London Arbitration 11/13

The Vessel was trip-chartered on an amended Asbatime 1981 form, which contained the following clauses:

Clause 66: “Without prejudice to any of their other rights under this charter, it is understood that charterers shall be entitled at any time to carry out ultrasonic hose or other testing of the vessel’s hatch covers … The cost and time for such testing shall be borne by charterers unless any deficiency is found, in which case same shall be for owners’ account and the vessel shall be off-hire for any time lost thereby … and other costs incurred which are directly related expenses as a result of such deficiency shall be for owner’s account.”

Clause 91: “Vessel’s holds on delivery to be completely clean … and in every way ready and suitable to load charterers’ intended cargo(es). If the vessel is rejected at loading port(s) by charterers’/shippers’ surveyors or competent authorities, then the vessel to be off-hired from the time of failure until all holds pass re-inspection by them and any time lost and all expenses caused thereby to be borne by owners.”

Facts

Shortly after arrival at the load port, the holds and hatch covers failed an inspection by the shippers’ surveyor. The loading berth was apparently free at the time the vessel arrived.

Remedial work was carried out, and a further inspection passed two days later, when NOR was tendered. However, because the intended berth was by then occupied by another vessel, loading did not commence for another two days.

The parties agreed that the vessel was off-hire until she passed the inspection. Charterers claimed that she should also be off-hire for additional time lost as a result of the failed inspections, alternatively that they should be able to recover in damages in respect of that time.

Tribunal’s findings

Charterers’ claim for additional off-hire failed. Clauses 66 and 91 were “net loss of time” clauses, the material words being “any time lost thereby”. If Charterers had been able to use the vessel whilst the holds and hatches were being worked on, between failing the first inspection and passing the second, the vessel would have been on hire.

The alternative damages claim also failed. Charterers’ assertion that the vessel could have berthed immediately after arrival if she had passed the first inspection was based on conjecture, not substantiated fact. Even if that assertion was correct, however, clauses 66 and 91 provided a complete code in respect of damages flowing from the relevant events. Those damages were clearly restricted to the period of the named off-hire event.

Comment

This decision highlights the point that whether the charter contains a “period” or “net” off-hire clause can significantly affect the off-hire position. To rely on a “net loss of time” off-hire clause, such as NYPE clause 15, charterers must show the loss of a period of service anddelay to the progress of the charter as a whole. Under a “period loss of time” clause, charterers only need to show the loss of a period of service.

Where a charter incorporates non-standard additional clauses which provide for off-hire events in specific circumstances, the precise wording of those clauses must be considered very carefully in order to determine the exact time and value of any off-hire period