Can owners refuse charterers’ order if it may jeopardise the safety of a vessel?
Introduction
In CM
P-MAX III Limited v Petroleos Del Norte SA (MT Stena Primorsk) [2022]
EWHC 2147 (Comm), the Commercial Court of the High Court of England and Wales
(the “Court”) has ruled that an
owner can legitimately refuse orders from the charterer where such orders may
jeopardise the safety of a vessel. As the owner cannot be satisfied that the
vessel could berth and discharge her load whilst remains to be “safely afloat”,
the owner may reject the charterer’s request to berth on safety grounds.
The
claim
In this case, the claimant (the “Owner”) chartered a tanker (the “Vessel”) to the defendant (the “Charterer”) for a single voyage. The
Owner claimed against the Charterer for demurrage in the sum of US$143,153.64.
The contract provided for a single allowance of 72 hours of laytime for loading
and discharging with demurrage payable at the rate of US$22,500 per day pro rata.
The Charterer defended on the basis that the time was suspended because the
Owner was in breach of the charterparty (the “Charterparty”) when the Owner decided to leave the discharge
terminal within 12 minutes of berthing on 31 March 2019 and subsequently
refused to comply with the Charterer’s request to return on berth at 2100 on 1
April 2019.
The Owner argued that both the decisions
to leave and to berth and commence discharge on 31 March 2019 and 1 April 2019
respectively were based on the safety reasons as permitted by the Charterparty
and so it did not amount to any breach or fault by the Owner.
The
Charterparty
Part 2 of the Charterparty included the
following highlighted provisions:
Clause 3(1): “Subject
to the provisions of this Charterparty the vessel shall perform her service
with utmost despatch and shall
proceed as ordered…as she may safely get and there, always safely afloat, discharge the cargo.”
Clause 3(2): “Owners
shall be responsible for and indemnify Charterers for any time, costs, delays
or loss including but not limited to use of laytime, demurrage,…due to any
failure whatsoever to comply fully with Charterers’ voyage instructions… Owners shall adhere to Charterers’ voyage
instructions as long as such orders are considered safe by the Master of the
ship.”
Clause 15: “Any
delays for which laytime/demurrage consequences are not specifically allocated
in this or any other clause of this Charterparty and which are beyond the
reasonable control of Owner or Charterer shall count as laytime or, if Vessel
is on demurrage, as time on demurrage.”
The
facts
The Vessel loaded cargo of oil at Bilbao
and was to head for port of discharge Paulsboro on the Delaware river. Prior to
arrival, the Master sought a waiver of the under keel clearance (“UKC”) policy in order to berth and
discharge the cargo. On 27 March 2019, the Master sent the relevant UKC
calculations to Northern Marine Management Limited (“NMM”), the Vessel’s technical operator, with a detailed risk
assessment. Upon considering the calculations, NMM confirmed on 28 March 2019
that it was prepared to grant an “one off
waiver for the NMM UKC policy…on 31 March 2019” to cover both the transit
from anchorage and the berthing.
Decision to leave the berth
on 31 March 2019
Upon arrival on 31 March 2019, the
terminal informed the Master that for the first 7 to 9 hours, unloading would
need to take place at a reduced rate of 5,000 barrels per hour. The Master
opined that the Vessel needed to maintain a discharge rate of 15,799 barrels
per hour to keep a safe UKC, and so he decided to leave the berth and return to
the anchorage.
Decision to refuse to berth
and commence discharge on 1 April 2019
On 1 April 2019, the Charterer noted that
Crown Point was able to discharge the cargo at the rate of 10,000 barrels per
hour and requested that the Vessel be permitted to discharge at the next high
tide which would be 2100 on 1 April 2019.
The Master contacted NMM with detailed UKC
calculations on the basis that the Vessel was all fast at 2100 with no delays,
discharge could commence within 3 hours and on the basis that “no allowance for delays, berthing,
connections or technical failure ship or terminal”.
However, since the UKC policy is a
function of deepest navigational draft which decreased during discharge, the
required UKC varied. At 2100, the UKC policy would not be met and so a waiver,
permitting the Vessel to berth despite a breach of the UKC policy, would be
required. NMM refused to grant the waiver on the reason that there would be “very little margin for safety and ensuring
adequate UKC” and if there were any delays and if delays were prolonged,
UKC would be “severely compromised, with the risk of the vessel touching
bottom”. Therefore, NMM concluded that there were “insufficient controls to mitigate the risks”.
Legal
principles
The Court ruled that the terms of the
Charterparty underline both the importance of operating the Vessel safely and
the importance attached to decisions made by the Master. The Court opined that
Clause 3(1) (as highlighted above) sets the tone of the Charterparty by
requiring that the Vessel, once loaded, to proceed with “utmost despatch” to
the nominated port of discharge and there “always safely afloat” discharge the
cargo. Therefore, the Court concluded that the requirement to proceed with
“utmost despatch” is not absolute but is tempered by the requirement to remain
safely afloat. As to Clause 3(2) (also as highlighted above), the Court opined
that it sets out an obligation for the Owner to comply with the Charterer’s voyage
instructions, but again, such obligation is not absolute. The Court emphasized
that an instruction not considered safe by the Master can be disregarded.
Upon referring to authorities, the Court
concluded that a charterer needs to establish some “fault” on the part of the
owner or those the owner is responsible for in order to suspend the time for
demurrage purposes. However, if the owner acts in a way authorised by the
charterparty, the owner would unlikely to be at fault.
Regarding the UKC policy, the Court held
that it represented a fetter on the Master’s freedom to decide where the Vessel
went and if the UKC was to be breached, the Master needed to consult with the
Owner’s agent. In this case, the Court observed that the UKC policy was binding
and must not be breached without consent. Careful risk assessment and a UKC
calculation before a waiver can be considered underlines the importance of the
UKC policy. The Court further noted that as the UKC policy formed an integral
part to the Charterparty and was governed by Part 1 of the Charterparty, it
would take precedence over the general terms of Part 2.
Upon examining the facts and the experts
evidence, the Court concluded that the Master’s request for a waiver on 1 April
2019 was realistic and NMM’s refusal was also entirely appropriate. Therefore,
the decision to leave the berth on 31 March 2019 was ruled to be appropriate
without putting the Owner in breach of the Charterparty, and time runs against
the Charterer. As to the refusal to berth and commence discharge on 1 April
2019, the Court held that the Owner was entitled to reject on safety grounds
and there was no fault on the part of the Owner, the Master, nor NMM.
Accordingly, the Court allowed the Claim.
Key
takeaways
Safety is always the prime consideration.
The Court’s decision confirmed that there will be a reluctance to overrule
decision made by a Master when making a call over the safety of the vessel so
long as the decision was not groundless or unreasonable. Accordingly, an owner
may legitimately refuse orders from the charterer when it may jeopardise the
safety of a vessel.
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Important: The law and procedure on
this subject are very specialised and
complicated. This article is just a very general outline for reference and
cannot be relied upon as legal advice in any individual case. If any advice
or assistance is needed, please contact our solicitors. |
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Published by ONC Lawyers © 2022 |
