be for owners’ account.
The vessel failed her holds survey and on passing it, the vessel had lost her turn to berth and it was a further week before she eventually berthed. The owners argued that the off-hire provision in cl. 7 was conclusive as to the amount of time that charterers could claim and that the vessel would be off hire only for the 70 hours between failing and then passing the survey. The tribunal held that additional time consequential on the failure of the hold survey could be recovered by reason of the owners’ breach of their clean holds warranty in the first part of cl. 7. The additional time spent in waiting for a berth after the vessel reentered the berthing queue was directly related to the breach of the warranty. That appropriate form of compensation was that charterers were relieved of the obligation to pay hire for that time.
2 thoughts on “Charterers recover consequential loss of time in addition to off-hire.”
Hi Simon, this is an interesting conclusion.
I compare this to the Nikmary which was a tanker voyage charter under Asbatankvoy with an additional clause similar to that described in this case.
The Nikmary was a demurrage case and the Owners successfully argued that the ‘additional time’ counts as demurrage with the court deciding that the Charterers have ‘an overriding obligation to provide a cargo’.
Obviously this ‘overriding obligation’ does not apply to Time Charterers