Demurrage time bar clause. What is the time for “completion of discharge”?

In Euronav NV v Repsol Trading SA (mt Maria) [2021] EWHC 2565 (Comm) Henshaw J was faced with a dispute between owners and charterers as to whether a demurrage claim was barred by clause 15(3) of the Shellvoy 6 form, which requires notification to be made of a demurrage claim “within 30 days after completion of discharge” failing which the claim becomes time-barred. The Vessel discharged at Long Beach and disconnected hoses at 21:54 local time (PST – Pacific Standard Time) on 24 December 2019, as noted in the Statement of Facts and laytime statement. On 24 January the Charterers received owners’ brokers an email stating that: “According to owners, demurrage has incurred on above [subject] voyage. Hence, please take this email as demurrage notice”.

Whether owners’ notification was within the thirty days after completion of discharge depended on which time zone was used in respect of ‘completion of discharge’. It was agreed that when computing a period of time within which a certain thing must be done, the first day is not ordinarily counted and that the date of discharge – whichever date it was – was ‘day 0’ and not counted as one of the 30 days within which notification had to be given. In addition ‘day’, absent any contrary indication meant a calendar day, i.e. the period of twenty-four hours beginning and ending at midnight, and not merely a period of twenty-four consecutive hours.

If as charterers’ argued, one took local time in California, where discharge took place, day one would be 25 December and the claim submitted on 24 January would be out of time and time-barred. Owners argued that for three alternatives which would give the date of completion on 25 December, and day one on 26 December:   (a) the time zone of the recipient of the required notice (here, Spanish time, that of Charterers), (b) the time zone of the giver of the required notice (here, Belgian time, that of Owners) or (c) GMT, given that the contract applied English law?  On each of these approaches the claim would not be time-barred.

Henshaw J held that the date of completion of discharge is to be determined applying local time at the place of discharge for the following reasons [61]:

“i)                   The ordinary and natural approach is to allocate to an event (e.g. a historical event, or a person’s birth, marriage or death) the date that was current in the place where the event occurred.

ii)                 That approach gains some support from the authorities and commentary referred to in §§ 30-35 above.

iii)               The discharge of cargo from a vessel is a tangible physical event, which occurs at a specific location and in a particular time zone.  It will in the ordinary course be recorded in documents, such as the Statement of Facts and any laytime statement, as having occurred at the time and date current applying local time.  A contracting party would naturally expect the date stated in such documents to be the date of completion of discharge for contractual purposes.

iv)               The date of discharge of the cargo is significant not only for the purpose of notification of demurrage claims, but also for other purposes.  It represents the end of the contractual service to the shipper, and ends the running of laytime or demurrage.  Under clause 15(3) itself it is also the start date for the separate 90-day period for service of supporting documents.  It is generally the starting point for the time limit under the Hague-Visby rules for cargo claims.  It would be unnatural and illogical either (a) for there to be more than one date of discharge, used for different purposes, or (b) for the date of discharge pursuant to (say) the Hague-Visby rules to be determined by something as potentially arbitrary and non-transparent as the place of receipt (or, even, potential receipt) of a notice of any demurrage claim.  Whether the date of delivery for Hague-Visby purposes is determined using local time at the place of discharge (which I am inclined to consider the obvious approach) or using the relevant court’s own time zone (as was mooted during submissions but appears to me less attractive), Owners’ case creates the prospect of the same event being differently dated for different purposes.

v)                  The use of local time at the place of discharge gives rise to a single, clear and easily ascertainable date and time of completion of discharge.  It tends to promote certainty and reduce the risk of confusion.

vi)               It is inherent in a date based system that different time zones may apply to the events which define the start and end of the period, if they are in different countries.

vii)             The point that it is not essential to apply the same time zone to the beginning and end of the 30 day period under clause 15(3) is illustrated by a case where daylight saving time changes during the period.  If, for example, discharge is completed on a particular day in the UK, and a notice is served at half past midnight on day 31, the notice would be out of time even if the clocks had gone forward an hour to GMT + 1 in the meantime (so that half past midnight was 11.30pm on day 30 GMT).  

viii)           If it were appropriate to determine both dates using a single time zone, it would be more logical for that to be the time zone of the place of discharge.  As already noted, the completion of discharge is a significant physical event, with a natural date, usually recorded in contemporaneous documents, and with several consequences under the contracts relating to the voyage.

ix)               The considerations discussed in section (D) above give no compelling or sufficient to depart from the natural approach.

x)                  There is no ambiguity in clause 15(3) that might justify a contra proferentem interpretation.”

Time charter trip. Quantifying shortfall of bunkers remaining on board on redelivery.

In London Arbitration 19/21 the bunker clause in a trip time charter from the Far East to Egypt provided:

“8. BUNKER CLAUSE:

BOD about 830 metric ton IFO 380 CST about 78 metric ton LSMGO.

Prices both ends: USD425 PMT for IFO 380 and USD685 PMT for LSMGO. 

BOR about same as BOD of IFO and BOR as onboard of LSMGO.”

The vessel was delivered with 888.56 mt of IFO on board and redelivered with 686.07 mt. The owners were prepared to allow a margin of 2 per cent for the term “about” but submitted that even on that basis the charterers had redelivered with a shortfall of 184.7188 mt of IFO. They said that the prevailing market price of IFO at the place of redelivery in Egypt was US$510 per mt, and claimed the difference between that price and the charterparty price of US$425 per mt on the shortfall, a total of US$15,701.10.

The Tribunal  held that the word ‘about’ without further clarification imported a 5 percent margin for both delivery and redelivery. Owners argued that this was not the case on redelivery because the charterers had the opportunity of supplying further bunkers to make up the shortfall but deliberately decided not to do so. Although the Tribunal could see the attraction of the argument it rejected it as adding such a gloss to the usual understanding of the term ‘about’ would cause uncertainty and leave the parties in the dark as to the nature and extent of their obligations.

The Tribunal then held that the charter prices on redelivery only applied to legitimate quantities on delivery and redelivery and not to any quantities as submitted by the charterers. The appropriate comparison to be made was between the charterparty price and prevailing market price at the place of redelivery. Speculation as to where and at what price the owners might have taken on bunkers after redelivery had to be discounted as a matter of an independent commercial decision of the owners after redelivery. 

The Tribunal rejected Charterer’s argument that they had requested the owners to load more bunkers at Singapore but were told that the vessel did not have sufficient tank capacity to load the quantity proposed by the charterers. The charterers had not then taken on additional bunkers in Egypt because the supply of bunkers there was unreliable both in terms of service and quality. There was no warranty as to the bunker capacity of the vessel and/or its ability to take on board any quantity of bunkers required by the charterers at any time at Singapore, or elsewhere, during the course of the trip.

Repudiation of time charter. Owners’ claim for summary judgment for damages.

The Marquessa (Giorgis Oil Trading Ltd v AG Shipping & Energy PTE Ltd) [2021] EWHC 2319 (Comm) involved repudiation of a time charter on Shelltime 4 form (as amended). Following repeated non-payment of instalments of hire, owners eventually accepted this conduct as Charterers’ repudiation and terminated the charter.  The vessel was then carrying a cargo, loaded on the orders of Charterers, for sub-sub-charterers, and having exercised a lien, as an act of mitigation, Owners agreed with Voyage Charterers to complete the voyage in exchange for payments to escrow.

 Owners applied for summary  judgment in respect of:

i)  unpaid hire accrued due prior to the termination of the Charterparty (the “Pre-Termination Claim”), and,

ii) damages consequent upon Owners’ termination of the Charterparty on the basis of Charterers’ repudiation or renunciation (the “Post-Termination Claim”), but excluding damages in respect of the period after the discharge of Charterers’ cargo from the Vessel.

Henshaw J rejected Charterers’ assertion that Owners had failed to allow for off-hire periods, presumably for the periods during which Owners suspended performance. Suspension of performance was permitted by the following clause in the charter.

“… failing the punctual and regular payment of hire …  [Owners] shall be at liberty to at any time withhold the performance of any and all of their obligations hereunder … and hire shall continue to accrue …”

Owners’ right to suspend performance was not a penalty. Nor was it arguable that Owner’s exercise of the right to suspend performance was an unlawful exercise of a contractual discretion.  The nature of the right is such that owners could reasonably have regard purely to their own commercial interests.  In any event, the suspension of performance in the present case was not arguably irrational, arbitrary, or capricious. Neither were Owners obliged to mitigate. Their claim was for liquidated sums due under the contract, not damages for breach. Further, any obligation to mitigate did not require them to refrain, while the Charterparty remained on foot, from exercising their right to suspend performance.  In any event, Owners did subsequently take reasonable steps to mitigate by means of their arrangement with the Voyage Charterers.

Henshaw J agreed that by the time Owners treated the Charterparty as having come to an end by reason of Charterers’ breaches a reasonable owner would have concluded from Charterers’ conduct that they would not pay hire punctually in advance as required by the Charterparty:

i) Charterers had failed to pay hire from the outset, and this continued over the ensuing months. 

ii) At most, Charterers expressed a willingness to perform, but repeatedly proved unable or unwilling to do so. 

iii) Charterers’ conduct in the present case deprived Owners of “substantially the whole benefit” of the Charterparty, and they were seeking to hold Owners to an arrangement “radically different” from that which had been agreed. 

It was not arguable, that Owners themselves were in repudiatory breach, for suspending performance and then reaching an agreement with Voyage Charterers: The charter entitled Owners to suspend performance, and the arrangement with the Voyage Charterers was a lawful step in mitigation, realising value from the exercise of Owners’ lien, and in any event post-dated the contract having come to an end upon their acceptance of Charterers’ breaches.

When the Charterparty came to an end in November 2020, the Vessel was laden with cargo and until discharge, no replacement charterparty at the current market rate was possible, and therefore there was no scope for entering into a mitigation charterparty. Accordingly damages ran at the charter rate up until discharge, from which Owners gave credit for address commission, Charterers’ payments and relevant sums received from the Voyage Charterers.  Credit was also given credit for the value of bunkers remaining on board at the date of discharge at the contractual rate in the absence of any evidence from Charterers as to the actual sums paid for the bunkers.

The correct date for assessing the credit for bunkers remaining on board was that of discharge on completion of the voyage for which Charterers had given orders, and not the date of termination. Clause 15 of the Shelltime 4 form (as amended) provides that “… Owners shall on redelivery (whether it occurs at the end of the charter or on the earlier termination of this charter) accept and pay for all bunkers on board …”.

The relevant date must, logically, be the date of actual redelivery, even if it was in fact later than the (natural) end of the charter or the date on which it was contractually brought to an end.  In any event, even if clause 15 were not construed in that way, owners would be still entitled to recover the bunkers used to complete Charterers’ voyage on a different basis, viz as damages or in bailment – as in The Kos [2012] UKSC 17.

Accordingly, Henshaw J found that Owners were entitled to summary judgment for a sum equivalent to hire from when they accepted Charterer’s repudiation to the date of discharge on the laden voyage in progress at that date, less credit for commission and bunkers remaining on board at the latter date.

Incorporation of Bulk Terminal Terms into Charter. Effect on Laytime and Demurrage Regime.

In London Arbitration 15/21 the Tribunal considered the effect, if any, of the incorporation into the fixture of what were referred to as UBT (United Bulk Terminal) Rules, which were rules imposed contractually by the berth operators on users of the berth. These provided:

 “2.2 NOTICE OF READINESS

In the case of an Ocean Vessel to be loaded, issuance of the Notice of Readiness shall mean that the Ocean Vessel (1) has obtained all requisite governmental approvals, inspections and clearances, including, but not limited to, those required by the US Customs Service and the Immigration and Naturalization Service; and (2) is located at the Berth or Closest Available Anchorage (as defined in section 2.5 below); and (3) is ready and suitable in all respects to receive the Cargo in all holds to be loaded; and (4) has confirmed with the Terminal that the Cargo is to be loaded to Vessel is in storage at the Terminal or, if Cargo is to be direct transferred, is in barges in the Terminal’s fleet; and (5) has determined that the Cargo is in a condition satisfactory to the Vessel Party and all regulatory authorities for shipment. Notice of Readiness shall be considered invalid unless the aforementioned five conditions are met…”

By contrast the recap setting out the fixture provided

“- SHOULD THE BERTH BE OCCUPIED OR SHOULD THE VESSEL BE PREVENTED FROM PROCEEDING TO THE BERTH AFTER HER ARRIVAL AT OR OFF THE PORT NOTICE OF READINESS MAY BE TENDERED BY TELEX, FAX WWWW (an acronym for “wibon, wccon, wifpon, wipon”, ie “whether in berth or not, whether customs cleared or not, whether in free pratique or not, whether in port or not”).

– AT BOTH ENDS PORT LAYTIME SHALL COMMENCE TO  COUNT 12 HRS AFTER VALID NOR IS TENDERED UNLESS OPERATIONS SOONER COMMENCED.  IN CASE SOONER COMMENCED, ACTUAL TIME USED TO COUNT.”

Clause 6 of the charter in effect confirmed what was agreed in the recap.

Owners gave notice of readiness at the port of Davant on the Mississippi on arrival at the South West Anchorage, having to wait there due to congestion at the berths. The tribunal held that there was no requirement in the contract for the vessel to have passed any inspections, etc before giving a valid notice of readiness. Nor was there any requirement in the contract that notice be accepted by the charterers or their agents. Similarly it contained no requirement that notice be given within the laycan.

Under English law was that where an incorporated document conflicted with the terms of the primary agreement entered into by parties, the conflicting terms had to give way to those in that primary agreement with which they were inconsistent, as had been held in a similar case The Linardos [1994] 1 Lloyd’s Rep 28.

Accordingly the aspects of the UBT Rules relied on by the charterers conflicted with the terms of the fundamental agreement as found in the recap, and reinforced by the incorporated charter terms. As in The Linardos, the UBT Rules were designed to govern contractual relationships between the terminal and users of the berth so, when reading them into a charterparty, great caution had to be exercised in interpreting them in the charterparty context so as to ensure that only those provisions in the Rules that were truly relevant to and compatible with the charter agreement were given effect to.

In the light of the charter provisions agreed in the recap, the vessel was entitled to give notice of readiness at the Southwest Pass as that was the nearest available anchorage off the port at the time she arrived there, and the UBT Rules did not affect that position. Accordingly the owners’ demurrage claim succeeded, and they would be awarded the claimed amount of US$109,495.83 plus interest and costs.

Charterers orders to wait off berth not an extra contractual service; time falls within the laytime and demurrage regime.

London Arbitration 14-21 involved a claim by owners that time spent waiting on charterer’s orders following tender of NOR at the discharge port was a non-contractual service which should be remunerated by way of quantum meruit. This would be at the demurrage rate and would include bunkers consumed while waiting.

The Tribunal rejected the claim. Laytime had already started to run when the charterers ordered the vessel to wait off berth. This was not a non-contractual order as in The Saronikos [1986] 2 Lloyd’s Rep 277 and Glencore Energy UK Ltd v OMV Supply & Trading Ltd [2018] 2 Lloyd’s Rep 223. The charterers were entitled to use the whole of the agreed laytime, whether  by holding the ship off the berth, or by berthing her and not working her for some time, or by berthing her and working her immediately. Once laytime had started to count the charterers were entitled to use it in full. Even if owners had been right, they would not have been entitled to anything for bunker consumption. Assuming the demurrage rate was to be taken as a genuine pre-estimate of damages for detention, it had to follow that running expenses, including bunker costs, were to be taken as included in the agreed rate.

Smart claims for bill of lading freight by owners.

If an owner’s bill of lading incorporates the freight provisions of a time charterer’s voyage charter, can owners intervene to require payment of the freight to themselves rather than to the time charterer? That was the issue recently before Butcher J in Alpha Marine Corp v Minmetals Logistics Zhejiang Co Ltd (MV Smart) [2021] EWHC 1157 (Comm) (05 May 2021).


Claim were made by owners against charterers in respect of the loss of the vessel for breach of the safe port warranty. the Tribunal found that the Charterers had provided a safe port warranty in respect of Richards Bay and that there were some shortcomings in the running of the port. However, the Master had been negligent in his handling of the Vessel and it was this that caused the grounding of the Vessel. Owners had issued bills of lading which stated ‘freight as per charter’.  After the vessel was lost the Owners gave notice to the bill of lading holder, the voyage charterer to pay full freight to them. At that time only a sum in respect of bunkers was due to Owners.  Charterers claimed damages in respect of losses sustained as a result of owners’ intervention in respect of freight due under the bill of lading through the incorporation of the terms of the voyage charter. They also claimed in tort on the basis of procuring breach of contract by the voyage charterer and/or knowingly and/or unlawfully interfering with the Voyage Charter. The Tribunal found that Owners were not entitled to revoke Charterers’ right to obtain the bill of lading freight or to direct it be paid to the Owners. This is because the Charterparty contained an implied obligation that Owners would not revoke unless hire and/or sums were due to them under the Charterparty

On appeal, Butcher J considered three possible terms constraining owners’ exercise of their rights to intervene to claim freight under the bill of lading. First, the “all freight” implied term whereby if the Charterers were in default of their obligations under the Charterparty, then the Owners would be entitled to collect the entirety of the freight, even if it exceeded the amount of the Owners’ claim against the Charterers arising out of their default. Second, “All Freight (Sum Identified) Implied Term”) by which the Owners were not entitled to revoke the Charterers’ authority to collect any freight unless a sum was due to the Owners under the Charterparty and the relevant sum was identified at the time of any revocation of the Charterers’ authority; and (3) the “Dollar for Dollar” Implied Term whereby the Owners were only entitled, in the event of a default by the Charterers, to revoke the Charterers’ authority to collect freight in respect to an amount up to, but no more than, the amount due from the Charterers under the Charterparty.

Butcher J rejected the implication of any term.  Owners’ duty to account to the charterer for any excess in the amount of freight collected over the amount due under the charterparty meant that the present charterparty, or other time charters in similar form, did not lack commercial or practical coherence without an implied term restricting the owners’ right to intervene.  If owners claimed freight in excess of sums due to them under the time charter the owners would have to account for the balance to the time charterers, and that was the charterers’ protection.

The Award was set aside insofar as it awarded damages for breach of the implied term found by the Tribunal; and the matter was remitted to the Tribunal for reconsideration of the Charterers’ freight counterclaim on the alternative Tortious Basis, having regard to this judgment.

Deadfreight. Charterer’s nominated berth frustrates owner’s option as to quantity to load.

In London Arbitration 7/21 a vessel was chartered to carry coal. The owners were given the option to load between 27,000 and 33,000 mt of cargo, and the charterers were bound to provide a safe port/berth at the specified terminal. The owners exercised their option to load 33,000 mt

Prior to the fixture being concluded the owners had emailed the charterers’ agents at the loading port and had been advised that the maximum draft at the terminal was in excess of 13 m. The agents indicated that the vessel would berth at a specified berth where the vessel would have had no problem in loading 33,000 mt.

Charterers ordered vessel to load at a different berth where there was a lower maximum sailing draft and failed to change the berth nomination. There was a shortfall of 1,590 mt of cargo.

The tribunal held that the owners were entitled to exercise their option as to cargo quantity unfettered, and the charterers were bound to load whatever amount the owners opted for up to 33,000 mt. If, by their choice of berth, the charterers prevented the vessel from loading that quantity, they put themselves in breach of that obligation. By ordering the vessel to a berth where the draft was so limited as to stop the vessel loading 33,000 mt, the charterers frustrated the exercise of the owners’ option. Charterers were liable to owners in damages for the shortfall in cargo loaded

Off-hire and arrests unconnected with the vessel detained.

On 15 December 2018, while under time charter to Navision the “Mookda Naree” was arrested at Conakry in respect of a claim against sub-sub charterers Cerealis, and remained under arrest for nearly a month. The claim related to an alleged shortage claim against them by SMG in respect of cargo discharged at Conakry from a previous, unrelated vessel. The head charter and the sub-charter were time charters on the Asbatime form with additional clauses. In both cases, additional clause 47 put the ship off hire inter alia upon her being detained or arrested by any legal process, until the time of her release, “unless such … detention or arrest [was] occasioned by any act, omission or default of the Charterers and/or sub-Charterers and/or their servants or their Agents.” Additional clause 86 of the head charter, not included in the sub-charter, provided as follows:

“Trading Exclusions

When trading to West African ports Charterers to provide adequate security guards during port stays in these countries to protect the vessel her crew and cargo.

When trading to West African ports Charterers to accept responsibility for cargo claims from third parties in these countries (except those arising from unseaworthiness of vessel) including putting up security, if necessary, to prevent arrest/detention of the vessel or to release the vessel from arrest or detention and vessel to remain on hire.

…”

By cl.43 the Inter-Club Agreement was incorporated into the head charter.

Owners claimed that the vessel never went off-hire and that Navision was liable in damages for breach of cl.86. It was common ground that in the context of both time charters, Cerealis was a “sub-Charterer” within the clause 47 proviso.

The tribunal heard separate references by the sub charterer against the time charterer, and by the time charterer against the owners. They held that the clause 47 proviso applied, so that the vessel was not off hire after 12:00 hrs on 17 December 2018, because by that time her detention under arrest thereafter was occasioned by Cerealis’ failure promptly to deal with or secure SMG’s claim so as to procure her release.

In the head charter reference, the arbitrators held that the second paragraph of cl.86 applied, and was not limited to claims concerning cargo carried under the head charter. Therefore, the vessel was off -hire for the entire period under arrest.

On appeals by sub-charterers and time charteres against the awards, Andrew Baker J held, [2021] EWHC 558 (Comm) 10.3.21, that the tribunal had correctly concluded that the detention of “Mookda Naree” after 12:00 hrs on 17 December 2018 was occasioned by Cerealis’ failure to act. It ought reasonably to have acted to deal promptly with the claim being made against it by SMG, that being an “act or omission or default of … sub-Charterers” within the meaning of the proviso to clause 47 of both charters. As regards s.86 under the head charter which concerned the award of hire up to 12,00 on 17 December 2018 it was clear that clause 86 was intended to create a different regime to that generally applicable by reason of clause 47. The vessel never went off-hire during the period of the arrest.

The arbitrators had erred in their construction of clause 86 and should have said that SMG’s claim, though it related to a cargo that had been carried to a West African port, was not a cargo claim within clause 86 of the charter between the Owner and Navision because it did not concern “Mookda Naree’s” West African trading pursuant to that charter but a different ship altogether. It was therefore not a claim allocated to be Navision’s full responsibility by clause 86, any more than it would have been a claim to be dealt with under the Inter-Club Agreement pursuant to clause 43 in the absence of clause 86. Navision’s appeal against the award in the head charter reference succeeded to the extent that because the arbitrators misconstrued clause 86 they wrongly held that the ship never went off hire, whereas they should have held that when arrested she went off hire under clause 47 until the proviso bit from 12:00 hrs on 17 December 2018. They had also wrongly held that Navision had a liability for damages to be assessed for breach of clause 86.

Updated BIMCO versions of TOWCON, TOWHIRE and BARGEHIRE forms. Work in progress on new Force Majeure clause.

BIMCO have released new versions of their TOWCON, TOWHIRE and BARGEHIRE forms. New to TOWCON 2021 are a provision for mid-voyage bunkering on longer tows, and a mechanism for calculating compensation due to slow steaming or deviation. BARGEHIRE 2021 now contains clearer wording relating to off-hire surveys, repairs and redelivery. These have often been a source of dispute in the past.

BIMCO has also announced details of progress on its new Force Majeure clause. It takes the approach that neither party may terminate the contract while the vessel is carrying cargo. It notes that termination by owners with cargo on board will entail their continuing responsibility for the cargo as bailees, with no rights of recourse against charterers for discharge costs.

The new bolt-on to the clause sets out a number of liberties if force majeure prevents the completion of loading, or the departure from the load port, or discharge, for more than 21 days from when force majeure notice was declared. Extra costs incurred thereby should be allocated in accordance with the contract, in particular terms as to allocation of responsibility for loading or discharge, such as FIOST terms.

Any extra costs incurred in exercising any of the liberties should be allocated in accordance with the contract. This will require examining how the responsibility for loading and discharge has been allocated in the underlying contract, for example, if it is on FIOST (Free In Out Stowed and Trimmed) terms.

The BIMCO sub committee also considered how the draft clause would relate to other BIMCO clauses in the same contract such as the war, piracy and infectious or contagious diseases clauses. These allow owners to reject proceeding to a risk area, and if they do, to provide a cost allocation mechanism. By contrast the purpose of the Force Majeure clause is to protect a party from liability in damages in case of force majeure, and as a last resort to allow termination, something complementary to the other BIMCO clauses, and not in conflict with them.

The sub-committee noted that it is for the parties to decide whether a Force Majeure clause belongs in a period time charter, and the triggers for the clause have been set deliberately high. Firstly, the party claiming force majeure must prove the existence of the force majeure event; that the event was beyond its control; that it could not have been foreseen; and that its effects were unavoidable. Secondly, the right to terminate will only be available if performance becomes impossible, illegal or radically different, or substantially affects the whole contract during an agreed number of days.

This second aspect is similar to the doctrine of frustration but BIMCO state that “However, there is an important difference – if a party can bring itself within that termination provision, it will be able to terminate immediately, from day one. Under frustration, the contract would only be considered frustrated and terminated after a very long time compared to the overall contract period. There are two termination provisions in the clause and the other one provides a longstop right to terminate after an agreed amount of time has passed. The number of days will have to be negotiated depending on the contract in question.”

The BIMCO Force Majeure Clause and the additional bolt-on provision will be presented for adoption in May this year.

In Rem Action- Demise Charterer or Not?

‘Statutory liens’ or ‘statutory rights in rem’ come into existence on commencement of in rem proceedings (The Monica S [1967] 2 Lloyd’s Rep 113). In practice, this means that, if a ship is sold to a third party before the jurisdiction has been invoked or if a charter by demise is terminated before such time, then the potential claimant may be unable to benefit from the in rem proceedings and the accompanying right of ship arrest. The most recent judgment of the Admiralty Court in Aspida Travel v The Owners and/or Demise Charterers of the Vessel ‘Columbus’ and The Owners and/or Demise Charterers of the Vessel ‘Vasco Da Gama’ [2021] EWHC 310 (Admlty) highlights that.

In this case, Aspida Travel claimed against the proceeds of sale of the vessels ‘Vasco De Gama’ and ‘Columbus’ in respect of travel agency services for the transport of crew to and from the vessels which took place between 1 January 2020 to 31 July 2020 when the vessels went to lay-up due to the pandemic. At that time the vessels ‘Vasco De Gama’ and ‘Columbus’ were demise chartered to Lyric Cruise Ltd and Mythic Cruise Ltd respectively to whom Aspida provided the relevant services and rendered the resulting invoices. The claim forms were issued on 13 November and 20 November 2020. The basis of the claims was Section 21 of the Senior Courts Act 1981, paragraph 4 of which provides that:

‘In the case of any such claim as is mentioned in section 20 (2) (e) to (r), where –

  • the claim arises in connection with a ship; and
  • the person who would be liable on the claim in an action in personam (‘the relevant person’) was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brought in the High Court against –
    • that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise; or
    • any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it.’

The main objection to the claims was that they do not meet the requirements of Section 21 (4) of the Senior Courts Act 1981, in that Lyric Cruise Ltd and Mythic Cruise Ltd as the ‘relevant persons’ (i.e. the persons who would be liable in personam on the claims) were the charterers at the time when the cause of action arose, but not the demise charterers at the time when the action was brought. In fact, Mythic Cruise Ltd and Lyric Cruise Ltd terminated their charters on 7 October 2020 and 9 October 2020. As the claims were brought more than a month later, it was held that the third require of the Section 21 (4) of the Senior Courts Act 1981 was not fulfilled. By the time the claims were issued, Mythic Cruise Ltd and Lyric Cruise Ltd were no longer the demise charterers.