CONTENTS
From an owner’s perspective, the extensive exceptions to laytime in the AmWelsh form are often problematic. The situation can often be further complicated by the interaction of the exceptions clause with the provisions for demurrage, laytime and notice of readiness. In a recent case, the English Commercial Court has considered the extent to which a charterer is entitled to rely on the strike exception to prevent the running of laytime.
Facts
Four vessels were chartered by the defendant owners, Louis Dreyfus Commodities Suisse AS (“Owners”) to the claimant charterers, Carboex SA (“Charterers”), for the carriage of coal from Indonesia to Spain. The Contract of Affreightment was on an amended AmWelsh voyage charterparty form and was a berth, rather than a port charter. Thus, the Owner was, subject to the provisions of the COA quoted below, entitled to tender NOR upon arrival at the berth.
Clause 9 of the COA provided, inter alia:
“…In case of strikes, lockouts, civil commotions or any other causes included but not limited to breakdown of shore equipment or accidents beyond the control of the Charterers’ consignee which prevent or delay the discharging, such time is not to count [as laytime] unless the vessel is already on demurrage.”
Clause 40 was a bespoke typed clause which provided, inter alia:
“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 the first permissible tide, Notice of Readiness received and accepted, whether in berth or not [WIBON], 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”
The vessels reached the discharge port in Spain on their respective dates and each tendered NOR upon arrival at the port. At the time that each of the vessels arrived, the port was congested as a result of the ongoing after-effects of nationwide strikes. Although the strikes had now ended, due to such congestion each vessel suffered delay in getting into berth and discharging its cargo.
Owners claimed demurrage. Charterers declined to pay on the ground that berthing and the discharge of the cargo had been delayed by the strikes and the strike exception in clause 9 meant that these periods were excluded from the calculation of laytime. In relation to the delay in berthing, Owners contended that by virtue of clause 40, Charterers had taken the risk of delay caused by congestion at the discharge port. They also argued that as the strike had ended by the time the vessels eventually reached the berth, the strike exception in clause 9 did not apply and, therefore, no period should be deducted from laytime.
The claim was referred to arbitration. The tribunal was asked to decide two preliminary issues:
1. Did the strike exception apply in the case of a vessel which was delayed by the after-effects of a strike which had ended?
2. Did the strike exception apply in the case of a vessel which arrived after the strike had ended?
The Tribunal answered “no” to each of the above questions. It found that the strike exception was ambiguous and was, therefore, to be construed contra proferentum (strictly against the Charterer). Applying that construction, the Tribunal’s view, relying on the decision in Central Argentine Railway v Marwood [1915] AC 981, was that the Charterer had taken the risk of delay due to congestion and clause 9 did not apply where a vessel was prevented from berthing because of congestion at the berth, regardless of whether such congestion had been caused by a strike.
Charterers appealed to the Commercial Court on the grounds that the tribunal had erred in law.
On appeal, the Owners formulated a further issue to be decided by the Court, as follows:
3. Did the strike exception apply to a vessel which was unable to berth due to berth congestion caused by a strike?
The arguments
Owners submitted that the effect of the WIBON provision in clause 40 was that the risk of congestion at the discharge port was, prima facie, on Charterers. Owners argued that the AmWelsh strike clause was too narrowly drafted to subvert that position.
Charterers argued that the only significance of the WIBON provision was that it “started the laytime clock ticking”. Clause 9, they argued, was a stand-alone provision which should be construed independently. The WIBON provision set out when laytime commenced but pursuant to Clause 9, any time lost due to strikes (including congestion caused by strikes) would not count as used laytime. Charterers relied on the decisions in Reardon Smith Line v East Asiatic Co Ltd [1938] 4 All ER 107, and The Amstelmolen [1961] 2 Lloyd’s Rep 1.
The Commercial Court’s decision
The Court found that the tribunal had erred in law and ordered that its award be set aside.
The Court accepted Charterers’ submission that the effect of the WIBON provision was simply to determine when the laytime clock starts ticking. Clause 9 was to be construed separately and, if the exception applied, would stop the laytime clock.
As to the construction of Clause 9, the judge said that it was to be given its ordinary and natural meaning. In his view, the judge considered that:
“ on their ordinary meaning, the words “in case of strikes… beyond the control of the Charterers which prevent or delay the discharging” cover delay in discharging caused by congestion due to the after effects of a strike that has ended. They also cover delay in discharging caused by congestion due to a strike where the vessel arrived after the strike had ended.”
Accordingly, the Court found that the strike exception did apply to a vessel which was delayed by the after-effects of a strike which had ended; that it did apply in the case of a vessel which arrived after the strike had ended; and that it also applied to a vessel which was unable to berth due to congestion caused by a strike. Thus, Charterers were entitled to rely on the strike exception and time lost as a result of port congestion caused by the strike was not to count as used laytime.
Although this decision was based upon the proven facts that the delay in discharging was caused by the strike, it recognises the stand-alone nature of clause 9 in relation to the running or suspension of time in circumstances where the exception has caused congestion and where the congestion causes delay. This case concerned operations at the discharge port but the principles have equal application to events at the load port.
