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Waiting matters: Laytime exceptions under Sugar charterparty

ED&F Man Sugar v Unicargo Transportgesellschaft (Comm) (The “Ladytramp”) [2012] EWHC 2879 (Comm) (Eder J.)

Waiting matters: Laytime exceptions under Sugar charterparty

ED&F Man Sugar v Unicargo Transportgesellschaft (Comm) (The "Ladytramp") [2012] EWHC 2879 (Comm) (Eder J.)

In relation to delays in loading caused by the destruction of an intended loading berth, what approach will the courts take in construing an exceptions clause such as clause 28 of the Sugar Charterparty 1999 form which provides:

"In the event that whilst at or off the loading place …the loading …of the vessel is prevented or delayed by any of the following occurrences : strikes, riots, ….mechanical breakdowns at mechanical loading plants, government interferences….time so lost shall not count as laytime"

ED&F Man ("Man") had voyage chartered "Ladytramp" to load a cargo of sugar at 1-2 safe berths Paranagua under a charterparty dated 9 June 2010. Before the vessel arrived notice was received from local agents that the intended loading terminal at CBL had had a fire which destroyed the conveyor belt system there. Accordingly Man had to make alternative arrangements at another berth in the port at either the Pasa or Cetrosul terminals. There was, however, congestion at Pasa which resulted in waiting time and a demurrage liability of US$397,912 awarded by an London arbitration tribunal, which Man appealed to the Commercial Court.

There were essentially 3 matters for consideration:

  1. Could Man rely on an exception to laytime with reference to a berth which had not been nominated and to which the vessel had never been ordered? Here, the court overruled the tribunal. This was not a case about berth nomination, but whether there was prevention or delay in loading caused by a relevant excepted peril. There was no requirement to nominate a berth as a precondition to invoking clause 28. The questions to be asked were simply (a) if there was prevention or delay in loading (b) if it was caused by an excepted peril (c) how long was the relevant delay?
  2. The next issue was more difficult: whether the closure of CTT could be regarded as a mechanical breakdown? Man argued, relying on The "Afrapearl" [2004] 2 Lloyd's Rep 305, that the cause of the breakdown (fire) was immaterial and that there was a breakdown if the equipment did not function. However here the conveyor belt was destroyed and Eder J. held that as a matter of common sense the destruction or partial destruction of an item is not within the scope of the term "breakdown" : if a vehicle was destroyed by fire and written off, its owner would not regard it as having broken down. In The "Thanassis A" [1982] unreported the destruction of a jetty was not regarded as breakdown.
  3. Was there government interference in the vessel being required by the port authority to use another berth? That seemed unlikely as there was no evidence that the port authority was a government entity. In any case the term "government interferences" could not be intended to encompass the administrative rescheduling of cargoes due to a fire.

Accordingly Owners entitlement to demurrage was upheld, although it is understood the decision has been appealed.

This decision meanwhile is a good illustration, in the context of laytime and demurrage, to the court's reasonably restrictive approach to charterers' reliance on exceptions clauses.

Mike Burns
Partner
Marine & Transit Team
Weightmans LLP