The Commercial Court has considered once again the wording of an additional clause on an amended form NYPE46 charterparty, in the context of a seizure by pirates, in order to determine whether a vessel was on or off-hire during a period of detention by pirates.
In Osmium Shipping Corporation v Cargill International SA (The "CAPTAIN STEFANOS") [2012] the charterparty contained the following clause:
Clause 56
Should the vessel put back whilst on voyage by reason of any accident or breakdown, or in the event of loss of time either in port or at sea or deviation upon the course of the voyage caused by sickness of or accident to the crew or any person onboard the vessel (other than supercargo travelling by request of the Charterers) or by reason of the refusal of the Master or crew to perform their duties, or oil pollution even if alleged, or capture/seizure, or detention or threatened detention by any authority including arrest, the hire shall be suspended from the time of the inefficiency until the vessel is again efficient in the same or equidistant position in Charterers' option, and voyage resumed therefrom. All extra directly related expenses incurred including bunkers consumed during period of suspended hire shall be for Owners' account. [emphasis added]
Owners said that any "capture/ seizure" had to be by an authority, whereas Charterers argued that capture/seizure was an off-hire event distinct from "detention or threatened detention by any authority", and that acts of piracy clearly fell within the meaning of "capture/seizure".
Owners also argued that a proper reading of clause 56, alongside the rest of the clauses in the charterparty, including CONWARTIME 2004 (which was incorporated), had the effect of allocating the risk of piracy to Charterers.
Charterers submitted that the words in clause 56 should be given their plain and ordinary meanings, which were clear. Owners' invocation of CONWARTIME as a risk allocation mechanism was misplaced, as CONWARTIME, and the "liberty" provisions within it were unrelated to the off-hire provisions in the charterparty.
The judge found in favour of Charterers, and held that clause 56 should be construed in accordance with the "plain and obvious meaning of the words used in the clause". Piracy was an off-hire event, being a "capture/seizure" within the meaning of clause 56, as the relevant capture/ seizure was not required to be by "an authority". The finding was in contrast to the earlier case of Cosco Bulk Carrier Co. Ltd v Team-Up Owning Co, Ltd, The "SALDANHA" [2010] in which the Court considered a clause similar to clause 56, but different in some respects, resulting in the vessel in that case being on-hire for the duration of a detention by pirates.
The judge also held that CONWARTIME related to the performance of the charterparty and to breach, not to off-hire.
The case serves to underline, yet again, the importance of using clear words to allocate the risk of piratical events, to avoid the risk of subsequent disputes.
Clyde & Co acted for the successful Charterers in this case.
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