Lucy Longmore, an Associate in the London Shipping Group, considers the situation where Charterers have ordered a vessel to Port of Aden in Yemen, and Owners wish to refuse these orders on the grounds that the voyage is unsafe.
Head Owners have time-chartered the Vessel to Disponent Owners, who have in turn employed the Vessel under a contract of affreightment (the “COA”) to Charterers. Charterers have ordered the vessel to proceed to Port of Aden, in Yemen, which orders have been passed up the line to Head Owners.
Head Owners have refused these orders, on the basis that they will not perform operations in the Gulf or Port of Aden. Disponent Owners have, in turn, refused Charterers’ orders. The refusals are made on the grounds that the voyage is unsafe, and puts the vessel and its crew at risk.
Charterers have offered to deploy armed guards on board the Vessel, in an attempt to ally fears regarding the safety of the proposed voyage. Head Owners have refused to allow such guards on board the vessel, on the basis that it is against their company policy.
TIME CHARTER TERMS
The time charter provides that the Vessel must trade via safe ports or berths, and that it will not call in “war or war risk areas”. A piracy clause, based on the BIMCO 2009 clause, is incorporated, as is a war risks clause which provides that Charterers shall be notified if, in the Master’s or Head Owners’ reasonable opinion, it becomes dangerous or impossible for the Vessel to enter or reach any place to which it has been ordered owing to, inter alia, “war, hostilities, warlike operations, civil war, civil commotions or revolutions”.
The COA provides that the Vessel must trade via safe ports or berths, within institute warranty limits, always excluding “all war risk and warlike areas” as declared by hull and machinery underwriters. The CONWARTIME 2004 clause is also incorporated.
THE POSITION UNDER THE TIME CHARTER
Prima facie, Yemen is within the trading limits under the charter, and as such orders to proceed there would be legitimate. However, in light of the recent unrest in Yemen, there may be an argument that Yemen is excluded, having become a “war risk” area.
Considering the piracy clause, the key issue is the reference to the “reasonable judgment” of the Master and/or Owners. This is an objective test which must be satisfied before orders can be refused. It would not be necessary to show that every Owner or Master would refuse to call at Aden. Rather, if it can be shown that some Masters or Owners, acting prudently, would refuse the orders then this would be sufficient. Where piracy attacks are ongoing, such as in the Gulf of Aden, this test may well be satisfied.
The war risks clause, similarly, is not unqualified. The Master or Owners are entitled to refuse Charterers’ orders if, in their “reasonable opinion”, the Port of Aden had become dangerous to reach or enter on account of an act of civil war, civil commotions or revolutions.
Yemen is currently in a state of civil strife, which has been said to be bordering on civil war. Depending on the extent to which this affects the Port of Aden, this could entitle Head Owners to refuse orders to proceed there on the basis of the war risks clause as well as the piracy clause.
THE POSITION UNDER THE COA
There is a good argument that the trading limits specified in the COA exclude areas for which hull and machinery underwriters require additional war risk premiums to be paid. The JWC lists Yemen as a Listed Area.
In any event, the COA states that the CONWARTIME 2004 clause is also incorporated. This clause states that a vessel, unless Owners’ written consent has been obtained, shall not be ordered to any port where it appears that “the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgment of the Master and/or the Owners, may be or are like to be, exposed to War Risks”. Such risks are defined as “war; act of war; civil war; hostilities; revolution; civil commotion … acts of piracy”.
This clause gives Disponent Owners the right to refuse orders subject to the “reasonable judgment” of the Master and/or Owners. This is most likely to be satisfied in circumstances where there are ongoing acts of piracy and continuing civil unrest.
PROVISION OF ARMED GUARDS
As regards the provision of armed guards, in this situation Charterers do not have a contractual right to insist upon armed guards being used. There is no provision under the COA that would allow them to take such a position. Further, it is generally accepted that the use of armed guards on board a vessel, and the consequential risks and problems which may arise, are Owners’ matters.
A consideration of whether Owners are entitled to refuse Charterers’ orders will depend very much on the specific facts of the situation. No matter the situation, however, Owners’ refusal must always be within the terms of the charterparty, which should be carefully considered prior to any refusal being communicated.
Where standard clauses such as the BIMCO piracy clause and CONWARTIME 2004 are incorporated, the key point is that any decision must be made according to the Master and/or Owners’ “reasonable judgment”. This should be exercised after an objective consideration of all of the facts in existence at the time that the orders are given.