When do time charterers have to pay hire after redelivery? When there’s the right form of underwater cleaning clause. So held Sir Ross Cranston (sitting as a High Court Judge) in The Globe Danae (Smart Gain Shipping v Langlois Enterprises) [2023] EWHC 1683 (Comm). The clause in question, in a trip charter, provided:
“Clause 86 Hull Fouling
Owners not to be responsible for any decrease in speed/increase in consumption of the Vessel whether permanent or temporary cause [sic] by Charterers staying in ports exceeding 25 days trading in tropical and 30 days if in non-tropical waters. In such a case, underwater cleaning of hull including propeller etc. to be done at first workable opportunity and always at Charterers’ time and expense. After hull cleaning vessel’s performance warranties to be reinstated.”
The issue at stake was whether Owners could claim the hire rate (and related expenses) for the time used in hull cleaning after redelivery, or whether they were confined to a claim in damages for breach of the charterparty. In arbitration the Charterers argued that they were not obliged to carry out cleaning after redelivery of the vessel, and Owners were confined to a claim in damages to put them in the position they would otherwise have been in and were not entitled to the cost of hire since there was no longer an obligation to pay it. The Tribunal rejected these arguments and found for Owners, referring to The Nicki R [1984] 2 Lloyd’s LR 186, which involved a similar clause concerning stevedore damage, as authority for the proposition that the Owners were not required to demonstrate loss of time regardless of whether the cleaning was performed before or after redelivery. If a clause allocates liability for the time to the charterer, the owners do not have to prove any actual loss of time and Owners can claim in debt.
On an appeal pursuant to s.69 of the Arbitration Act 1996, Sir Ross Cranston upheld the award of the Tribunal. First, the words of the second sentence supported the tribunal’s conclusion and the Owners’ construction. Cleaning was to be “always at Charterers’ time”, and that meant that the Charterers must always pay for the time associated with underwater cleaning. The phrase “at the first workable opportunity” covered both before and after the charterparty. As this charterparty was for a single trip, the first workable opportunity for cleaning following a 25 or 30-day idle period would likely be once the charter had concluded and the vessel had been redelivered.
Had the parties intended for Charterers to compensate the Owners for any “loss of time” resulting from the cleaning, the language of clause 86 could have said this. But the clause used the phrase “always at Charterers’ time”. The charterparty contained clauses “at Charterers’ time” or similar, and clauses referring to “loss of time” or similar, so that the parties must be taken to have intended that a distinction be drawn between the two phrases. The plain words of the clause therefore supported the Tribunal’s conclusion, The clause required that the cleaning be at the Charterers’ time and expense. The charter did not expressly stating that underwater cleaning must be undertaken before the vessel is redelivered to the Owners.
As to commercial purpose, the rationale of clause 86 was that the vessel needed underwater cleaning because of the Charterers’ orders that it remain idle and must therefore pay for the time and cost of remedying the consequent fouling. The vessel could be redelivered unclean, but then Charterers must compensate the Owners at the hire rate for the time when cleaning is undertaken. This was commercially sensible. What would not be commercially sensible would be to provide the Charterers with an incentive to redeliver the vessel without cleaning, and to evade having to pay hire for the time spent cleaning, unless there was a workable opportunity for that to be undertaken before redelivery.
To conclude, there was no reason not to apply The Nicki R and it was binding.
