Golden Fleece Maritime Inc and another v St Shipping and Transport Inc “ELLI” and “FRIXOS” – Butterworths Law Direct 2.8.07 is an important shipping decision.
The two vessels were time chartered on an amended Shelltime 4 form. The class description of the vessels was 'SBT/PL' (Segregated Ballast Tanks – Protected Location). Each was described as including a 'double-side' and they were considered as 'double-sided' by the market although the overlap between the bunker tanks and the slop tanks resulted in Lloyd's Classification Society's determination that they were partially double-sided and not double-sided along the whole length of the cargo spaces. Clause 1 of the charters provided that the vessels were to be 'in every way fit to carry crude and/or dirty petroleum products'. Clause 3(i) provided that 'Throughout the charter service Owners shall, whenever the passage of time, wear and tear or any event … requires steps to be taken to maintain or restore the conditions stipulated in Clauses 1 and 2(a), exercise due diligence so to maintain and restore the vessel … '.
The problem arose when there was a change in International Regulations, namely MARPOL Regulations 13F, 13G and 13H, which meant that neither of the vessels was permitted to carry fuel oil unless the vessels were fully double sided and had obtained letters of authorisation from their flag state. As referred to above, there was a small section on each vessel which was not deemed as double sided, so that vessels did not comply with the new regulations and could not obtain letters of authorisation to carry fuel oil. The issue was therefore whether the Owners were under an obligation to repair or modify the vessels to complete the double side and enable the carriage of fuel under the MARPOL Regulations.
It was held that the charterparties contained a warranty that the vessels would, at the time of delivery to the Charterers, be fit for the ordinary service for which the vessels had been chartered, namely the carriage of the stated cargoes between the places listed, as best found at clause 4 of Shelltime 4. This did not relate simply to the vessel’s physical condition but extended to a wider obligation including compliance with applicable rules and regulations such as Marpol. Under the Shelltime 4 form, a vessel which was not 'legally fit' to carry a permitted cargo such as fuel oil could not properly be described as being 'in every way fit' to do so. Nor could a vessel be 'in every way fit for the service', if she was not legally fit to carry a cargo of fuel oil which was part of the specified service. The on-going obligation under clause 3 of Shelltime 4 required the Owners to maintain the vessels in such condition, and the financial implications for the Owners of compliance with the new MARPOL Regulations were not a relevant factor, absent questions of frustration.