CSSA Chartering and Shipping Services S.A. v Mitsui O.S.K. Lines Ltd - The Pacific Voyager - Court of Appeal
CSSA Chartering and Shipping Services S.A. v Mitsui O.S.K. Lines Ltd (The “Pacific Voyager”)
English Court of Appeal: Longmore, King and Sir Rupert Jackson LLJ:  EWCA Civ 2143: 6 November 2018
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWCA/Civ/2018/2413.html
John Russell QC (instructed by Clyde & Co LLP) for CSSA
Simon Croall QC and Stewart Buckingham (instructed by Kennedys Law LLP) for Mitsui
VOYAGE CHARTER: SHELLVOY 5 FORM: WHETHER OBLIGATION ON OWNER TO GET THE VESSEL TO THE LOADING PORT WITHIN A CERTAIN TIME: WHETHER SUCH AN OBLIGATION IS ABSOULTE OR ONLY ONE OF DUE DILIGENCE: WHETHER LAYCAN EQUIVALENT TO AN ESTIMATED TIME OF ARRIVAL OR READINESS TO LOAD DATE
The Court of Appeal, in upholding the High Court’s decision, [] held that where a charter provided for a vessel to perform the chartered service with utmost dispatch and contained an express obligation to proceed to the port of loading, there was an absolute obligation on the vessel to commence her approach voyage to the loading port by a date when it was reasonably certain that the vessel would arrive at the loading port on or around the expected readiness to load date, even where the charter only included an anticipated itinerary relating to the completion of the then current voyage.
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor of England & Wales, LMAA Supporting Member and International Contributor to DMC’s Case Notes
The disponent owners (“Owners”), Mitsui, chartered the vessel, “Pacific Voyager”, on a Shellvoy 5 form to the charterers (“Charterers”), CSSA, for a voyage from Rotterdam to the Far East (the “CSSA charter”), at a time when the vessel was laden with another cargo under a previous charter and needed to transit the Suez Canal prior to final discharge to become free of cargo for the CSSA charter.
The cargo was due for part discharge in Egypt shortly after the CSSA charter had been concluded. The CSSA charter included an itinerary of ports and call dates prior to the vessel’s intended arrival in Rotterdam. Under this itinerary, the last port of call was named as Antifer (north of Le Havre) on or about 25 January 2015.
Unfortunately, while transiting the Suez Canal, the vessel suffered rapid water ingress and developed a list, with the cause being attributable to contact with submerged dredging equipment, and no apparent fault being attributable to the vessel or Owners.
An underwater survey confirmed the vessel had to discharge her remaining part cargo and perform a drydocking to repair the damage before she could perform any further voyages. The repair work, according to Owners, was expected to take months. Owners duly informed Charterers of the situation and, in consequence, Charterers exercised their right to cancel the charter.
Charterers brought a damages claim for USD1.2m on the basis that, despite Owners having given no estimated time of arrival at the loading port nor any date of expected readiness to load, the Monroe (fn.1) obligation applied. That meant that the Owners were under an absolute obligation to commence the approach voyage to the loading port by a date when it was reasonably certain that the vessel would arrive there on or around the estimated time of arrival or expected readiness to load date.
The High Court found for Charterers []. Owners appealed to the Court of Appeal.
Having briefly summarised the key legal decisions, reviewed the key part of the High Court’s decision, and outlined the parties’ submissions, Longmore LJ (with whom King LJ and Sir Rupert Jackson agreed) gave his decision as follow.
While every charter must be construed on its own terms, previous decisions on the same or similar clauses must be treated as authoritative in the interest of business certainty, as they are helpful guides in situations similar to prior situations dealt with by the courts.
The obligation of utmost despatch is an important obligation and is intended to give comfort to a charterer. If the obligation is to be given any effect at all, some time for sailing must be put in. That means that the vessel must either proceed "forthwith" at the date of the charter or "within a reasonable time". The inclusion of the itinerary in this charter showed that "forthwith" was not meant. So, the terms of the charter had to be looked at to ascertain what that reasonable time would be.
In these circumstances the owner was, to use Devlin J’s words in The “North Anglia” (fn.2), “permitted to have recourse to the expected date of readiness to load”. If the owner was permitted to have recourse to that expected date, so also was the charterer. There was no particular magic in the concept of a date of expected readiness to load; it was merely a provision to which the parties might “have recourse” in order to ascertain what a reasonable time will be.
Therefore, one needed to look at the charter to determine if there were any provisions to which recourse might be had to determine the answer. As the insertion of the vessel’s itinerary had excluded the possibility that "forthwith" was meant, it was equally possible to use it to enable the parties (and, if necessary, the court) to decide what was the reasonable time at which the obligation of utmost despatch was to attach. On that basis, the reasonable time was that at which it was reasonable to suppose the vessel would leave Antifer for Rotterdam, once a reasonable time for discharging her Antifer cargo had elapsed. Since the distance from Antifer to Rotterdam was comparatively short, that would have been, in the court’s view, on or about 28 January 2015. This date was based on an allowance of three days for the vessel to discharge her Antifer cargo after her arrival there on 25 January 2015, in accordance with the itinerary set out in the CSSA charter.
Accordingly, since Owners did not exercise the utmost despatch on or about 28 January 2015 (or at any other time), they were in breach and Charterers are were entitled to damages, because the court was bound, by Monroe, to hold that the exceptions in the CSSA charter (in this case, for example , the exceptions for collision or accidents or perils of the sea) did not apply to the performance of the previous charter, to which, of course, CSSA were not a party.
Whilst there might be some grounds for saying that this judgment provides a logical extension to the circumstances where the Monroe obligation has previously been held to apply, its correctness remains open to challenge but only if a case raising that same point reaches the UK Supreme Court for further consideration.
Some of the key features for the application of the Monroe obligation were missing in this case. Further, determining the start point for the application of the obligation is not straightforward when reasonable certainty is desirable for commercial purposes. In this case, for example, the itinerary given in the CSSA charter included three port calls and one canal transit prior to an anticipated arrival at Rotterdam, with “estimated” dates of arrival at each prior port and at the canal. However, no reasonable allowance (to account for each port call date being an estimate only) had been contemplated for the almost inevitable delays (given the vagaries of trading in the maritime environment) that would realistically have arisen for so many prior port calls and the canal transit. Instead, the court jumped on the final port call ETA, as if this were a certainty - with no reasonable margin for a delayed arrival being allowed - and then added three days to allow for cargo discharge, without apparent reference to evidence about how long port calls usually take at Antifer.
But, of course, on the facts of this case, it could be said that a more precise analysis was not required. If, however, there were a case where the delay prior to commencing the voyage to the load port were not so extreme as here but still caused the charterer problems in its loading schedule, the charterer might find it difficult to determine with reasonable certainty when that approach voyage should have begun, if the charterparty in question contained a detailed pre-charter itinerary. Without determining that question, the charterer cannot know whether the owners were in breach and, in consequence, whether it would be justified in terminating the charter.
The parties could have chosen a conventional formulation instead (for example, by inserting an expected ready to load date), had they so wished, to achieve a commercially certain result. But they chose not to do so in this case. So, the Court of Appeal decision (like that of the High Court) could be viewed as going beyond, rather than simply giving effect to, the CSSA charter terms that were agreed. This is because the Court of Appeal adopted an overly-simplified exercise to consider what would be a reasonable date at which the vessel had to commence her approach voyage to Rotterdam in order to be reasonably certain that she would arrive there on or around the (presumed) expected readiness to load date.
Without deciding the point, the Court of Appeal did at least cast doubt on the High Court’s acceptance of the alternative case, namely that the obligation to proceed with utmost despatch began to operate at the date when it could reasonably be expected that the vessel could arrive by the cancelling date. It was good that the Court of Appeal did express some reservation, because a cancelling date does not necessarily reflect actual expectations about when the vessel would realistically arrive at the port of loading. Such a date is merely an option to cancel without the need to show any fault by the owner. Such a date is often inserted in charters for other commercial reasons, reflecting the fact that cargo interests can have in their sale contracts strict obligations to load the cargo within a defined period of time.
The Court of Appeal also usefully highlighted that, if owners want to make the beginning of the chartered service contingent on the conclusion of the previous charter, then they can achieve that effect by the use of sufficiently clear words.
As the Court of Appeal’s decision in this case has, we understand, not been appealed to the UK Supreme Court, that decision represents the law as it presently stands. There are, however, in the author’s view, grounds on which the correctness of the Court of Appeal’s decision in this case could be challenged before the UK Supreme Court, if or when a similar case arises in the future.
Footnote 1: Monroe Brothers Ltd v Ryan  2 KB 28 (CA)
Footnote 2: Evera S.A. Commercial v North Shipping Company Ltd (The “North Anglia”)  2 Lloyd’s Rep 367