In London Arbitration 5/08 - 738 LMLN 3 the vessel was chartered on the NYPE form as amended for a minimum of 90 and a maximum 150 days’ service. Disputes arose in relation to the condition of the ship’s holds, both on delivery and later during performance of the charter. Before the present charter, the ship’s previous cargoes had been, in order: cement, petcoke, coal, copper concentrates, and steel coils. The steel coils were discharged in Camden and the vessel was surveyed by AMS on behalf of the steel coil charterers (off-hire survey) as well as the parties to the present charter (on-hire survey).

The charterers’ orders were to load a cargo of grain at New Orleans. The master and crew undertook steps to clean the holds ready for that cargo. The ship was inspected by the National Cargo Bureau (“NCB”) and US Department of Agriculture (“USDA”) surveyors. Both passed her without qualification first time round as being fit to load grain, and thereafter loading took place.

The cargo was discharged without complaint. The charterers then ordered the vessel to sail to Kwinana to load a cargo of bulk alumina for the US West Coast. At arrival at the loadport an inspection took place. She failed that inspection. It was said that previous cement residues as well as some rust scale and copper concentrate residues were found. Cleaning by shore labourers then took place, including the scraping of the tanktops, taking in excess of four days. The holds were then passed and the vessel loaded, sailed to the US and discharged her cargo without incident. She was then ordered to load a further grain cargo from Portland, Oregon, for Japan. Again, the vessel failed inspection, this time on grounds that cement dust was found in the holds. Further cleaning took place lasting almost two days before the ship was passed for loading.

The charterers contended that the ship was off hire during the cleaning operations, alternatively that the owners were in breach of contract in relation to the ship’s condition on delivery and/or on arrival at the first loading port. They therefore withheld hire for the periods in question, as well as the cost of cleaning. They also made a deduction in respect of a speed claim on the alumina voyage.

The owners said that the deductions were unjustified, and they brought arbitration proceedings.

The charterparty provided inter alia as follows:

Lines 41/42

“Vessel on her delivery shall have … holds to be clean, swept, dry, free of any previous cargo residue and/or loose rust … loose rust scales or any other foreign materials to the satisfaction of a mutually agreed independent surveyor and tight, staunch, strong and in every way fitted for the intended cargo of, [sic] …”

Clause 90:

“Vessel’s holds on delivery or arrival at 1st load port are to be completely clean, swept, washed down by fresh water and dried up, free of salt, loose rust scale and previous cargo residues and fully ready to receive Charterers’ intended cargo in all respects and to the satisfaction of independent surveyor.


The charterers said that the owners were in breach of the lines 41/42 obligations and that the vessel was off-hire pursuant to the standard NYPE clause 15.

The tribunal held that the charterers had failed to establish any loss of time, and thus could not succeed whether as a matter of off-hire or one of damages. They took time to deal with some of the other main arguments advanced.

The first point was that AMS’s on-hire survey at Camden had no probative value as to the cleanliness of the ship’s holds in the respects which were relevant to the arbitration. However, although it was found that the owners were in breach of lines 41/42 it was found that that did not matter – in light of clause 90 all that mattered was that the holds met the requirements at the first load port. It was equally obvious that the condition of the holds on delivery had no significance whatsoever because, by the time the ship was presented for loading, she was in the condition required.

It was difficult for the charterers to argue that clause 90 was not satisfied. The NCB and USDA inspectors were plainly independent. The charterers had relied on what was said to have been found at Kwinana, ie cement and copper concentrate residues, and some loose rust, and had invited the tribunal to infer that the holds could not have been in the condition they should have been on first loading. That was a difficult argument to advance, given the diligence of NCB and USDA surveyors, and the fact that no complaints were made on discharge of the cargo. At its lowest, it was inherently improbable. The evidence as to the condition of the holds at Kwinana was not very detailed. The tribunal was in no doubt that there were no cement residues at Kwinana that required removal: there was only some harmless staining of the upper reaches of bulkheads and shell plating.

As to the alleged loose rust scale and copper concentrate residues, the tribunal’s view was that the former did not exist at Kwinana, and that if the latter did, it was a question of hardened – and thus irrelevant – residues on the tanktops. It might be that that requirement was imposed because there was no cargo for the ship when she arrived.

As to off-hire, clause 90 could have no application simply because the ship did not fail the loadport inspection. Standard clause 15 of the NYPE form gave the charterers no comfort, not only because there was no loss of time, but also because the charterers could not bring themselves within the wording of the clause. There was no cause amongst those listed that could be said to be applicable on the facts of the case.

Accordingly, the charterers were not entitled to deduct any amounts in respect of time or expenses at Kwinana and Portland. On the facts, the charterers were not entitled to make any deductions in relation to the alleged speed claim. It followed that the owners’ claim succeeded in full.