ED&F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH [2013] EWCA Civ 1449.

The M/V “LADYTRAMP” was chartered on the Sugar Charter Party 1999 Form. Clause 28 of the charter provided for the following exceptions to laytime:

“In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lock outs of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost, mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to the terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime or time on demurrage or detention.”

The terminal where the vessel was originally scheduled to load had been damaged by fire, which had destroyed the conveyor-belt system linking the terminal to the warehouse.

Owners claimed demurrage. Charterers argued that this damage to the conveyor-belt system fell within the meaning of “mechanical breakdowns at mechanical loading plants” in clause 28, and so entitled them to rely on that exception to laytime.

The Tribunal found, and the first instance court agreed, that Charterers were not entitled to rely on clause 28. The nature of the breakdown was key. It had to be mechanical in the sense that the mechanism of the mechanical loading plant ceased to function. It was not enough that the loading plant simply no longer functioned or malfunctioned. There had to be an inherent mechanical problem, rather than a problem due to a wider or external cause (such as a fire).

Charterers appealed, but their appeal was dismissed.

The Court of Appeal agreed with the Tribunal and the first instance court. It was held that “destruction of machinery by fire does not without more amount to a mechanical breakdown for the purpose of clause 28”.

Comment

Exceptions clauses, such as clause 28 in this case, are construed strictly against the party relying on them (in this case, Charterers). This latest judgment serves to emphasise that point. The cause of any delay must be capable of being brought within the ordinary meaning of the clause, without any need to extend the meaning or imply additional wording.

This is in line with the commercial purpose of the laytime and demurrage regime. Owners are entitled to demurrage if the laytime is exceeded, and should only be deprived of that demurrage in the circumstances strictly specified in the charter terms.