UK: Construing The Strike Exception In An Amwelsh Charterparty

Last Updated: 16 June 2011
Article by Jamila Khan and Ruth Monahan

Carboex SA –and- Louis Dreyfus Commodities Suisse SA [2011] EWHC 1165

The Commercial Court in this case has decided as a preliminary issue an important question in the context of voyage charterparties, namely whether a strike exception to the running of laytime applies to stop laytime running (i) after the strike has ended; and (ii) where the vessel is delayed in berthing due to congestion that has arisen as a result of the strike.

The background facts

Four vessels were chartered by the Defendant Owner to the Claimant Charterer under a Contract of Affreightment dated 6 March 2008 ("the COA") for the carriage of coal from Indonesia to Puerto de Ferrol in Spain. The COA was on an amended version of the AmWelsh voyage charterparty form and was a berth as distinct from a port charter. The relevant clauses of the COA were clauses 9 and 40.

Clause 9 provided for the rate of discharge of cargo and for payment of demurrage. The last sentence of the clause read:

"in Case of strikes, lockouts, civil commotions ... beyond the control of the Charterers which prevent or delay the discharging, such time is not to count unless the vessel is already on demurrage."

Clause 40 stated:

"At port of discharge...If the berth is not available when vessel tenders Notice of Readiness, but provided vessel/Owners not at fault in relation thereto, then laytime shall commence twelve (12) hours after first permissible tide, Notice of Readiness received and accepted, whether in berth or not, whether in free pratique or not, whether in customs clearance or not, unless no customs clearance or no free pratique due to vessel's fault, unless sooner commenced in which case only time actually used to count..."

When the vessels reached Puerto de Ferrol in Spain there was congestion at the port due to a nationwide Spanish haulage strike and the vessels were delayed getting into berth.

Charterers contended that the discharge of the four vessels was delayed by reason of the strike and these periods were excluded from computation of laytime by virtue of clause 9. Owners contended that the combined effect of clauses 9 and 40 was that Charterers took the risk of delay caused by congestion at the port, so that it was only delay suffered once the vessel had berthed by reason of a strike in progress that was excluded by clause 9. Since the strike was over when each of the vessels eventually berthed, they argued time was to count in full, and the demurrage as calculated was due.

The claim for demurrage was referred to arbitration. Two preliminary issues were decided by the Tribunal. First, whether clause 9 of the COA applied in the case of a vessel which was delayed by the after effects of a strike which had ended; and secondly whether clause 9 of the COA applied in the case of a vessel which had arrived after the strike had ended. The Tribunal answered both questions in the negative. They found that clause 9 was ambiguous and was to be construed contra proferentem, applying Central Argentine Rly Ltd v Marwood [1915] AC 981. Charterers appealed under s 69 of the Arbitration Act 1996 (appeal on point of law).

The Commercial Court's analysis

On appeal, the newly formulated question before the Court was whether the strike exception in clause 9 applied to a vessel which was unable to berth due to berth congestion caused by a strike.

Owners submitted that the effect of the "whether in berth of not" ("WIBON") provision in clause 40 was that the risk of delay due to congestion at the discharge port was to be borne by Charterers. They argued that clause 9 did not shift the risk to Owners and that it did not prevent the running of lay days where the vessel was unable to berth due to congestion caused by a strike.

Charterers argued that Owners' contentions based on WIBON were inconsistent with authority. In Reardon Smith Line Ltd –v- East Asiatic Co Ltd [1938] 4 All ER 107, there was no available berth for the chartered vessel due to Government requisitioning of ships and quay space. The Clause within the charterparty which provided for the start of lay days included a WIBON provision. The Court held that the WIBON provision and the clause within which it was contained was there to indicate the time at which a notice of readiness should be given in order to fix when the lay-days should commence i.e. that the notice may be given, whether the ship is in berth or not. The existence of the WIBON provision could have no effect on altering the construction of the demurrage exceptions clause in order to shift liability to Charterers.

In The Amstelmolen, the vessel was unable to find a berth for 14 days following her arrival at the loadport, due to congestion at the port. The charterparty clause which allowed for the commencement of lay days included a WIBON provision. The issue before the Court of Appeal was whether the delay in loading the vessel was caused by an "obstruction" within the meaning of the strikes clause of the charterparty. The Court held that something at the quay side that prevented the vessel from coming alongside to load was an "obstruction" for the purposes of the strike clause in question. The inclusion of the WIBON provision did not mean that commercial congestion could not constitute an "obstruction".

The Commercial Court judgment

The Court found for Charterers and held that the Tribunal's award should be set aside.

The effect of the WIBON provision was found to do no more than to start the laytime clock ticking and the exceptions clause was to be construed as a free-standing provision. Laytime commenced either because the vessel concerned had arrived at a point within the port where it was at the immediate disposition of the charterers (in the case of a port charter), or because there was a provision for bringing forward the commencement of laytime, such as a WIBON provision. In the absence of an appropriately worded exceptions clause, the risk of congestion causing a delay to berthing was on Charterers. Where, however, there was an exceptions clause whose effect was to protect Charterers against the consequence of congestion, risk of congestion did not pass. Therefore, where there was a demurrage exception for obstructions or hindrances beyond the control of either party, whilst the WIBON provision would allow laytime to commence, laytime would be immediately suspended whilst the obstruction subsisted.

Comment

In the instant case, the Court held that the approach to the construction of clause 9 would be in the manner adopted in The Amstelmolen. On their ordinary meaning, the words "In case of strikes ... beyond the control of the Charterers which prevent or delay the discharging" covered delay in discharging caused by congestion due to the after effects of a strike that had ended. They also covered delay in discharging caused by congestion due to a strike where the vessel had arrived after the strike had ended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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