CONTENTS
Background
The Wehr Trave was chartered on an amended NYPE form for:
“one Time Charter trip via good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo…. Duration… minimum 40 days without guarantee…”
Re-delivery was in the “Colombo/Busan range including China not north Qingdao.”
The vessel was delivered in Algeciras on 16 October 2013 and proceeded to load cargoes at Stevastopol, Novorossiysk, and Constantza. The vessel then went on to discharge cargo at Jeddah, Sohar, Hamriyah, Jebel Ali, and Dammam. While the last cargo was being discharged in Dammam, the charterers ordered the vessel to proceed to Sohar to load a cargo for delivery at New Mangalore or Cochin. The owners considered this final order to be unlawful and the dispute was referred to arbitration, leading to a partial final award that was then appealed to the High Court.
The sole question before the High Court was whether or not the terms of the charterparty permitted the charterers to order the vessel to load a further cargo after the initial cargo had been discharged. In other words, what is the scope of the often-used phrase “one time charter trip”? Can charterers load cargo after fully discharging of the vessel?
High Court Decision
The owners put forward several arguments as to why the order to load a further cargo was unlawful including: (1) the charterparty was for one trip and to find otherwise would, in effect, create an open-ended charter which no owner would agree to; (2) the charter was from one range of ports to another range; (3) Sohar was not listed in the agreed range of load ports.
In his decision, Eder J. gave short shrift to the strict arguments of construction that owners relied on concluding that “there is no single definition as to what constitutes a trip.” He reiterated that a time charter trip was still a time charter and not a voyage charter, with the principal benefit to the charterers being that they are not “irrevocably bound” by their voyage orders when given. Parties are accordingly free to define the parameters of a “trip” in a charter but must do so using clear words.
Under the terms of the charterparty, the Judge determined that the charterers could call at any ports they wished, provided that they fell within the relevant ranges and were not inconsistent with the contractual route. Indeed, “the word “via” simply means “by way of”; and the word “to” simply denotes the contractual route.” Thus, those words did not impose a limitation on where cargo could be loaded or discharged and the Judge held in favour of the charterers.
Practical Considerations
The judgment makes it clear that the terms of a TCT will be broadly interpreted if not limited using clear words. Considering a hypothesized trip from “East Coast USA to West Coast Australia” the Judge simply stated that such a trip would have to be construed “in accordance with the charterparty” which obviously provides some scope for such a trip potentially appearing “open-ended.” The Judge’s remarks do little to add clarity but are a red light warning to owners. Getting the parameters of the trip clear is essential to planning future charters. Get it wrong and owners could be in breach of the next laycan or risk exposure to claims by the existing charterers. How to do this?
In the interest of certainty, contracting parties should employ clean and specific language when defining the parameters of the TCT. For example, the load and discharge ranges should be designated as such instead of simply stating “from” and “to”. Alternatively, one could limit the number of cargoes to be shipped to “one cargo only”. It is also notable in the instant case that the charterers had not yet reached the redelivery range when they ordered the vessel to load a further cargo. It is an open question whether further liftings would be deemed permissible if the vessel was already in the redelivery range. Ensuring ports of call are “always” in geographical rotation will prevent trading over and over within the same range before going to the redelivery zone. Setting an absolute maximum duration may also be sensible. Nordisk shall of course be pleased to assist in drafting clauses which limit the Owners’ exposure in this respect.
By Paige Young