A vessel was chartered by NYK to Cargill for a time charter trip. Cargill sub-chartered to Sigma. The cargo was a shipment sold by Transclear to IBG. (Transclear were a sub-charterer, but it was not clear whether this was from Sigma or from an intermediate charterer.)
A dispute concerning unpaid demurrage arose between Transclear and IBG and Transclear had the vessel arrested. Cargill withheld hire for the period of the arrest, relying on clause 49 of the charterparty:
"Should the vessel be captured or seizured [sic] or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents."
The arbitral tribunal held that Cargill were entitled to put the vessel off hire. On appeal Field J held that Cargill were not so entitled. Cargill appealed.
The appeal was dismissed. Cargill were not entitled to put the vessel off hire, as the arrest had been "occasioned by any personal act or omission or default of the Charterers or their agents".
1 The word "agents" in clause 49 was not limited to agents strictly so called. Delegates of Cargill could be its agents for the purposes of the clause, irrespective of the precise contractual relationship existing between the delegate and the party above him in the contractual chain. The word “agents” was accordingly capable of extending to sub-charterers, sub-sub-charterers and receivers.
2 The acts or omissions or defaults in question were not restricted to those occurring "in the course of the performance by the delegate of the delegated task".
3 The general scheme of clause 49 was that the vessel would be off-hire where the relevant matters were either on NYK's side of the line or were the acts or omissions of third parties (eg government authorities) unconnected to either NYK or Cargill.
4 However, the dispute between Transclear and IBG clearly fell on Cargill's side of the line. The dispute arose out of Cargill's trading arrangements. The result was that hire continued to run over the relevant period (subject to questions of causation). The acts or omissions of both Transclear and IBG led to that result.
(The Global Santosh [ 2014 ] 2 Lloyd's Rep 103)
Authors: Michael Bundock, Senior Associate and professional support lawyer with Stephenson Harwood & Joanne Champkins, Associate specialising in marine insurance with Stephenson Harwood / Publisher: SCMO