Nordisk Skibsrederforening

­Unsafe port and off-hire – how a claim may be fouled by facts

Review of a London arbitration award

We recently acted for one of our members in a London arbitration that illustrates how dramatically the outcome of a case may turn on the facts.

Our members had their vessel out on time charter to a charterer who in turn had sub-chartered the vessel under a voyage charter. In connection with loading at Richards Bay, the vessel anchored awaiting a ready berth. When the vessel attempted to heave anchor, problems were encountered in that the anchor had become entangled with a fouled anchor that had to be cut loose before the vessel could berth. At the time (before our involvement) the members conceded to off-hire for the time it took for the vessel’s anchor to be cut loose – amounting to about USD 35,000.

About one year later, however, time charterers commenced arbitration claiming additional amounts. The basis for their claim was that our members were allegedly in breach of charter in that the master had negligently dropped anchor in an area which on the local chart was marked “Foul ground lost anchor and chains”. The time charterers claimed as damages (alternatively off-hire) time lost because the vessel had lost her berthing turn following the incident with the anchor (about USD 65,000), plus allegedly lost demurrage earnings under the sub-charter by reason of the vessel’s NOR having been invalid due to the problem with the anchor (about USD 11,000).

The allegation that the vessel had dropped anchor in a marked danger zone was supported by a statement by the local port authorities. Together with our members we enquired into the alleged facts, which seemed not entirely to make sense. We procured local charts of Richards Bay as well as the vessel’s logs, which gave GPS positions every 12 hours. These positions included the vessel’s location when the anchor was dropped and the location when the fouled anchor was eventually cut loose. This evidence showed clearly that the master had in fact dropped anchor well outside the danger zone indicated on the chart, and that the vessel had drifted into the zone in the course of the struggle to have the fouled anchor cut loose. It therefore seemed that the statement by the port authority wrongly assumed that the vessel’s position when the fouled anchor was cut loose was the same as the position where the vessel had dropped anchor initially. No evidence to rebut these facts was produced by the time charterers.

On the basis of these factual findings we pleaded that time charterers’ claims were bound to fail. Moreover, we asserted that Richards Bay was an unsafe port in the legal sense because of debris on the seabed outside the areas so marked on the local charts. This meant that charterers were in breach of charter for having ordered the vessel to an unsafe port.

Accordingly we submitted a counterclaim for the costs our members had incurred in having the anchor cut loose. Furthermore we claimed repayment of the initially conceded off-hire of about USD 35,000. On this latter point, time charterers argued that our members could not re-open an off-hire claim to which they had already conceded. We, on the other hand, argued that the off-hire claim had been conceded on the condition that further arguments would not be raised and time charterers had themselves breached that condition by subsequently claiming additional off-hire and damages.

In short, our members succeeded in full and were also awarded their costs in respect of the arbitration.

The moral of this story is that one should ascertain the true facts before commencing arbitration. In this case time charterers had USD 35,000 in their pocket and commenced arbitration to recover more. Instead they lost the USD 35,000 and were obliged to pay to our members twice that amount plus the costs of the arbitration.