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The disputes in this arbitration related to claims for
deadfreight and despatch under a voyage charterparty for the
carriage of iron ore.
The background facts and the tribunal's
decision
Owners' claim for deadfreight
The cargo was defined in the charterparty as "46,000MT
MOLOO [More or Less at Owners'Option] 10% IRON ORE IN
BULK". It was further provided that "Chartrs
confirm min draught of 11.4m SWAD plus tide in the loading
port".
An owner is entitled to deadfreight if the charterer fails to
load the full amount of cargo which he has agreed to supply under
the terms of the charterparty. Here, the deadfreight claim arose
from the fact that when the vessel arrived, the maximum allowable
draught at the berth was 11.19 metres: less than the minimum
draught warranted by the charterers. Therefore, the vessel could
only load 46,000.787mt of iron ore. As the charterers had agreed
under the charterparty to load up to 50,600mt, the owners claimed
freight on the full cargo which could have been loaded at the
warranted minimum draught, which they said was 47,265mt.
The charterers claimed that the port authority reduced the
draught following a recent earthquake. They refuted liability on
the grounds that: (i) the owners had removed the charterers'
agent at the loadport (in breach of the agency provisions of the
charterparty), meaning that they were in the dark during the
loading operations and denied the opportunity to negotiate with the
port authority to procure the loading of more cargo; and (ii) the
warranty as to minimum draught was given in good faith after
exercising due diligence to ascertain the position - the actual
draught was only lower because of circumstances beyond their
control.
The tribunal rejected the charterers' arguments. With
respect to (1) above, the evidence showed that the charterers were
aware of maximum draught limitation before and during the loading
operation. Even if the owners were technically in breach of the
agency provisions of the charterparty, this had not caused the
charterers any loss. In relation to (2), as there was no force
majeure or other clause excluding losses caused by the aftermath of
the earthquake, the charterers were bound by their warranty as to
the minimum draught at the loadport. The charterers had assumed the
risk of any reduction in available draught and were liable for the
deadfreight claimed.
Charterers' claim for despatch
Where it is expressly provided for in a voyage charterparty,
despatch is payable to the charterer if loading or discharging is
completed in less than the allowed laytime. Such was the case here,
with despatch payable at half of the demurrage rate. The laydays
were 1 to 10 April, and it was stipulated that "laytime at
the Port of Loading shall not count before 1st April".
The vessel arrived at the loadport, tendered notice of readiness
and completed loading by 29 March. It was common ground that, as no
new laydays had been agreed, laytime had not commenced at the
loadport. However, the charterers argued that they should be
entitled to despatch for the full time allowed for loading, whereas
the owners argued that as laytime never began, no laytime was saved
during loading and no despatch was due.
The tribunal dismissed the owners' argument, which was not
supported by any authority, as illogical. There was no reason why a
charterer should be deprived of a right to despatch where the
loading operations were completed before laytime began to count.
The nature of the benefit to the owners in having such operations
completed early - reflected by despatch paid to the charterers -
was just the same whether or not laytime began to count. The
charterers were, therefore, awarded despatch for the full time
allowed for loading.
Comment
This decision adds some helpful context to two types of voyage
charterparty claim. The arbitrators' comments relating to the
charterers' minimum draught warranty serve as a reminder that
parties will be held responsible for a breach of their contractual
warranty as to a particular state of affairs, even if the cause of
that breach is outside of their control, unless the circumstances
are covered by a suitably drafted exclusion clause.
The decision that despatch should be payable even where laytime
has not commenced also provides some useful guidance on a novel
issue, although being an arbitration decision it does not create
any binding precedent in English law.
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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