In the case of Cosco Bulk Carrier Co Limited v Team-Up
Owning Co Limited (the 'Saldanha')  EWHC 1340,
Mr Justice Gross in the English High Court recently determined that
piracy did not interrupt the hire period in a charter party on the
New York Produce Exchange (NYPE) form.
On 25 June 2008, Cosco Bulk Carrier Co Limited
(Charterers) chartered the vessel Saldanha (the
vessel) a Panamax size bulk carrier, from Team-Up Owning Co Limited
(Owners) for a period of 47 to 50 months on the
same terms as an earlier charter, which was on NYPE form with
On 22 February 2009, the vessel was seized by Somali pirates in
the Gulf of Aden and remained in the control of the pirates until
25 April 2009. The vessel did not again reach the location at which
she was first seized until 2 May 2009.
The Charterers refused to pay hire between 22 February and 2 May
The relevant charter party provision
Clause 15 of the Charter Party provided:
'That in the event of the
loss of time from default and/or deficiency of men including strike
of officers and/or crew or deficiency of .... stores, fire,
breakdown or damages to hull, machinery or equipment, grounding,
tension by average accidents to ship or cargo, dry docking for the
purpose of examination or painting bottom, or by any other cause
preventing the full working of the vessel, the payment of hire
shall cease for the time thereby lost ...'
An arbitral tribunal found that clause 15 did not entitle the
Charterers to treat the vessel as off hire in the piracy
Loss of time by piracy was not disputed. It was also accepted
that the 'full working' of the vessel was prevented by the
piracy. The question on appeal was whether Charterers could
successfully maintain that any of the following had prevented the
full working of the vessel:
'detention by average accidents to ship or cargo';
'default and/or deficiency of men'; or
'any other cause'.
Detention by average accidents to ship or cargo
Mr Justice Gross agreed with the tribunal that an 'average
accident' necessarily required an accident which caused damage,
as noted by Justice Kerr in The 'Mareva A.S.' (1977) 1
Lloyds Rep 368 at 381.
He also did not consider that the incident was an
'accident', as the piracy was a deliberate and violent
attack, and an 'accident' required lack of intent by all
involved. He agreed with the tribunal that an 'average
accident' to ship or cargo was an accident which caused damage
to the ship or cargo but not its total loss. He was also not
persuaded that the overlap between the words 'average
accident' and the words 'damages to hull, machinery or
equipment' led to a different conclusion.
Default and/or deficiency of men Mr Justice Gross agreed with
the tribunal that the words 'default of men' involved a
refusal by officers or crew to perform all or part of their duties
as owed to the ship owner and not the negligent or inadvertent
performance of those duties.
Any other cause
It was noted that the wording referred to 'any other
cause' rather than the wording 'any other cause
whatsoever'. Mr Justice Gross considered the difference in
wording was significant as if the words were 'any other
cause', then it was necessary to construe the words in a more
limited way. Mr Justice Gross considered that seizure by pirates
was an example of a totally extraneous cause whereas the other
causes referred to in the clause were all related to the physical
condition or efficiency of the vessel including its crew.
Accordingly, he took the view that piracy did not fall within the
scope of the 'sweep up wording'.
The Charterers failed in their attempt to avoid payment of hire
during the period of piracy.
However, Mr Justice Gross signalled that clearer wording could
be used to deal with the situation so that seizure or detention by
pirates could be treated as an off hire event. In particular the
use of the word 'whatsoever' after 'any other
cause' might assist, although Mr Justice Gross was careful to
avoid expressing a concluded view on this point. Clearer wording
that specifically referred to detention as a result of piracy would
be advisable if this is what Charterers wished to achieve.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).