Escalating demurrage under ‘stop and wait’ clause.

In Gard Shipping AS v Clearlake Shipping Pte Ltd [2017] EWHC 1091 (Comm) Sir Jeremy Cooke considered the effect of a ‘stop and wait’ clause which gave charterers a liberty, at any stage of the voyage, of instructing the vessel to stop and wait for orders. For the first three days time would count as used laytime or time on demurrage, if vessel was on demurrage, and all bunkers consumed were to be for charterers account. After five days “waiting for orders/disch instructions at sea vessel to be considered as being used for storage” and escalating rates of demurrage applied. The Vessel tendered NOR at the discharge port of Rotterdam at 2250 on 26 January 2016 but charterers did not give any discharge instructions until the afternoon of 31 March 2016.

Owners claimed demurrage at the escalating rate pursuant to the ‘stop and wait’ clause on the grounds that the vessel had been used for storage for this time. The charterers argued that the waiting time at Rotterdam of 64.7083 days fell under the laytime and demurrage regime in the charter. The owners’ claim failed. The clause only operated in the event of an instruction to the vessel “to stop and wait for orders” and did not cover a passive failure to give orders. The charter provided different regimes covering payments in the form of demurrage and/or payment for bunkers used, each with their own trigger. The trigger for entry into the ordinary loadport/disport regime was the service of the NOR, in this case, at the disport and this was wholly distinct from the orders to which the ‘wait and stop’ clause referred.

The court also rejected owners’ argument that there should be an implied term that the vessel was to be considered as being used for floating storage if stopped for more than five days over the course of the voyage, whether before or after reaching the disport or giving NOR. It was not necessary to imply the term into the contract and the implication of the term was inconsistent with the charter as properly construed.

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