NYK Bulkship (Atlantic) v Cargill International - The Global Santosh
NYK Bulkship (Atlantic) N.Y. v Cargill International S.A., The “Global Santosh”
English High Court; Field J;  EWHC 30 (Comm); 1 February 2013
Timothy Young QC (instructed by Maritime Law Office Skinitis) for NYK Bulkship (Atlantic) N.Y., Owners
Andrew W Baker QC and Daniel Bovensiepen (instructed by Holman Fenwick Willan LLP) for Cargill International S.A., Charterers
PERIOD OFF-HIRE CLAUSE COVERING DELAY ARISING FROM DETENTION OR ARREST OF VESSEL: WHETHER SUB-CHARTERERS OR RECEIVERS WERE AGENTS OF THE CHARTERERS: WHETHER DELAY TO VESSEL “OCCASIONED BY” RECEIVERS’ FAILURE TO DISCHARGE WITHIN THE LAYTIME AND/OR TO SECURE SELLERS’ DEMURRAGE CLAIM
The Vessel’s charter contained a period off-hire clause for delays due to arrest. The clause did not apply if the arrest was “occasioned” by acts of the charterers or their agents. Cargo discharge was delayed by cargo receivers, and the Vessel was (mistakenly) arrested by a sub-charterer as security for a demurrage claim against receivers. Charterers contended that the Vessel was off-hire during the arrest, and were successful before a Tribunal. However, Field J found that insofar as the clause was concerned, receivers had discharged the cargo as the charterers’ agents, potentially triggering the exception to the clause. The question of whether the receivers’ delay in discharge “occasioned” the arrest was remitted to the Tribunal.
This case note has been contributed by Justin Gan Boon Eng, LLB (Hons) (NUS), an advocate and solicitor of the Singapore Bar
The Vessel was chartered on a modified NYPE 46 form by NYK Bulkship (Atlantic) N.Y. (“Owners”) as disponent owners to Cargill International S.A. (“Charterers”), and ultimately chartered to Transclear S.A. (“Transclear”). The Vessel carried a cement cargo which Transclear had sold to IBG Investment Ltd (“IBG”) C&F free out; IBG was responsible for unloading and would pay demurrage to Transclear if unloading were delayed.
Unloading (at Port Harcourt, Nigeria) was delayed partly due to the breakdown of IBG’s unloader. Transclear arrested the cargo to secure its demurrage claim. By error, the Court order arresting the cargo also directed the arrest of the Vessel.
Charterers withheld hire for the time the Vessel lay under arrest, citing additional Clause 49:
“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…”
Owners argued that the arrest fell under the proviso to Clause 49 (underlined above) as “agents” included sub-charterers and receivers performing Charterers’ obligations, in particular, Charterers’ discharge obligations.
Charterers succeeded in the reference to arbitration. In so deciding, the Tribunal (a) rejected Owners’ argument that Transclear was acting as Charterers’ agent when it arrested the Vessel, (b) but did not comment on Owners’ argument that IBG’s failure to discharge the cargo in time (as Charterers’ agent) “occasioned” the arrest.
Owners appealed on a question of law, and were largely successful. The question of whether IBG’s failure to discharge the cargo in time “occasioned” the arrest was however remitted to the Tribunal.
Field J found that the words “...any personal act or omission or default of the Charterers or their agents…” in the proviso to Clause 49 were not restricted to “agents” specifically instructed to carry out Charterers’ responsibilities. Instead, the words extended to:
“…parties such as sub-charterers or sub-sub-charterers or receivers to whom [Charterers], by subletting the vessel, had delegated or sub-delegated the performance of its responsibilities under the Charterparty… irrespective of the precise contractual relationship existing between the delegate and the party above him in the contractual chain.”
In so deciding, Field J had regard to:
(a) The liberty to sublet clause providing that Charterers remain responsible for performance of their responsibilities.
(b) Clauses contemplating that parties would act (and presumably fulfil their contractual responsibilities under the charter) via agents.
The “personal act[s] or omission[s] or default[s]” would however be limited to those occurring during the delegate’s performance of the delegated task. IBG’s failure to pay demurrage or secure Transclear’s claim was part of the delegated task of discharge because that task included an obligation to “meet all necessary expenses to clear obstacles to performing that task that resulted from IBG’s own failure to get on and unload the cargo.”
Field J then explained the degree of causation required before the “capture or detention or seizure or arrest” would be considered “occasioned by” the agent’s act. In his view, “occasioned by”:
(a) Is wider than “effective cause” but narrower than “but for” causation
(b) Involves a finding that the arrest was “caused by or brought about” by the act in question “as a matter of commercial common sense”.
(c) Can encompass events directly caused by the “mistaken and wrongful conduct on the part of third parties”.
Applying these causative principles, Field J found:
(a) When Transclear arrested the cargo (and by mistake, the Vessel), it was not performing any responsibility delegated to it by Charterers. (Transclear had a demurrage claim against IBG but Charterers did not.)
(b) It was “plainly arguable” that IBG’s delay in unloading caused the demurrage claim, and together with the failure to pay or provide security, caused the application for the arrest of the cargo, and the mistaken arrest of the Vessel.
(c) As the question of whether IBG’s delay in unloading “occasioned” the Vessel’s arrest was one of “commercial common sense”, it would be remitted to the Tribunal for decision.