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Voyage charters and demurrage: interpreting strike exceptions

In a berth charter, can a laytime exclusion – here a strike preventing loading or discharging – rescue charterers from a demurrage claim?

Carboex SA v Louis Dreyfus Commodities Suisse S.A. [2011] EWCA Civ 24 (Field J)

In a berth charter, can a laytime exclusion – here a strike preventing loading or discharging – rescue charterers from a demurrage claim when (1) their vessel is only affected by the after effects of the exclusion and (2) they have otherwise assumed the general risk of congestion delays?

This was an appeal to the Commercial Court from a London arbitration award. Owners Louis Dreyfus had chartered 4 vessels to Carboex for the carriage of coal from Indonesia to Spain, on an amended AmWelsh voyage charterparty form.

In June/July 2008 there was a nationwide Spanish haulage strike. When the vessels arrived at the discharge port they tendered NOR on the basis of the “whether in berth or not” (WIBON) provision in clause 40, so as to start the running of laytime. However, there were significant delays to the vessels in getting into berth, as although the strike had ended, the after effects were such that other vessels were ahead of the Carboex ships in the queue to berth.

Owners claimed demurrage and were successful in arbitration. The tribunal held that although clause 9 contained an exception in relation to strikes (“In case of strikes, lockouts, civil commotions or any other causes… or accidents beyond the control of the Charterers, such time is not to count unless the vessel is already on demurrage.”) that the clause was ambiguous and Carboex could not, on the facts, have the benefit of it. Further, construed ejusdem generis, congestion caused by strikes did not fall within “other causes”.

Field J. overturned the award and held that Carboex were entitled to the protection of the exception clause in relation to strikes.

Owners had contended (on the basis of The Kyzikos [1989] 1 Lloyd’s Rep 1) that the WIBON provision – enabling laytime to start whether or not a berth was available – meant that charterers fully accepted the risk of congestion, and that clause 9 would have to be very widely drafted to pass the risk back to owner. It was only if a strike caused delays after the vessel had berthed could the exception come into play.

However, Charterers argument was to be preferred. The WIBON provision did not establish any general allocation of risk. It was simply a mechanism to enable laytime to start. However there was nothing absurd about laytime starting and then “in a scintilla” stopping due to an exception coming into play. The exceptions clause was a free standing clause and was not cross-contaminated by the separate WIBON provision dealing with laytime.

Regarding the fact that the strike had in fact ended, the issue had to be looked at commercially and as a matter of common sense. On this basis delay caused by congestion arising from the after effects of a strike fell within the exception, which was the approach of the courts in Leonis Steamship Co v Rank (No.2) [1908] Com Cas. 295, and The Amstelmolen [1961 2 Lloyd’s Rep 1.

This decision therefore makes it clear that, in demurrage cases, the courts will not apply a blanket allocation of risk for waiting delays, and where there are charter party exceptions to the running of laytime, the court will look to interpret them commercially and sensibly. Here, the strike was causative of the delay (even though it was over) and therefore Carboex could rely on the exception.

Mike Burns
Partner, Weightmans LLP
0151 242 6527
mike.burns@weightmans.com