UK: Exceptions To Laytime

Last Updated: 6 March 2013
Article by Ian Woods

E.D. & F Man Sugar Ltd – v – Unicargo Transportgesellschaft mbH

[2012] EWHC 2879 (Comm)

INTRODUCTION

The present economic crisis and the ferocity with which owners and charterers are fighting charterparty disputes have recently increased the instances of scrutiny by the courts of numerous charterparty clauses. We are also seeing a number of new situations where the application and scope of particular clauses are being tested.

A recent example of the scope of an exception to laytime clause being tested is the case of E.D. & F Man Sugar Ltd ("Charterers") – v – Unicargo Transportgesellschaft mbH ("Owners") [2012] EWHC 2879 (Comm). This was an appeal from an arbitration award in relation to a claim by Owners against Charterers for demurrage in the sum of US$397,912.77.

FACTS

The Charterers had chartered the vessel to carry a cargo of sugar and, on the date of the fixture (9th June 2010), declared Paranagua as the loading port. In an email dated 4th June 2010 the local agents advised the parties that a fire had occurred at the Compania Brasilliera Logistica A/A terminal ("CBL"), which was normally used by the Charterers to load the cargo. On the 15th June 2010 the agents instructed the Parties to change the vessel's berthing programme to the Pasa terminal in Paranagua, although they were also told that the contemplated berthing programme for this terminal would be revised involving a long waiting time.

The vessel arrived on 20th June 2010 and tendered notice of readiness to load at 2330 hours. The Statement of Facts showed that in the absence of an available berth the vessel remained off the port until 14th July 2010, when she weighed anchor and entered the inner roads of the port awaiting berthing instructions.

One of the relevant clauses under consideration in this case was clause 28 which states as follows:

"Clause 28: 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, civil commotions, lock outs of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost mechanical breakdowns at mechanical loading plant, government interferences, vessel being inoperative or rendered inoperative due to the terms and conditions of appointment of the Officers and crew time so lost shall not count as laytime."

A number of conclusions in the Tribunal's award were challenged by the Charterers on appeal, one in particular was the Tribunal's finding that clause 28 made no mention of "fires" as an excepted peril and "in common sense terms", the inoperability of the conveyor belt appeared to have been the result of physical damage due to the fire rather than any mechanical breakdown. The Charterers sought, inter alia, to appeal this finding

JUDGMENT

The arguments turned on the proper construction of the words in clause 28 which exclude laytime time lost as a result of loading being prevented or delayed by "mechanical breakdowns at mechanical loading ports".

Owners argued that as an exception to laytime clause, inserted for the benefit of Charterers, the clause should be construed contra proferentem against the Charterers based on the statement of Lord Sumner in USSB v Strick [1926] AC 545 at p. 576. Charterers countered this argument submitting that the court should adopt the court's approach in the Carboex v Louis Dreyfus Commodities Suisse [2011] 2 Lloyd's Rep 177, [2012] 2 Lloyd's Rep 379 (CA) ("Carboex case") that the clause should be read "naturally according to [its] wording and not be over-restrictive". The judge in this case adopted this latter approach but did acknowledge that the former method of interpretation may well be appropriate in these circumstances.

The arguments in relation to the construction of the clause were finely balanced, the Charterers submitted, inter alia:

In the case of "The Afrapearl" [2004] 2 Lloyd's Rep 305, the approach of the court was that the cause of a breakdown is immaterial and there is a 'breakdown' if the equipment does not function or if it malfunctions;

It would be odd, unreasonable and uncommercial, if one had to distinguish between types of mechanical breakdowns according to their cause which might require difficult and expensive investigations. For example, if a mechanical breakdown caused overheating which caused the fire which caused the destruction of the conveyor system; and

The reference to "mechanical breakdown" is wide enough to include destruction.

The judge, despite acknowledging the force of these submissions, did not accept them. He accepted the Tribunal's finding that the fire had destroyed the conveyor belt system linking the terminal to the warehouse and held that as a matter of ordinary language, the destruction of an item (or even the partial destruction) is not within the scope of the term "breakdown", still less in the term "mechanical breakdown". In support of this finding the judge cited the case of "The Thanssis A" (1982 unreported), referred to with approval by Clark L J in "The Afrapearl", in which Robert Goff J stated that "'breakdown of machinery and equipment' cannot, even with the most generous of constructions, be regarded as the same as a complete destruction of part of the facility".

The judge also drew a distinction between clauses that refer only to "breakdown" and those, such as in the present case, which refer to "mechanical breakdown". The difference, in the judge's view, was significant and required, in the latter case, the nature of any malfunction to be mechanical in the sense that it is the mechanism for the mechanical loading plant which ceases to function or malfunctions and causes prevention or delay to loading. The implication here, as commented on by Robert Goff J in "The Thanassis A", is that in the absence of the word "mechanical" the cause of a breakdown is immaterial, it could be some external agent or internal defect, if the machinery does not function or malfunctions then there is a 'breakdown of machinery'.

Finally, in the absence of any words, such as 'fire' or 'accident', the scope of the exception should not be broadened beyond the meaning of a plain reading of the exception outlined above.

Other issues were considered in the judgment including: (i) whether the vessel had to be an arrived ship in order for clause 28 to apply, this was due to the inclusion of the wording "at or off the loading place" in the beginning of clause 28; and (ii) whether the refusal of permission by a Port Authority to load at the CBL terminal constituted "government interferences" for the purposes of clause 28. Both issues were answered in the negative by the judge.

COMMENTARY

This case provides a clear demonstration of the level of scrutiny applied by the courts, in this case the inclusion of one word ('mechanical') determined the applicability of the clause to a breakdown of a conveyor belt, part of which had been destroyed by fire. It would appear from this judgment that when faced with a similar situation it will be necessary to obtain time consuming and expensive evidence to determine the exact chain of causation leading to the inoperability of machinery or equipment. For example, whether a mechanical mechanism malfunctioned that caused the fire which destroyed the conveyor belt as opposed to a fire causing damage to the proper functioning of the mechanical components causing the machine to breakdown.

Ben Macfarlane & Co is a maritime law practice with over the 25 years' experience. We provide an efficient, effective and value for money service for all of your maritime law and insurance matters. Please see www.bjm-co.com for more details or call Ben Macfarlane on +44 (0) 207 190 2988.

www.bjm-co.com

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.

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.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions