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CHARTERPARTIES AND CARRIAGE OF GOODS BY SEA

Consider whether the allocation of risk for delay between shipowners and charterers is different depending on whether the charter is a voyage charter or a time charter.

INTRODUCTION

The voyage charterparty and the time charterparty are forms of contract of carriage of goods

by sea that attempt to address differing parties’ commercial needs. In a voyage charter the ship-

owner, for him a riskier but potentially more lucrative enterprise, agrees to carry the goods of the

charterer for a specific voyage while retaining the control of the vessel, equipping and managing it. In

a time charter the owner agrees to carry the charterer’s goods for a certain period of time: he

thereby transfers the commercial use of the ship during the charter to the charterer who is free to

use it at his will.

It is suggested there are two distinctions between both types of charter that relate closely to the

allocation of the risk of delay. Firstly there is generally a coincidence between the party in control of

the vessel and his assumption of responsibility for the risk. In a voyage charter, since the charterer

does not interfere it is normal that the ship-owner bears the risk of events that damage the

profitability of the charter during the preliminary and carrying voyage. However at loading and

discharging, since the charterer prevents the owner from using the vessel, he will have assumed the

risk of delay for these operations. On the other hand in a time charter, the charterer is in control of

the commercial use of the ship and bears the risk by paying hire. The contractual provisions will

thereby concern primarily how and when the risk of delay shifts between both parties.

Secondly the methods of payment in voyage and time charters illustrate the differing difficulties both

types of charters have in apprehending the issue of delay. Delay in time charters is addressed

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through hire: it is the natural mechanism (but not always the best suited) for accommodating the

problems created by delay simply because hire is the consideration for time. Off-hire clauses will

stipulate in which situations the risk of delay may shift. On the other hand, freight in a voyage

charter does not address directly the problem of time: the parties thus, for purposes of commercial

and legal certainty, will need to provide alternative mechanisms of allocation of risk.

To understand how the allocation of risk differs between charterer and ship-owner depending on the

nature of the charterparty and the importance of specific contractual mechanisms to that effect, an

analysis of the methods of payment should firstly be undertaken.

I) METHOD OF PAYMENT

A) FREIGHT

Freight as the consideration for the carriage of goods does not directly consider delay1 since it is

generally calculated on the basis of the quantity of goods. Unless otherwise provided, freight is only

payable if the goods arrive at their delivery port2 unless they are so damaged that they no longer

correspond to their commercial description3.

1 Laytime is deemed to be covered by freight and it may only involve indirect consideration of the time factor if it includes the expenses of the ship-owner in making the voyage.

2Dakin v. Oxley (1864) 15 C.B. (N.S.) 646, per Willes J. at pages 664-665: “…the true test of the right to freight is the question whether the service in respect of which the freight was contracted to be paid has been substantially performed; and according to the law of England, as a rule, freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant, though they may be in a damaged state when they arrive. If the shipowner fails to carry the goods for the merchant to the destined port, the freight is not earned. If he carries part, but not the whole, no freight is payable in respect of the part not carried, and freight is payable in respect of the part carried unless the charterparty makes the carriage of the whole a condition precedent to the earning of any freight—a case which has not within our experience arisen in practice…”3 Duthie v. Hilton (1868) L.R. 4 C.P. 138

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Furthermore freight is neither recoverable nor deductible. The charterer is not entitled to recover

freight paid in advance, even if the contract is frustrated4 and the goods or ship are not delivered

unless there is a clause to the contrary5.

The charterer does not have a right of equitable set-off and must form a counter claim 6. This is

justified on the grounds that an unaffected right to full freight provides the ship-owner with a very

much required commercial certainty and security making the voyage charter an attractive enterprise.

Indeed since the ship-owner generally bears the risk, including delay7, and thus may be liable to pay

the charterer as a result of occurrences8, it would be only too easy for a charterer in bad faith to

unreasonably delay payment.

As such freight is the ship-owner’s security net, unaffected by potential liabilities with respect to

delay, the allocation of which is covered by express mechanisms.

B) HIRE

1) Payment of Hire

The charterer bears the risks that may befall the vessel by paying hire, an absolute obligation. As

such “the risk of delay is primarily on the Charterer”9 displaced by operation of the off-hire clause.

This obligation is strengthened by provisions as to the method and time of payment, of which failure

4 Allison v. Bristol Marine Insurance Co. per Lord Selborne: “The peculiar rule of English Mercantile Law, that an advance on account of freight to be earned, made at the commencement of the voyage, is, in the absence of any stipulation to the contrary, an irrevocable payment at the risk of the shipper of the goods, and not a loan repayable by the borrower if freight to that amount be not earned.”5 Freight considered a « mere loan » : Manfield v. Maitland (1821) 4 B. & Ald. 5826 Sheels v. Davies (1814) 4 Camp. 1197A/S Gunnstein v. Jensen (The Alfa Nord) [1977] 2 Lloyd’s Rep. 434. In this case equitable set off of freight was not allowed for a claim in damages relating to the failure by the ship-owners to observe their duty to prosecute the voyage with utmost dispatch:.8 Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s Rep. 429The exception is very wide and covers all possible claims by the charterer 9 Torvald Klaverness v. Arni Maritime (The Gregos) [1992] 2 Lloyd’s Rep. 40 per Lord Mustill

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to observe may entitle the ship-owner to rescind the contract and withdraw the vessel from services.

This right may be subject to anti-technicality clauses10 or waivers11.

2) Off-hire clauses

The charterer should prove that he is not obliged to pay hire12 by bringing himself within the

specific wording13 of the clause14. If he does not succeed he will be in breach of contract.

The ship should be fully prevented15 from performing the next operation required and necessary

from her under the charter16. This means that the delay will not trigger off-hire if it is caused by

events which do not prevent the ship’s working, as for example, reduced vessel speed or difficulties

encountered in loading17. Furthermore necessary operations required of the charterer creating delay

generally do not amount to a prevention of the full working of the vessel18 while the reverse may be

so19.

Furthermore the real cause of this impossibility of performance should be specifically covered.

Although charters will vary, the courts will construe them as narrowly as possible. Indeed for

example the wording “any other cause whatsoever” is construed as “any other cause of the same

type as those previously mentioned”20. However the term “whatsoever” has been construed as any

10 Notice should be given by the owners: The Georgios C. [1971] 1 Lloyd’s Rep. 7; for e.g The Pamela [1995] 2 Lloyd’s Rep. 24911 Tankexpress v. Compagnie Financière Belge des Pétroles (1948) 82 Ll.L.Rep. 43 (H.L.); The Mihalios Xilas [1979] 2 Lloyd’s Rep. 303, at page 314: “When a man, faced with two alternative and mutually exclusive courses of action, chooses one and has communicated his choice to the person concerned in such a way as to lead him to believe that he has made his choice, he has completed his election.”12 Clause 15 NYPE: “payment of hire shall cease” see the The Lutetian [1982] 2 Lloyd’s Rep. 140 per Bingham J: held that charterers are not obliged to pay hire on the due date if the vessel is off hire at the time.13 The clause is construed contra preferentum to the charterer.14 The Doric Pride [2006] 2 Lloyd’s Rep. 175, at page 179, per Rix LJ said, “under a time charter the risk of delay is fundamentally on a time charterer, who remains liable to pay hire in all circumstances unless the charterer can bring himself within the plain words of an off-hire provision”.15 NYPE clause 15 provides “the full working of the vessel” . other charters, such as Shelltime 3 and 4 provide: “the efficient working of the vessel”16 The Berge Sund [1993] 2 Lloyd’s Rep. 453 (C.A.), per Staughton, L.J., at page 460:”The question is not what the charterers hoped or expected their orders would be, but what service they actually required”17 Covered by duty of despatch sounding in damages18 The Aquacharm [1980] 2 Lloyd’s Rep. 237 19 The Clipper Sao Luis [2000] 1 Lloyd’s Rep. 645.20 Shell time 4 and Blatime defer on this; namely deficiency of men, breakdown in machinery, damages to hull and machinery and detention by average accidents to ship or cargo.

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possible cause21. The Saldanha22 illustrates the non-operation of off-hire in the absence of

“whatsoever”:, despite the fact that the ship’s working had been completely prevented by it having

been seized and detained by pirates off-hire was not triggered since piracy is an extraneous cause to

the vessel and did not relate to her condition.

Furthermore certain terms will be implied. The cause needs to be fortuitous 23, should not result from

the fault of the charterer or as an inevitable result of his employment orders. In Leolga v. Glynn24 the

charterers loaded the ship with ammunition in breach of contract, and the vessel was detained by

local authorities: the court found that the breach was the cause of the detention and as such could

not trigger the off-hire clause25.

Finally there should be proof of loss of time. As regards NYPE 199326 it should relate both to the

period of time during which the ship is prevented from working, and to the period of time by which

the progress of the charter service has been delayed (net loss of time clauses27). Period clauses,

simpler to calculate, are only concerned with the loss of time resulting from the event that makes

performance impossible28.

21 However it is submitted that this may be artificial since pure extraneous causes to the condition of the ship would still be caught by the requirement that they should prevent the full working of the ship: see Weale Piracy and off-hire: extraneous causes revisited, (2010) L.M.C.L.Q. 574; Belcore Maritime Corp v. Fratelli Moretti Cereali SpA (The Mastro Giorgis) [1983] 2 Lloyd’s Rep 66; CA Venezolana de Navegacion v. Bank Line Ltd (The Roachbank) [1987] 2 Lloyd’s Rep 498. per Webster J; ‘‘[I]n practice I would have thought that the only real limitation is that the cause must have been one which prevented the full working of the ship. This does not limit the meaning of the words ‘any other cause whatsoever’; it merely limits the range of relevant causes by reference to their effect’’22 Cosco Bulk Carrier Co Ltd v. Team-Up Owning Co Ltd (The Saldanha) [2010] EWHC 1340 (Comm)23 The Rijn [1981] 2 Lloyd’s Rep. 267. Per Mustill J: ““The draftsman cannot possibly have intended that hire should cease in every circumstance where the full working of the vessel is prevented. This reading would be commercial nonsense, and would make the second half of the clause redundant. In my judgment, only those causes qualify for consideration which are fortuitous, and are not the natural result of the ship complying with the charterers’ orders”24 [1953] 2 Lloyd’s Rep. 4725 The Laconian Confidence [1997] 1 Lloyd’s Rep. 13926 Same for Baltime and ShellTime 427 See the Bridgestone Maru (N°3) (1985) 2 Lloyd’s Rep 43 per Hirst J28 this would mean that while the efficiency of the vessel has not been fully restored due to the occurrence, off hire will continue to operate see for e.gTynedale v Anglo-Soviet Shipping Co (1936) 41 Com Cas 206

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Consequently it is difficult for the charterer to shift the risk back to the ship-owners. Furthermore off-

hire does not relieve them from certain contractual obligations, paying for bunkers, unless otherwise

provided29. Finally, contrary to freight, deductions from hire are allowed and theoretically30 practical

since they would enable deductions made in respect of claims in damages31 for delay caused by the

ship-owner.

II) CONTRACTUAL MECHANISMS OF ALLOCATION OF THE RISK OF DELAY

A) THE APPROACH VOYAGE

The ship-owner in both voyage and time charters should deliver the vessel by the stipulated

delivery date. This is coupled with the express or implied32 obligation to proceed with utmost or due

dispatch to the port of delivery in order to meet the stipulated date33, breach sounding in damages

unless the delay is such that it frustrates the contract.

However the risk on the ship-owner will be quite slight. Firstly he may have intermediate

engagements34 which may be more profitable than respecting the loading date and incurring

damages for delay. Secondly it is the charterer who has most to lose in waiting for the vessel since he

is unable to take advantage of current market freight or hire rates. Furthermore, concerning voyage

charters, the charterer wishes to know exactly when the ship should arrive so as to be able to comply

with his obligation to provide cargo35 and take full advantage of laytime avoiding incurring delay in

loading.

29 See clause 20 NYPE 194330 However in practice deduction from hire are very risky since if the charterer may be liable in breach of contract for not having paid full hire31 However it seems deductions to not apply to all types of delay but those specifically included in the contract; see for example lines 99 to 101 NYPE 1993 with respect to delay caused by “defect in or breakdown of any part of her hull, machinery or equipment”. However not all loss of speed is deductible under this clause, for example by bottom fouling or marine growth (The Rijn (1981) 2 Lloyd’s Rep. 267) 32 Hick v Raymond (1893) AC 22 at p 32. per Lord Watson op cit. Wilson F Wilson, Carriage of Goods by Sea, 7th edn, 2010, at p. 1533 “utmost dispatch”: Baltime, clause 9; NYPE 46 clause 834 There is no rule against intermediate engagements: Monroe v. Ryan [1935] 2 K.B. 2835 Sunbeam Shipping Co. v. President of India (The Atlantic Sunbeam) [1973] 1 Lloyd’s Rep. 482

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The ship-owner can thereby agree to give an “expected ready to load” date in good faith and on

reasonable grounds36. As such unforeseeable supervening delay would not defeat the validity of the

declaration. Failure to respect these requirements entitles the charterer to repudiate the contract37,

and if properly observed the proper measure are damages for the loss caused by the late arrival 38.

The expected ready to load date is often coupled with a cancellation clause. The latter confers upon

the charterer the separate39 and absolute right to cancel the contract, subject to the duties imposed

by the clause4041, without prejudice to his right to damages for breach.

B) LAYTIME AND DEMURRAGE

Laytime is the period of time available to the voyage charterer for loading and discharging the

ship deemed to have been included in the freight. Contractual provisions will thus relate firstly to

how and when does the lay time clock start, aiming to shift the risk of delay from the ship-owner to

the charterer, and secondly will relate to its length, shift, and the consequences of its breach,

demurrage. Laytime starts if two conditions are met, subject to contractual modification.

1) Arrived ship

Firstly the ship should be an arrived ship, meaning that it has arrived at the designated place in

the charter. A port charter42 is more advantageous to the ship-owner since laytime starts even 36 R. Pagnan & Fratelli v. N.G.J. Schouten [1973] 1 Lloyd’s Rep. 349, per Kerr J. at p. 358: “one must not only consider the information which was in fact known to the owner, but also any facts which he ought to have known or as to which he was put on enquiry”37 Maredelanto Cia Nav. S.A. v. Bergbau Handel G.m.b.H. (The Mihalis Angelos) [1971] 1 Q.B. 164; [1970] 2 Lloyd’s Rep38 The same is to be said of estimate date of arrival dates: 39. Bank Line Ltd. v. Arthur Capel & Co. (unreported) in the Court of Appeal (approved by the House of Lords at [1919] A.C. 435 per Per Scrutton L.J : “it does not destroy a right which exists in either party to terminate a contract if an event has happened which frustrates the commercial adventure …”. 40 Triton Navigation v. Vitol (The Nikmary) [2004] 1 Lloyd’s Rep. 55: .the charterer could not invoke the cancellation clause since he did not exercise when the ship arrived late and he incurred demurrage as a result41 The Madeleine Roskill J. “…Plainly it is for the charterers to establish the right which they have sought to exercise.” If, therefore, delivery or readiness under the charter is dependent upon some act of nomination or instruction by the charterer, his failure in that regard may preclude his right of cancellation although much will depend upon the extent to which the charterparty itself gives sufficient definition of where the vessel is to be.42 E. L. Oldendorff & Co. v. Tradax Export (The Johanna Oldendorff) [1974] A.C. 479 : If the charter is a port charter, the vessel need only within the geographical and legal area of the port, immediately at the disposal of the charterers for loading in the sense that it can reach a berth quickly if one is vacant, presumption of immediate availability if the ship is anchored at the usual place for waiting to berth.

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though the vessel hasn’t reached a berth for reasons such as weather or congestion. Berth charters

on the contrary are more advantageous to the charterer: the ship-owner risks delay in waiting for a

berth since the ship will only be arrived once it has berthed43.

The parties will shift the risk of delay in berth charters by the inclusion of specific clauses such as

requiring the charterer to nominate a reachable berth44, failure upon which the risk of delay will shift

to him. Alternatively, the ship-owner may include a time lost waiting for a berth clause 45, laytime

counting from the moment the vessel could have entered a berth4647. Furthermore, the ship-owner

may wish to include a WIBON clause which effectively transforms the berth charter into a port

charter48.

2) Notice of readiness to load

Secondly the ship-owner is required to give notice that the ship is ready to load, and the ship

must actually be ready to load.

The declaration, for commercial and legal certainty must be given at the time the ship is arrived and

ready to load. An anticipated notice will be considered ineffective, only cured by a subsequent

effective declaration or if it is accepted by the charterer49. The Court of Appeal seems to have

shrouded in doubt the rule, albeit it was an aberration: if the charterers commence loading despite a

43 Berlingieri, Francesco, The Allocation of the Risk of Delay in Voyage Charter Parties, 8 J. Mar. L. & Com. 504 1976-197744 The Angelos Lusis (1964) 2 Lloyd’s Rep 28. op cit Wilson F Wilson, Carriage of Goods by Sea, 7th edn, 2010, at p. 56

45 Gencon clause46 Aldebaran Compania Maritime SA, Panama v Aussenhandel AG Zurich, The Darrah (1977) AC 157 per Lord Diplock : « the vessel is to be treated as if during that period she were in fact in berth and at the disposition of the charterer for carrying out the loading or discharging operation[…] and […] in the computation of time lost in waiting for a berth there to be excluded all periods which would have been left out in the computation of permitted laytime used up if the vessel had actually been in berth »47 It is even of use to the ship-owner in a port charter since laytime may start once the vessel has entered the harbour without requiring it to be arrived ship under the Johanna Oldendorff test; Federal Commerce v. Tradax Export (The Maratha Envoy) [1977] A.C. 1, at p. 10.48 Entitling the master to give notice of readiness to load once the vessel is an arrived ship under the Johanna Oldendorff test.49 Sofial v. Ove Skou Rederi (The Helle Skou) [1976] 2 Lloyd’s Rep. 205

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premature notice, this would amount to a waiver of the invalidity of the notice50. Furthermore the

ship should actually be ready to load in the sense that it is capable of receiving the cargo, both

physically51 and legally.

3) Laytime and demurrage

The charterer bears the risk of delay during lay time. Absent provisions as to its length, the

charterer should load the cargo within a reasonable time, sounding only in damages for detention 52 .

If provided, the charterer may take fullest advantage of them53. He may choose, in view of potential

profits on the market, to load on the final days of laytime while potentially sacrificing despatch

money and possibly going into demurrage. However once the full cargo is loaded further detention of

the ship will sound in damages for detention.

The obligation’s to load within the prescribed time limit is strict: laytime will not stop unless the

delay is covered by very specifically drafted exclusions clauses or caused by the ship-owners fault54. If

the charterer fails to respect his lay days he will be in breach of contract and the owner will be

entitled to liquidated or agreed damages (demurrage) for the delay55, the amount susceptible of

50 Glencore Grain Ltd. v. Flacker Shipping Ltd. (The Happy Day) [2002] 2 Lloyd’s Rep. 487 per Potter L.J. “In such circumstances, the charterers may be deemed to have waived reliance upon the invalidity of the original notice as from the time of commencement of discharge and laytime will commence in accordance with the regime provided for in the Charterparty as if a valid notice of readiness had been served at that time. By answering the question in that way, I should not be thought to doubt that, in appropriate circumstances, the same result may follow by application of the doctrines of variation and estoppel” However it is unclear whether the rule would function if the charterers were unaware of the premature notice since waiver or equitable estoppel requires that the representor is aware of his rights: Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) (1990) 1 Lloyd’s Rep. 399 per Lord Goff :“Equitable estoppel occurs where a person, having legal rights against another, unequivocally represents (by words or conduct) that does not intend to enforce those legal rights; if in such circumstances the other party acts, or desists from acting, in reliance upon that representation ,with the effect that would be inequitable for the representor thereafter to enforce his legal rights inconsistently with his representation, he will to that extent be precluded from doing so”

51 “she is discharged and ready in all her holds so as to give the charterer complete control of every portion of the ship available for cargo, except as much as is reasonably required for ballast to keep her upright52 the ship-owner having to prove his loss and the causative link between the charterers delay in loading and his loss, so less advantageous than demurrage payment53 No duty of despatch. See Margaronis v. Peabody [1965] 2 Q.B. 43054 See Budgett v. Binnington [1891] 1 Q.B. 35: the ship-owner should exercise due diligence in providing for example crew to stow the cargo. If however the shortage is due to an event beyond his control he will not be held responsible for the delay.55 Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1 Lloyd’s Rep. 81, at p. 87 per Hobhouse J: “The obligation has two different aspects: the first is the obligation to discharge and the second is to do so

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review if excessive56. Once demurrage is over, he will be entitled to damages for detention, thus it is

more in the ship-owners interests to have the longest possible demurrage period57.

B) REDELIVERY OF THE VESSEL

Redelivery of the vessel, specific to time charters, corresponds to the date when the charterers’

use of the vessel ends at the end of the charter period58.

The risk is entirely on the charterers. Unfortunately, it is not always possible to know exactly when

the vessel is going to be redelivered. Both parties have competing interests. The charterer may wish

to make a final voyage to take full advantage of the charter’s rate of hire which would be lower than

the current market rate whereas the ship-owner would want the exact opposite. Contracts will

generally provide for periods of tolerance or allowance either side of the redelivery date, otherwise

implied by law59, spread during which the charterer is free to redeliver the vessel. However in such

cases there will be no implied further allowance60. As such the main problems will involve early or

late redelivery beyond (overlap) or before (underlap) the allowance spread.

Concerning delay caused by overlap, the charterer will be in breach of contract and will be liable to

pay damages for the overlap61 corresponding to the difference between the charter hire rate and the

within the limited time. There is no breach before that limited time has expired. Once the limited time has been exceeded there is a continuing breach for which the liability in liquidated damages (that is to say demurrage) continues to accrue minute by minute as the failure to complete discharge continues…”56 Dunlop v New Garage (1915) AC 7957 No need of proof of causation 58 See Hyundai Merchant Marine v. Gesuri Chartering (The Peonia) [1991] 1 Lloyd’s Rep. 10059 The London Explorer [1971] 1 Lloyd’s Rep. 523, per Lord Reid at page 526: A statement as to the exact date of redelivery is always considered to reflect the intentions of the parties to include the term “about that date”The Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep. 115: the spread will depend on the length of the charter

60 Bocimar v. Farenco Navigation [2002] EWHC 1617 (QB) unless the spread afforded by the charter is too slight. In this case however a spread of 3 months was construed as not implying a further tolerance period61 charter hire rate is payable as hire till the redelivery date in the charter; clauses can protect the charterer from liability for overlap: The Black Falcon (1991) 1 Lloyd’s Rep 77; eg: ShellTime 4 Clause 19

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current market rate 62 of hire63. The ship-owner still bears the risk of delay since it seems that he will

not be able to recover for additional losses caused by overlap64, unless the charterers were aware

that late redelivery would result in such losses for the ship-owner65.

In order to minimise the risk of losses by delay, in the absence of contrary provisions66, the ship-

owner can refuse to obey the charterer’s illegitimate employment order for a last voyage, i.e a

voyage which appears, at the time the order is given or at the time performance is due, to be

incapable of meeting the redelivery date. On the other hand, if it is legitimate67 the ship-owner may

not refuse, without prejudice to his right to damages68.

If the charterer persists on giving an illegitimate order, it may amount to an anticipatory breach of

contract69. It is submitted that if the ship-owners comply with the illegitimate last order, they should

be entitled to quantum merit for losses suffered in performing extra-contractual duties beyond the

charter, ie overlap.70

III) FRUSTRATION

62Watson v. Merryweather (1913) 18 Com.Cas. 294. Per Atkin J ; However if the market hire rate is lower than the charter rate, the owner will be entitled to the charter rate for the excess.63 the market rate is the rate of hire and not of freight of a voyage charter of the same durationThe Johnny [1977] 2 Lloyd’s Rep. 1 per Denning M.R64 Transfield Shipping v. Mercator Shipping (The Achilleas) [2007] 1 Lloyd’s Rep. 19; on the basis that the party who caused the delay did not reasonably assume responsibility for such losses. 65 Ibid per Lord Roger: the charterers could reasonably have contemplated “that late redelivery of a vessel of that particular type, in a certain area of the world, at a certain season of the year would mean that the market for its services would be poor … the owners might have a claim for some general sum for loss of business, somewhat along the line of the damages for the loss of business envisaged by the Court of Appeal in Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB 528, 542–543”66 Clauses that authorise the charterer to perform an illegitimate last voyage: Shelltime 3 clause 18 or clause “without guarantee”67 Torvald Klaverness v. Arni Maritime (The Gregos): the legitimacy of the order is assessed on the basis of whether the last voyage appears both at the time of the giving of the order and when performance of it as been able to meet the redelivery date68 : it does not change that the order was legitimate or illegitimate for the measure of damages for the overrun period to be the current market rate of hire see The Black Falcon [1991] 1 Lloyd’s Rep. 77, per Steyn, J69 The Dione [1975] 1 Lloyd’s Rep. 115 per Denning M.R, Torvald Klaverness v. Arni Maritime (The Gregos) [1995] 1 Lloyd’s Rep. 1 (H.L.). per Lord Mustill70 Foxton, David, Damages for late or early redelivery under time charterparties[2008] L.M.C.Q

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Frustration is problematic with regards to delay because it arises independently of the allocation of

risk or breach by one of the parties of the charter71. Indeed breaches of contract will shift the risk

unless the other party has accepted the risk. For example the ship-owner will bear the risk for delay

in waiting for a berth72 if he is deemed to have accepted the charterer’s nomination risk of an unsafe

port from a range of ports, or proceeds to the port he knows is unsafe 73. The same could go for the

obligation not load dangerous goods74

Frustration however arises independently of fault or assumption of risk. Frustration finally increases

the disparity between time and voyage charters with respect to its occurrence75 and the effect on

pre-existing payments of hire76 or freight77.

CONCLUSION

The risk of delay is allocated on one party but may be shifted to the other party by contractual

provisions or breach of contract. Party autonomy, albeit the fundamental principle in the law of

carriage of goods by sea, is nevertheless limited by the interpretation made by the courts that have

71 Davis Contractors v Fareham UDC (1956) AC 696 at p 728 per Lord Radcliffe: “Frustration occurs whenever the law recognises that whitout default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract72 No obligation to nominate safe ports unless expressly stated: Mediterranean Salvage & Towage Ltd v Seamar Trading (2008) 2 lloyd’s Rep 62873 The Stork (1955) 2 QB at p. 77 per Devlin J op cit. Wilson F Wilson, Carriage of Goods by Sea, 7th edn, 2010, at p. 29: The existence of a safe port warranty “does not mean that a master can enter ports that are obviously unsafe and then charge the charterers with damage done” 74 Liability under Hague-Visby Rules Art IV 6): 6. Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.75 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] EWCA Civ 7: the measure of frustration depends on the length of the charterparty and thus more frequent in voyage charter parties76 Section 1(2) Frustrated Contracts Act 1943 applying only to hire: All sums paid or payable to any party in pursuance of the contract before the time when the parties were so discharged (in this Act referred to as “the time of discharge”) shall, in the case of sums so paid, be recoverable from him as money received by him for the use of the party by whom the sums were paid, and, in the case of sums so payable, cease to be so payable:77 Freight cannot be recovered unless there was never any consideration for it: Fibrosa v Fairburn Lawson (1943) AC 32

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adopted the rationale of assumption of risk in the sense that a shift and quality of the risk will be

difficult if that party could not reasonably have agreed to bear it78.

2625 words

78 Transfield Shipping v. Mercator Shipping (The Achilleas) [2007] 1 Lloyd’s Rep. 19

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BIBLIOGRAPHY

BOOKS:

Baughen, Simon, Shipping Law, 3rd ed, London, Portland, Cavendish, 2004

Coghlin, Terence, Baker, Andrew, Kenny, Julian, Kimball, John, Time Charters, 6th ed , Informa

Maritime & Transport 2008

Cooke, J.H.S, Voyage charters, 3rd ed, London, Informa, 2007

Girvin, Stephen, Carriage of Goods by Sea, Oxford , Oxford University Press, 2007

Wilson, John Furness, Carriage of goods by sea, 7th ed, Harlow, Longman, 2010

ARTICLES:

Foxton, David, Damages for late or early redelivery under time charterparties, L.M.C.Q, 2008

Berlingieri, Francesco, The Allocation of the Risk of Delay in Voyage Charter Parties, 8 J. Mar. L. &

Com. 504 1976-1977

Weale, Piracy and off-hire: extraneous causes revisited, L.M.C.L.Q. 574; 2010

CASES:

A/S Gunnstein v. Jensen (The Alfa Nord) [1977] 2 Lloyd’s Rep. 434

Aquacharm, The [1980] 2 Lloyd’s Rep. 237

Bank Line Ltd. v. Arthur Capel & Co. (unreported)

Bocimar v. Farenco Navigation [2002] EWHC 1617 (QB)

Budgett v. Binnington [1891] 1 Q.B. 35

Belcore Maritime Corp v. Fratelli Moretti Cereali SpA (The Mastro Giorgis) [1983] 2 Lloyd’s Rep 66

Berge Sund, The [1993] 2 Lloyd’s Rep. 453

Bridgestone Maru, the (N°3) (1985) 2 Lloyd’s Rep 43

15

Clipper Sao Luis, The [2000] 1 Lloyd’s Rep. 645

Cosco Bulk Carrier Co Ltd v. Team-Up Owning Co Ltd (The Saldanha) [2010] EWHC 1340 (Comm)

Dakin v. Oxley (1864) 15 C.B. (N.S.) 646

Davis Contractors v Fareham UDC (1956) AC 696

Dione, the [1975] 1 Lloyd’s Rep. 115

Doric Pride, The [2006] 2 Lloyd’s Rep. 175

Dunlop v New Garage (1915) AC 79

Duthie v. Hilton (1868) L.R. 4 C.P. 138

E. L. Oldendorff & Co. v. Tradax Export (The Johanna Oldendorff) [1974] A.C. 479

Federal Commerce v. Tradax Export (The Maratha Envoy) [1977] A.C. 1, at p. 10.

Fibrosa v Fairburn Lawson (1943) AC 32

Freedom Maritime Corp. v. International Bulk Carriers (The Khian Captain (No. 2)) [1986] 1 Lloyd’s

Rep. 429

Georgios C., The [1971] 1 Lloyd’s Rep. 7

Glencore Grain Ltd. v. Flacker Shipping Ltd. (The Happy Day) [2002] 2 Lloyd’s Rep. 487

Hick v Raymond (1893) AC 22*

Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] EWCA Civ 7

Hyundai Merchant Marine v. Gesuri Chartering (The Peonia) [1991] 1 Lloyd’s Rep. 100

Islamic Republic of Iran Shipping Lines v. Ierax Shipping Co. [1991] 1 Lloyd’s Rep. 81

Johnny, the [1977] 2 Lloyd’s Rep. 1

Pamela, The [1995] 2 Lloyd’s Rep. 249

Laconian Confidence , the[1997] 1 Lloyd’s Rep. 139

Laundry (Windsor) Ltd v. Newman Industries Ltd [1949] 2 KB 528

London Explorer, The [1971] 1 Lloyd’s Rep. 523

16

Lutetian, The [1982] 2 Lloyd’s Rep. 140

Manfield v. Maitland (1821) 4 B. & Ald. 582

Maredelanto Cia Nav. S.A. v. Bergbau Handel G.m.b.H. (The Mihalis Angelos) [1971] 1 Q.B. 164

Margaronis v. Peabody [1965] 2 Q.B. 430

Mediterranean Salvage & Towage Ltd v Seamar Trading (2008) 2 lloyd’s Rep 628

Mihalios Xilas, The [1979] 2 Lloyd’s Rep. 303

Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) (1990) 1 Lloyd’s

Rep. 399

Rijn, the [1981] 2 Lloyd’s Rep. 267

R. Pagnan & Fratelli v. N.G.J. Schouten [1973] 1 Lloyd’s Rep. 349

Sheels v. Davies (1814) 4 Camp. 119

Sofial v. Ove Skou Rederi (The Helle Skou) [1976] 2 Lloyd’s Rep. 205

Stork, the (1955) 2 QB

Tankexpress v. Compagnie Financière Belge des Pétroles (1948) 82 Ll.L.Rep. 43 (H.L.)

The Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep. 115

The Aldebaran Compania Maritime SA, Panama v Aussenhandel AG Zurich, The Darrah (1977) AC 157

Torvald Klaverness v. Arni Maritime (The Gregos) [1992] 2 Lloyd’s Rep. 40

Transfield Shipping v. Mercator Shipping (The Achilleas) [2007] 1 Lloyd’s Rep. 19

Triton Navigation v. Vitol (The Nikmary) [2004] 1 Lloyd’s Rep. 55:

Tynedale v Anglo-Soviet Shipping Co (1936) 41 Com Cas 206

Venezolana de Navegacion v. Bank Line Ltd (The Roachbank) [1987] 2 Lloyd’s Rep 498

Watson v. Merryweather (1913) 18 Com.Cas. 294