Marine & Transport - December 2009

Voyage charters – no Christmas cheer

Cobelfret Bulk Carriers NV v Swissmarine Services SA (The “Lowlands Orchid”) – Commercial Court (Beatson J) [2009] EWHC 2883 (Comm)

This decision is a good example of the difficulties that can rise if a charter party is not drawn up and signed at an early stage, a dispute subsequently arises between the parties, and they then have to try and rely on other evidence confirming the contract such as a fixture recap telex making reference to another charter party.

In this case the voyage charter party was summarised in a fixture recap email from the brokers to the owners and charterers that contained the following references:

Scale load/25.000 MT SHINC

O/WISE AS PER EUROSAILOR-CP DTD 02/MARCH 2004 …
LOGICALLY AMENDED TO REFLECT MAIN TERMS AGREED AS ABOVE …

The “Eurosailor” charter party contained an additional clause concerning laytime providing that the discharging rate for the vessel would be 25,000 metric tonnes “Sundays and Holidays included, excluding Super Holidays.”

The vessel loaded a cargo of coal which was discharged partly at Rotterdam with the balance at Immingham between 23 and 28 December 2005. The issue between the parties was whether there was an inconsistency between the fixture recap and the additional clause.  The owners argued there was a clear inconsistency so that the provisions of the additional clause should apply.  On this construction of the charter party, the super holidays (i.e. Christmas holidays) were excluded from the laytime and the owners were entitled to US$142,177 demurrage.

The charterers argued that the clauses could quite easily be considered together and that by virtue of the fixture recap terms, all holidays including super holidays were included in the laytime.  On this approach the charterers were entitled to US$106,500 dispatch money.

The dispute went to arbitration before a panel of three arbitrators in London.  By a majority of 2:1, the arbitrators decided in favour of the charterers.  The matter went on appeal to the Commercial Court.

Mr Justice Beatson reviewed the applicable authorities before coming to the view that there was no direct and clear conflict between the clauses and the respective provisions could be read commercially and logically together.  The result of this was that the fixture recap dealt with holidays and included all holidays including super holidays.  This meant the fixture recap term qualified the additional clause in the incorporated charter thereby removing the reference to the exclusion of super holidays from the laytime.

The case is a clear warning to parties that they should not allow their contracts to remain unclearly set out, by reference to other contract documents which may have terms that do not sit easily with other terms agreed between the parties. 

Terry Donaghy, Partner
Weightmans LLP