10 Charterparties

David Martin-Clark

From: The IMLI Manual on International Maritime Law: Volume II:

Shipping Law
Edited By: David J Attard, Malgosia Fitzmaurice, Ignacio Arroyo, Norman
Martinez, Elda Belja

Content type: Book content

Product: Oxford Scholarly Authorities on International Law [OSAIL]
Published in print: 21 January 2016
ISBN: 9780199683932

Subject(s):
Seafarers — Nationality of ships — Straits

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 (p. 267) 10 Charterparties
10.1 Introduction
The term ‘charterparty’ is probably derived from the Latin ‘carta partita’. It is thought to
refer to the practice in the Middle Ages when a contract was drawn up in duplicate and
then torn in two, with each party then retaining one part. The authenticity of the document
was then established by placing the two parts together to ensure that they matched up. The
term is often shortened in usage to ‘charter’.
The term is used to describe contracts for the use of ships in trade. The persons involved in
a charter are the owners of the ship and the persons who require the use of the ship, the
charterers. Sometimes there is a chain of charters relating to the same ship; in such a case,
the first charterers will be described in the second charter as the ‘disponent’ owners—that
is, the person who has the usage of the ship at their disposal—while the second charterers
will be called the sub-charterers. There can be—and often are—more than two charters in a
charter chain, with each successive charterer being the disponent owner to the next
charterers in the chain. Whilst a charter usually relates to the entire ship, it is possible to
have charters that relate only to a part of the ship’s carrying capacity. These are known as
part charters, or as slot charters in the container trades.
A ship trading on the basis of charters is called a ‘tramp’ ship; such a ship is engaged in
‘tramping’, namely a search for suitable cargoes on a worldwide basis. Tramp shipping is to
be contrasted with ‘liner’ shipping; in liner shipping, the ship travels on a regular and
scheduled itinerary, published in advance, and will call at the advertised ports, loading and
discharging such cargo as is available. Most liner shipping cargo is nowadays carried in
containers, on specialized container ships.
There are three main types of charter, namely the demise—or bareboat—charter, the voyage
charter, and the time charter. There are also a number of hybrids.(p. 268)
A demise charter is a contract for the lease of a ship. It is not a contract for the carriage of
goods by sea. Under a demise charter, the complete responsibility for the operation of the
ship is passed by the owners to the charterers. The charterers put their own crew on board,
maintain and insure the ship, and control its commercial operations. The charterers become
the de facto owners of the ship for the period of the charter. Charters of this type are, as
mentioned above, not used for the carriage of goods by sea; they are used for the quite
different purposes of ship financing and investment. As such, they lie outside the ambit of
this Chapter.
The voyage charter is the oldest form of charter. It is a contract whereby the owners agree
with the charterers to carry out a particular voyage with a particular cargo. The charterers
contract not for the right to control the commercial exploitation of the ship—as in a time
charter—but for the services of the owners to carry a given cargo, which may or may not fill
the ship’s full capacity, between designated ports. The remuneration earned by the owners
under a voyage charter is known as ‘freight’.1 The risk of the duration of the voyage is on
the owners.
The time charter is a contract that came into use later, when the advent of steam propulsion
made it possible to estimate the length of voyages more accurately. It is a contract whereby
the owners put the commercial operation of the ship at the charterers’ disposal, within
certain constraints set out in the charter. These constraints may relate to the geographical
area in which the ship can trade and to the nature of the cargoes that it may carry. The
remuneration earned by the owners under a time charter is known as ‘hire’. This is a rather
unhelpful term, since the time charter, like the voyage charter, is not a letting of the ship, as

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 in a demise charter, but a contract for the services of the owners’ ship. We will, however,
use the word ‘hire’ in relation to the time charter, as this reflects market practice.
The most important of the hybrid charters are the trip time charter, the consecutive voyage
charter, and the contract of affreightment. Under a trip time charter, the ship is hired for a
period of time that is delineated not by days and months, but by the time required to carry
out a specific voyage. The consecutive voyage charter is, as its name implies, a contract for
a series of voyages. These may or may not follow on directly one after the other and usually
involve the same ship. The contract of affreightment, on the other hand, provides for a
series of similar cargoes to be carried over a defined period of time, at a specific frequency,
by vessels to be named that fit the description agreed in the contract.
In negotiating a charter, the parties, whilst subject to the general constraints of English
contract law, have otherwise a wide freedom to agree the terms that suit their particular
business.(p. 269)
In examining the principal characteristics of charters, we will make reference to two
standard forms of voyage charters, the Gencon 1994 charter for dry cargoes and the
Asbatankvoy charter for the oil trades. We will also refer to two standard forms of time
charter, the New York Produce Exchange (NYPE) form, as amended in 1993, for dry
cargoes, and the Shelltime4 charter for the oil trades.
There are also many other standard forms of charter that have been developed for specific
trades and commodities. Examples of these are the Cementvoy 2006 for cargoes of bulk
cement, Graincon for the grain trades, and Amwelsh 93 for the coal trades.
Despite the widespread use of standard form charters, the parties usually supplement their
provisions with additional, or rider, clauses; these will deal with matters not addressed—or
not addressed to the parties’ satisfaction—in the standard forms and can sometimes be
inconsistent with them.

10.2 Voyage Charters

10.2.1 The basic obligations of the parties
A voyage charter is a contract for the services of the shipowners, not for the hire of a ship.
Typically, the owners undertake to carry a given cargo from a port or ports of loading to a
port or ports of discharge, in return for the payment of freight by the charterers.
Under a voyage charter, the owners retain the possession of the ship and responsibility for
the full costs of running the ship. These comprise the costs of capital, the costs of operation,
such as manning costs, insurance, and maintenance and repair, and all voyage-related
costs, such as port charges, canal and seaway dues, and the cost of bunkers and other fuel
charges. Different considerations may apply to the costs of loading and discharging cargo.
This is dealt with in Section 10.2.3.13. Generally speaking, the risk of delay at sea under a
voyage charter lies with the owners. Under a time charter, the risk of delay, whether at sea
or in port, lies with the charterers.
In return for carrying the cargo, the charterers pay the owners a sum of money known as
‘freight’. Freight may be calculated at a given rate per tonne of the cargo carried or it may
be a lump sum. The actual amount will be largely dependent on the market rate. In return
for the payment of freight, the ship will perform any necessary ballast voyage to the port of
loading, will allow an agreed period of time for the cargo to be loaded, will carry it to
destination, and will allow a further agreed period of time for its discharge there. The time
allowed for loading and discharging operations is called ‘laytime’, which is discussed in
Section 10.2.3.7.(p. 270)

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 A voyage charter consists of four stages: the approach voyage to the port of loading;
loading; the voyage from the port of loading to the port of discharge; and discharging.
Stages one and three are performed in the owners’ time and at the owners’ risk, whereas
stages two and four are performed in charterers’ time and at charterers’ risk.2

10.2.2 The owners’ obligations

10.2.2.1 Seaworthiness
The basic obligation of the owners is to provide a seaworthy ship. This has been defined in
the following terms:

The ship must have that degree of fitness which an ordinary careful and prudent
owner would require his vessel to have at the commencement of her voyage having
regard to all the probable circumstances of it. To that extent the shipowner . . .
undertakes absolutely that she is fit, and ignorance is no excuse. If the defect
existed, the question to be put is, would a prudent owner have required that it
should be made good before sending his ship to sea had he known of it? If he would,
the ship was not seaworthy . . .3

At common law this is an absolute obligation, not dependent on proof of negligence. It is

also a non-delegable duty, in the sense that the owners will be responsible for
unseaworthiness caused by their servants, agents, and independent contractors.4
Furthermore, the ship is required to be seaworthy at each stage of its voyage. For example,
a ship that sails from a bunkering port with insufficient fuel to reach the next port where
bunkers are available will be unseaworthy.5
The obligation of seaworthiness is twofold; to provide a ship that is fit to go to sea—
seaworthiness in the strict sense of the word—and a ship that is fit to carry the intended
cargo—cargoworthiness. The obligation of seaworthiness attaches at the time the ship sails
with cargo on its voyage. Defects on the approach voyage will not, therefore, render a ship
unseaworthy if they are remedied before it sails. On the other hand, the obligation of
cargoworthiness attaches as soon as cargo begins to be loaded.
Whether a breach of the seaworthiness obligation will allow charterers to treat their
obligations under the charter as discharged will depend on the severity of the breach and
the time required to remedy it. Where the delay is likely to be sufficient to frustrate the
contract, the charterers may treat the breach as a breach of condition and repudiate the
charter; in other circumstances, the charterers will be limited to their remedy in damages.
The period of time required to frustrate a voyage charter (p. 271) will normally be less than
that required to frustrate a time charter—compare the cases of Stanton v Richardson6 and
Hongkong Fir Shipping Co. Ltd v Kawasaki Kizen Kaisha Ltd (The Hongkong Fir).7
With the advent of the Hague Rules8 in 1924, it became common practice to limit the
obligation of seaworthiness to one of exercising due diligence, before and at the
commencement of the voyage, to ensure that:

1. the ship is seaworthy;

2. it is properly manned, equipped, and supplied; and
3. the holds and all other parts of the ship in which goods are carried, are fit and safe
for their reception, carriage, and preservation.

This is achieved either by express words in the charter or by including in the charter a
General Clause Paramount. This reads as follows:

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 The International Convention for the Unification of Certain Rules of Law relating to
Bills of Lading signed at Brussels on 25 August 1924 (‘the Hague Rules’) as
amended by the Protocol signed at Brussels on 23 February 1968 (‘the Hague-Visby
Rules’) and as enacted in the country of shipment shall apply to this Contract. When
the Hague-Visby Rules are not enacted in the country of shipment, the
corresponding legislation of the country of destination shall apply, irrespective of
whether such legislation may only regulate outbound shipments.
When there is no enactment of the Hague-Visby Rules in either the country of
shipment or in the country of destination, the Hague-Visby Rules shall apply to this
Contract save where the Hague Rules as enacted in the country of shipment or if no
such enactment is in place, the Hague Rules as enacted in the country of
destination apply compulsorily to this Contract.9

The Asbatankvoy contains its own Clause Paramount, making particular reference to the US
Carriage of Goods by Sea Act at clause 20(b)(i).
10.2.2.2 Reasonable despatch
The owners are also obliged, once the cargo is loaded, to carry it to the port of discharge
with ‘reasonable despatch’. In this context, reasonable despatch means that the owners
must perform the contract voyage without departing intentionally—as opposed to
negligently—from the agreed or usual route. Such a departure has been known traditionally
as a ‘deviation’. The contract voyage need not be the geographically direct one; indeed, in
most cases, and particularly in the liner trades, the contract voyage is defined by reference
to so-called ‘liberty clauses’, which purport to allow the owners to perform the voyage in
any way that suits them.(p. 272)
The relevant clause in the Gencon charter is clause 3, which reads:

The Vessel has liberty to call at any port or ports in any order, for any purpose, to
sail without pilots, to tow and/or assist Vessels in all situations, and also to deviate
for the purpose of saving life and/or property.

The equivalent clause in Asbatankvoy, clause 20(b)(vii), reads:

The Vessel shall have liberty to call at any ports in any order, to sail with or without
pilots, to tow or to be towed, to go to the assistance of vessels in distress, to deviate
for the purpose of saving life or property or of landing any ill or injured person
onboard, and to call for fuel at any port or ports in or out of the regular course of
the voyage . . .

But the literal meaning of such clauses is constrained by judicial interpretation. A line of
cases has established that a liberty clause, however widely drafted, cannot frustrate, and
must be subordinate to, the described voyage.10
At common law, the owners are entitled to deviate to save life, but not property, in peril on
the sea.11 They are also entitled to deviate to offload or re-stow cargo, where this is
necessary for the safety of the adventure, even if this was necessitated by a breach of
contract on their part—see Kish v Taylor.12
Where the charter is subject to the Hague or Hague-Visby Rules, the owners are entitled to
deviate to save or attempt to save life and property (an enlargement of the position at
common law) and to make ‘any reasonable deviation’.13 The precise ambit of such a
‘reasonable deviation’ has not yet been fully defined in the jurisprudence—compare the

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 cases of Stag Line Ltd v Foscolo, Mango & Co. Ltd14 and Danae Shipping Corp. v TPAO (The
Daffodil B).15
In addition to being responsible for any loss or damage caused by the deviation, there is
case law to the effect that, once the deviation has occurred, the contract is ‘displaced’. This
is so even if, thereafter, the ship has resumed the contract voyage. The effect of this is that
the owners are deprived of the benefit of all clauses in the charter (or bill of lading, where
similar principles apply), whether or not they relate to their liability for cargo loss and
damage.16
More recent jurisprudence has noted the severity of the deviation doctrine and its
incompatibility with the modern view that a contract is only discharged/(p. 273) terminated
from the moment that the innocent party, with knowledge of the other party’s breach, elects
to treat it as discharged.17 The difficulty with this view is that the innocent party will, in
most cases, not know of the deviation until the arrival of the ship at the port of destination.
In these circumstances, the right to terminate from the time of breach must, it seems, be
exercised retrospectively.
In the case of a so-called ‘quasi deviation’, namely the loading of cargo on deck where
under-deck bills of lading had been issued, the Court of Appeal refused to apply the
displacement doctrine and allowed the owners to rely on the time-bar defence under the
Hague Rules.18
10.2.2.3 Description of the ship
If the charter sets out, as it will normally do, the characteristics of the ship, her present
location, her expected readiness to load, and her condition, the owners must ensure that
these statements are accurate. Thus, clause 1 of the Gencon provides:

It is agreed between the [owners] of the vessel named in Box 5, of the GT/NT
indicated in Box 6 and carrying about the number of metric tons of deadweight
capacity all told on summer loading line stated in Box 7, now in position as stated in
Box 8 and expected ready to load under this Charter Party about the date indicated
in Box 9 . . .

Similarly, clause A of Part I of Asbatankvoy sets out the description and position of the ship.
If any of these statements is incorrect, the remedy of the charterers will depend on whether
the particular statement in question is to be regarded as a condition or a warranty. In
accordance with general contract law, a breach of a condition gives the innocent party the
right to rescind the contract, if that is still possible, or if that is not so, to terminate it as
from the time of breach. If the statement is to be regarded only as a warranty, then the
contract remains in place but the charterers will have the right to claim damages for any
recoverable loss that they have suffered.
Case law has given some guidance on the categorization of such statements. In the case of
Behn v Burness,19 the ship was described in the charter as ‘now in the port of Amsterdam’
when it was at the date of the charter delayed en route to Amsterdam. The appeal court
held that such a description was a condition, breach of which entitled the charterers to
repudiate the charter. A similar result was reached in the case of Bentsen v Taylor,20 where
the ship was described at the date of the (p. 274) charter—29 March 1892—as ‘now sailed
or about to sail from a pitch pine port to the United Kingdom’. In fact, the ship did not sail
from that port until 23 April 1892.

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 Where the owners describe the ship as expected ready to load on a given date, they are
obliged to make that statement honestly and on reasonable grounds. A failure to do so
entitles the charterers to repudiate the charter.21
The charterers were also held entitled to repudiate the charter in a case where the
condition of a tanker on delivery did not meet certain guarantees given in the charter in
respect of its cargo lines and heating coils. The court held that the heating potential of the
ship was a very important factor in relation to the charterers’ intended use of the ship in
the molasses trade.22 The courts take a similar view of statements in the charter as to the
ship’s class—see Routh v Macmillan23 and The Apollonius.24
Descriptions of the ship’s condition and performance have, however, been treated in the
jurisprudence as warranties, rather than conditions. The main case in this regard is that of
The Hongkong Fir,25 where in the context of a two-year time charter, the Court of Appeal
held the charterers in breach of contract when they repudiated the charter on the grounds
that the ship had been, by reason of unseaworthiness, unavailable to them for some twenty
weeks out of the first six months, repairs being completed only by the end of that period.
The court held that the breach was not serious enough to justify the discharge of the
charter.
A similar result was reached in The Ymnos,26 where the ship was time-chartered for the
charterers’ container services under a charter containing the term: ‘Owners guarantee the
loading of the containers . . . without any stability problem.’ The court held that, since the
term was one of which there might be breaches of varying degrees of seriousness, it should
be regarded as a warranty rather than a condition.
An important question is at what time must the ship be in compliance with the description.
The jurisprudence is divided on this issue; the case of French v Newgass27 established that
a description of the ship’s class related to the date of the charter, whereas the more recent
case of The Apollonius28 held that the description of the ship’s performance related to the
time of delivery under the charter.

(p. 275) 10.2.3 The charterers’ obligations

10.2.3.1 To provide the cargo
The basic obligation of the charterers is to provide the contracted cargo for the ship to
carry. The charterers have an absolute obligation to have a cargo available for the ship at
the port of loading.29 The absence of cargo does not prevent laytime (see Section 10.2.3.7)
from commencing, if the ship is ready. If the absence of cargo prevents the ship from
commencing laytime, the charterers are liable for damages for detention—see The Aello30
and The Mass Glory.31 The absence of cargo does not, however, entitle the owners to treat
the contract as repudiated, unless the delay is sufficiently long to frustrate the contract.32
As the provision of the cargo is treated as an absolute obligation, the charterers will not be
able to excuse it by reliance on a general exceptions clause. Specific wording will be
required—see Grant v Coverdale33 and compare Hudson v Ede.34
The charterers are also under an obligation—assuming the ship can receive it—to load the
full quantity of cargo which they agreed in the charter to provide. If they fail to do so, the
owners will be able to claim ‘dead freight’, that is, the amount of freight that they would
have earned, had the full contractual quantity been put on board. Where practical to do so,
the owners must mitigate their loss, by ordering the ship to take a completion cargo, even if
this may entail a divergence from the agreed voyage—see Wallems Rederi A/S v Muller.35
Where the freight is payable on a lump sum basis, the full lump sum must be paid; in this
case, the owners will not suffer any loss and have, accordingly, no obligation to mitigate.

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 10.2.3.2 Not to ship dangerous cargo
The charterers are also under an obligation not to ship a cargo which is dangerous and to
the carriage of which the owners have not consented. This is an absolute obligation, not
dependent on negligence.36 A cargo is ‘dangerous’ if it has inherent explosive, toxic, or
noxious characteristics. A comprehensive list of such products is now available in
international instruments, such as the International Maritime Dangerous Goods Code.37 A
cargo without such characteristics can also be dangerous, if it is capable of causing, either
directly or indirectly, physical damage to (p. 276) the ship, to persons, or to other cargo
loaded on board. For example, in the leading case of The Giannis NK,38 a cargo of
groundnut extraction meal pellets was held to be dangerous as the fact that it was infested
with Khapra beetle led to the destruction of both it and the sound cargo of wheat that was
also on board. The word ‘dangerous’ is interpreted widely. It can include a propensity to
prejudice the ship’s trading, such as rendering it liable to detention by the authorities.39 A
propensity only to cause the ship delay will not, however, make a cargo ‘dangerous’—see
The Darya Radhe.40
At common law, the owners have the right to refuse to load a dangerous cargo. If the
danger develops once the cargo is on board, the owners have the right to render the cargo
innocuous by the most efficient means, even if this means destroying it, and the charterers
must indemnify them accordingly.
If the Hague or Hague-Visby Rules apply, the owners’ rights are set out in Article IV Rule 6,
as follows:

6. Goods of an inflammable, explosive or dangerous nature to the shipment

whereof the carrier, master or agent of the carrier has not consented with
knowledge of their nature and character, may at any time before discharge be
landed at any place, or destroyed or rendered innocuous by the carrier
without compensation and the shipper of such goods shall be liable for all
damage and expenses directly or indirectly arising out of or resulting from
such shipment . . .

There is no specific reference to dangerous cargoes in either the Gencon or Asbatankvoy

but the latter has certain cargo exclusions:

13(a) Cargoes Excluded Vapor Pressure

Cargo shall not be shipped which has a vapor pressure at one hundred degrees
Fahrenheit (100 degree F.) in excess of thirteen and one-half pounds (13.5 lbs.) as
determined by the current A.S.T.M. Method (Reid) D-323.

10.2.3.3 Laytime and demurrage

The charterers also have the obligation to load and discharge the ship within the laytime
allowed. This is covered in more detail in Section 10.2.3.7.
10.2.3.4 Safe port
Depending on the wording of the charter, the charterers may also have the obligation to
ensure that the port or berth to which the ship is bound is ‘safe’ for the ship. The classic
definition of a safe port is that given in the judgment of Sellers LJ in the case of the Eastern
City:41 ‘A port will not be safe unless in the relevant period (p. 277) of time the particular
ship can reach it, use it, and return from it without—in the absence of some abnormal

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 occurrence—being exposed to danger, which cannot be avoided by good navigation and
seamanship.’
Where, under a charter, the owners have agreed to load or discharge at a named port, the
risk of its safety lies with them. They are presumed to have checked that those ports were
safe for the ship before they agreed that it could go there. Where the charterers have a
right to nominate a port out of a range of possible ports, there is generally an implied term
to the effect that the port they nominate will be safe for the ship at the time she reaches it.
Where, on the other hand, the charterers have the right to nominate one of a number of
named ports, the risk of unsafety lies with the owners, for the reason stated above.
Where the charterers are obliged to nominate a safe port, they are under a similar
obligation to nominate a safe berth. Where, on the other hand, the risk of the safety of the
port is on the owners, there is no obligation on the charterers to nominate a safe berth
within that port.42 Furthermore, in the absence of a safe port provision, an obligation on the
charterers to nominate a safe berth will not place on them a corresponding obligation for
the safety of the port in which the berth lies.43
In considering what makes a port unsafe, the risk of damage to the ship is an important
element—whether this be from weather factors, such as typhoons or excessive swell, or
from insufficient depth of water, the presence of ice, or the risk of silting. What renders a
port unsafe depends on the facts of the specific case; a port may be safe for one type of
vessel but not for another, or at one time of the year, but not at another. Attention must be
paid to the characteristics of the ship involved, the work it has to do at that port, and the
conditions prevailing in the port at the relevant time.
Other factors can also render a port unsafe, such as political instability, the imposition of a
blockade, or the outbreak of hostilities—see The Evia No. 2.44 Further, organizational risks
arising from faulty administration by the port authorities can also amount to unsafety—
factors such as the absence or misplacement of navigational aids, the absence of reliable
weather reports or a defective pilotage service, or the provision of unsafe berths—see The
Dagmar45 and Reardon Smith Line v Australian Wheat Board.46(p. 278)
Since, however, there are risks attached to the use of any port, a port will not be regarded
as unsafe by the presence of risks which can be avoided by good navigation and competent
seamanship. Thus, a port is not necessarily unsafe because it is liable to the occasional
storm or other incidence of bad weather, even if ships are required to leave the port when
such conditions prevail. But in those circumstances, the port must be so organized that
adequate weather reports and forecasts are available and sufficient sea room is assured for
ships leaving berth to manoeuvre—see The Khian Sea.47
Similarly, an obstruction of only a temporary nature, such as high winds or low tides, does
not render a port unsafe. In these circumstances, the ship is expected to wait a reasonable
time until the obstruction has ceased or been removed. A reasonable time is measured by
the time necessary for the contract to become ‘frustrated’ in a legal sense; it is thus a
period which will vary according to the nature of the commercial venture in question. Only
if, in the given case, the delay is long enough to frustrate the charter will the owners be
entitled to sail away.48
The definition of a safe port quoted above refers to it being safe at the ‘relevant period of
time’ for the ship to reach it, use it, and depart from it. What is the ‘relevant period’? The
Evia No. 2 case, referred to above, established that the port must be prospectively safe for
the ship when it is scheduled to reach it. Thus, a port will not be unsafe when, at the time it
is nominated, it is inaccessible by reason of ice if, by the time the ship reaches it, the ice
will have melted. On the other hand, a port will be unsafe if the only means of reaching it is
unsafe—for example, the approaches to a river port are blocked—see Grace v General

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 Steam Navigation Co.,49 where ice in the river Elbe prevented the ship from reaching
Hamburg.
A port is unsafe if the ship cannot leave it safely after cargo operations have been
completed in the normal way—see Limerick v Stott,50 where the port of Manchester was
held to be unsafe when the ship leaving the port in light condition after discharge of its
cargo, had to cut its masts to clear bridges on the Manchester Ship Canal linking the port
to the sea.
What is the position where the port is safe at the time of nomination but has become unsafe
when the ship reaches it by reason of some unexpected and abnormal event? In the case of
a time charter, the Evia No. 2 case mentioned above decided that the owners are entitled to
refuse to enter the port and may require the charterers to nominate an alternative port that
is safe and which the ship can reach.(p. 279)
The position under a voyage charter is less clear. Whether the port in question has been
named in the charter or has been nominated subsequently by the charterers, the law takes
the position that it cannot be changed without the agreement of both parties. Thus, the
charterers have no obligation, and no right, to order the ship to a different port if the
intended port has become unsafe. The same applies to the owners. One possibility is to
treat the charter as frustrated in those circumstances, provided that the unsafety is likely to
last a sufficient length of time, but that still leaves the owners with a practical problem if
they have cargo on board. They remain the bailees of that cargo, with an obligation to take
reasonable care of it. The solution may lie in proceeding to a nearby port, where the cargo
can be discharged ashore either to the consignees or at their risk. This is likely to be the
course adopted if the charter provides that the ship shall proceed to a port ‘or so near
thereto as she may safely get’—see below.
What is the position if the port in question is unsafe at the time of its nomination— or on the
ship’s arrival there—but the owners or master agrees to use it nevertheless, and thereafter
damage occurs? The answer depends on the degree of unsafety. If the danger was manifest,
the court is likely to say that, by accepting the nomination and/or using the port, the owners
have also accepted the risk posed by the dangers that were evident at the relevant time—
see The Chemical Venture.51 If, on the other hand, the port in question is known to be
sometimes safe and sometimes not, the owners who agree to go there will not have waived
their right to claim damages should the port subsequently prove to be unsafe— see The
Kachenjunga.52
It is quite common for a voyage charter to provide specifically that the port or berth shall
be safe but in the Gencon, this is left to the parties. The word ‘safe’ is normally added to
Boxes 10 and 11 in Part I of the charter. Thus, the loading port may be described as ‘one
safe berth, one safe port, Antwerp/Hamburg range’. Such a description places upon the
charterers the responsibility for the safety of the port and the berth. This is logical, since
the choice lies with the charterers and they must exercise that choice with the safety of the
ship in mind. Where the port of loading and discharge is specifically named, however, and
the word ‘safe’ does not appear in Boxes 10 and 11, it is the owners who have accepted
responsibility for the safety of the ports in question.
The relevant provisions in the Asbatankvoy are set out in clause 9:

The Vessel shall load and discharge at any safe place or wharf, or alongside vessels
or lighters reachable on her arrival, which shall be designated and procured by the
Charterers, provided the Vessel can proceed thereto, lie at, and depart therefrom
always safely afloat . . .

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 (p. 280)

Both the Gencon (cl. 1) and the Asbatankvoy (cl. 1) charters refer to the vessel proceeding
to the loading and discharging ports ‘or so near thereto as she may safely get and lie always
afloat’. This wording has been considered in two cases. In the first,53 the court held that the
owners were not entitled to discharge the cargo at an alternative port in reliance on this
wording. In the latter case,54 the court held that the owners were so entitled. Generally
speaking, the burden on the owners wanting to rely on such a provision is difficult to
discharge. The ship must be exposed to a delay sufficient to frustrate the charter, the risk of
which the owners had not accepted when agreeing to the naming of that port.
10.2.3.5 The approach voyage
When a ship is chartered to load a particular cargo, it is not usually in the same place as the
cargo and has to sail from its then location to the port of loading. This is known as the
‘approach’ or ‘preliminary’ voyage. It is performed in owners’ time and at owners’ risk.
In chartering a ship, it is important for the charterers to know where the ship is at the time
the charter is agreed and when it may be expected to arrive at the port of loading. Thus
clause 1 of the Gencon includes the words:

now in position as stated in Box 8 and expected ready to load under this Charter
Party about the date indicated in Box 9 . . .

Similarly, Part I of the Asbatankvoy provides:

1. Now: … … … … … … … Expected ready: … … …

In completing these fields, the owners are required to give an honest description of the
ship’s present location and an honest and reasonable prediction of her date of arrival at the
port of loading. Because of the importance of such information to the charterers in
arranging the supply of cargo, these requirements are usually regarded as conditions, the
breach of which entitles the charterers to refuse to load.55 Furthermore, the owners have
an obligation to start on the approach voyage at such time as will reasonably allow them to
meet the date of expected readiness.56
10.2.3.6 Laycan
Laycan is the term used to describe further provisions in the charter which set out the
earliest day on which laytime may commence and the latest time by which the (p. 281) ship
must present itself as ready for loading at the port in question. The time difference between
these dates is called the ‘spread’. It may vary between a couple of days and a couple of
weeks—but it is usually shorter.
Clause 9 of the Gencon is the Cancelling clause. It reads:

(a) Should the Vessel not be ready to load (whether in berth or not) on the
cancelling date indicated in Box 21, the Charterers shall have the option of
cancelling this Charter Party.

The equivalent provision in the Asbatankvoy is clause 5:

Should the Vessel not be ready to load by 4:00 o’clock P.M. (local time) on the
cancelling date stipulated in Part I, the Charterer shall have the option of cancelling
this Charter by giving the Owners notice of such cancellation within twenty-four

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 (24) hours after such cancellation date; otherwise this Charter to remain in full
force and effect.

The cancelling clause gives the charterers the option of cancelling the charter if the ship is
late. Sometimes it will suit the charterers to cancel the charter; at other times it may suit
the charterers to accept the ship when she arrives late. As in the Asbatankvoy wordings, the
charter often contains provisions requiring the charterers to exercise their option within a
given timescale. The option to cancel is a right available to the charterers, independent of
any negligence or breach of charter on the part of the owners. The reason why the ship was
late is not relevant to the right to cancel. Nor is it relevant that the ship was delayed by
reason of some cause or event excepted under the charter.
Whether, in addition to the right to cancel, the charterers have a right to claim damages for
any loss that they have incurred, for example for storage costs on the waiting cargo, will
depend on whether the owners have been in breach of some other obligation, such as
starting the approach voyage too late or not prosecuting it with due despatch. In answer to
the latter, but not the former (which is a strict obligation),57 the owners may be able to rely
on the exceptions clause in the charter.
10.2.3.7 Laytime and demurrage
Most voyage charters require the charterers to complete the loading and discharging
operations within a pre-agreed length of time, the cost of which is included in the overall
freight charged by the owners. The length of time can either be fixed, or can be calculated
by reference to the weight of the cargo, as in the formula ‘1000 metric tonnes per day’.
Where the time is fixed, it can be expressed as so many days or, in the tanker trades, as so
many running hours, usually seventy-two.(p. 282)
The Gencon provides for laytime in clause 6, part (a) of which reads:

(a) Separate laytime for loading and discharging

The cargo shall be loaded within the number of running days/hours as indicated in
Box 16, weather permitting, Sundays and holidays excepted, unless used, in which
event time used shall count.
[Identical provisions apply to the discharging of the cargo]

The Asbatankvoy principal laytime provisions are set out in clause 7:

The number of running hours specified as laytime in Part I shall be permitted the
Charterer as laytime for loading and discharging cargo . . .

If the loading and discharging operations exceed the time allowed, the charterers are in
breach of contract and must pay damages for the additional time for which the ship is
delayed. In the absence of any contractual provisions, such damages would be based on the
daily market value of the ship for the period in question. To avoid the uncertainties in such
a calculation, the parties normally provide a fixed amount, per day or pro rata, that the
charterers must pay if laytime is exceeded. This fixed amount is called demurrage and is an
example of ‘liquidated damages’, that is, damages quantified by the contract in advance.
Such damages are legally recoverable if they bear some relation to the likely market value
of the ship at that time. If they do not, then they may be disallowed by the court as
constituting a ‘penalty’.58
Given that the time taken in the approach voyage to the port of loading is for the account of
the owners, and the time taken for loading—and discharging—is for the account of the
charterers, it is important to define the point in time at which the change in the risk takes

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 place, that is to say, at which laytime starts to run. In order to start laytime running, the
owners and the ship must meet three conditions.
First, the ship must be an ‘arrived ship’. An arrived ship is one that has reached its
contractual destination. What this is depends on the wording of the charter. The choice lies
between a port and a berth in the port. A ‘port’ charter is one in which the destination is
described as a port; a ‘berth’ charter is one where the destination is described as a berth
within a port, or a charter in which the charterers are given an express right (as opposed to
an implied right) to nominate the berth.
Thus, a charter providing for the ship to proceed to the port of Hamburg, or to a port or
ports in the Antwerp/Hamburg range, is regarded as a port charter, even if followed by the
words ‘one safe berth’. On the other hand, a charter providing for the ship to proceed to
one safe berth, Hamburg, or one safe berth, one safe port (p. 283) Antwerp/Hamburg
range, is regarded as a berth charter. A charter providing for the ship to proceed to ‘one
safe port, North Continent or Mediterranean, place or places as ordered by charterers’
would also be regarded as a berth charter, since the charterers are given the express right
to nominate the loading or discharging ‘place’ or berth.59
The significance of the distinction between a port charter and a berth charter is that, in the
first, the risk of delay in waiting for a berth to become available after the ship has reached
the given port lies with the charterers. In the second case, that risk remains with the
owners, since the ship has not completed its contractual voyage until it has reached the
berth nominated by the charterers.
To be ‘arrived’ under a port charter, the ship must be within the port in question. That
means that it must be within the legal, fiscal, and administrative limits of the port. Further,
it must be ‘at the immediate and effective disposition of the charterers’—see The Johanna
Oldendorff.60 In this case, the House of Lords held that a ship destined for Liverpool/
Birkenhead was an arrived ship when it anchored at the Mersey Bar, some seventeen miles
from the berth to which it was destined. This was the usual place at the port of Liverpool
where ships waited for a berth. Contrast this decision with that in a case some four years
later, to the effect that a ship destined for a port on the river Weser in North Germany was
not an arrived ship when she anchored at the Weser Light Vessel, the normal place at which
ships destined for that port waited for a berth, because it was not within the limits of the
port in question, but some further twenty-five miles distant.61
As a result, the market has developed particular clauses for such ports, under which the
ship is to be regarded as arrived when it reaches the usual waiting place for that port,
regardless whether the waiting place is within or outside the port. An example of such a
clause was considered in The Ante Topic case,62 where the port in question was the UK port
of Hull and the usual waiting place was the Spurn Head light vessel, at the mouth of the
river Humber.
Similarly, the market has developed a number of clauses designed to accelerate the point at
which notice of readiness can be given under a berth charter, when the ship is not able to
proceed to its berth immediately on arrival at the port. Examples of such clauses are:

1. ‘time lost in waiting for berth to count as loading or discharging time’ (or laytime)

(p. 284)
Such a clause will allow the ship to start counting time as soon as she can proceed no
further in the absence of an available berth. That point may, or may not, be within the limits
of the port of destination. Such a clause, then, would have benefited the owners in The
Maratha Envoy case mentioned above. The time spent waiting for berth will, however, be
subject to the laytime provisions.63 This mean that if laytime is described as so many
‘weather working days of 24 consecutive hours’ or, as in the Gencon, ‘weather permitting’,

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 then periods of bad weather that would have interrupted work had the ship been at the
berth will also be deducted from the waiting time.
Once the ship is in a position to give notice of readiness, time ceases to count under this
provision and laytime proper will begin after the expiry of any notice period.

2. Time to count whether in berth or not—‘WIBON’

These words are less powerful than the ‘time lost’ wordings, since the ship must have
arrived at the port before it can take advantage of this provision. As with the ‘time lost’
wording, any waiting time will be subject to the laytime provisions. In addition, laytime will
not start until a valid Notice of Readiness (see Section 10.2.3.8) has been given.
Furthermore, the House of Lords decided in The Kyzikos64 that time would only start to
count under this provision where the delay in getting into berth has arisen from congestion;
where the delay is due to natural causes, such as weather or tides, these are regarded as
navigational factors, which are at owners’ risk.

3. Charterers to nominate a berth ‘reachable on arrival’

Asbatankvoy clause 9:

The Vessel shall load and discharge at any safe place or wharf, or alongside vessels
or lighters reachable on her arrival, which shall be designated and procured by the
Charterers . . .

These are very powerful words for the owners. In the case of The Laura Prima,65 the House
of Lords held that they imposed an absolute obligation on the charterers to have a berth
available for the ship on her arrival at the port. If this were not so, then the ensuing delay
was for the charterers’ account, even where the delay was caused by navigational factors,
which would usually be for the owners’ account—see The Fjordaas66 and The Sea Queen.67
(p. 285)
This was so, despite the last sentence of clause 6 of the Asbatankvoy form, which reads:

However, where delay is caused to Vessel getting into berth after giving notice of
readiness for any reason over which Charterer has no control, such delay shall not
count as used laytime.

According to the House of Lords’ decision, clause 9 prevails over clause 6; the ‘berth’ to
which clause 6 refers is a berth that is ‘reachable on arrival’ as required by clause 9.
In the dry cargo trades, an equivalent provision is one that requires the berth to be ‘always
accessible’. In fact, these words are probably wider in their meaning. They are capable of
applying to an obstruction that prevents the ship leaving the berth once it has finished its
work there; the ‘reachable on arrival’ wording could not be stretched this far.
10.2.3.8 Notice of Readiness (NOR)
The second requirement for the commencement of laytime is that the owners have given a
valid notice of readiness. At common law, NOR is required only at the loading port, not at
the discharge port. But charters usually provide that a NOR be given at each port and set
out when, how, and to whom the NOR is to be given. Thus the Gencon provides in clause 6:

(c) Commencement of laytime (loading and discharging)

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 Laytime for loading and discharging shall commence at 13.00 hours, if notice of
readiness is given up to and including 12.00 hours, and at 06.00 hours next working
day if notice given during office hours after 12.00 hours . . .

The Asbatankvoy provides in clause 6:

Upon arrival at customary anchorage at each port of loading or discharge, the

Master or his agent shall give the Charterer or its agent notice by letter, telegraph,
wireless or telephone that the Vessel is ready to load or discharge cargo, berth or
no berth, and laytime, as hereinafter provided, shall commence upon the expiration
of six (6) hours after receipt of such notice, or upon the Vessel’s arrival in berth (i.e.
finished mooring when at a sea loading or discharging terminal and all fast when
loading or discharging alongside a wharf), whichever first occur.

Note that both charters provide for a period of a few hours to elapse between the giving of
a valid NOR and the commencement of laytime. This is often called ‘turn time’; its purpose
is to allow the cargo interests a short period of time in which to prepare for cargo
operations.
10.2.3.9 The ship must actually be ready
In addition to the NOR meeting the charter provisions, the third requirement for the
commencement of laytime is that the ship is indeed ‘ready’ for cargo operations at the time
the NOR is given. A NOR stating that the ship will be ready at some (p. 286) future time is
invalid.68 Readiness means physically ready to receive or deliver the cargo. Thus a ship
cannot give a valid NOR, unless the parties agree otherwise, if she is not clean of residues
of previous cargoes,69 or if the cargo in question is over-stowed with other cargo and thus
inaccessible to the cargo interests.70
Readiness also connotes ready in a legal sense to commence cargo operations. It is quite
common for a charter to provide that, prior to giving its NOR, a ship must have passed
inspection by the appropriate authorities at the port concerned. It must also be in a
condition to gain admittance to the port, in particular to obtain clearance from the health
authorities (usually known as being in ‘free pratique’) and from Customs. Where, however,
the obtaining of these consents is a mere formality, a ship may give a valid NOR without
them, provided that, when the time comes, it does indeed obtain the clearances it needs.71
This occurs most frequently when the ship gives NOR at anchorage but, in the port in
question, clearance from Customs and the health authorities can only be obtained at the
berth. To put this matter beyond doubt, a charter will often provide that a ship can tender
NOR ‘WWWW’; this means ‘whether in port or not, whether in berth or not, whether in free
pratique or not, whether Customs cleared or not’.
At one time it was thought that a NOR that was invalid at the time it was given became a
valid one when the factors that rendered it invalid ceased to operate. In other words, the
NOR was considered as some kind of ‘delayed action device’. This concept was, however,
judicially rejected.72 This gave rise, however, to practical problems in those cases where an
invalid NOR was given but no valid NOR was tendered subsequently. That meant, logically,
that no NOR was ever given and that, accordingly, laytime never commenced! This situation
was eventually resolved by the Court of Appeal decision in The Happy Day.73 There the
court was prepared to find that the charterers, by commencing discharging, had waived the
invalidity of the NOR. Accordingly, the NOR was deemed to be given at that time and
laytime therefore commenced when turn time expired.

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 The law does, however, recognize the NOR as a ‘delayed action device’ in the case where an
otherwise valid NOR is tendered outside the hours specified in the charter. Thus, if a ship
fixed under the Gencon, tenders a NOR in the evening, outside office hours, contrary to the
provisions of clause 6(c), the NOR is deemed (p. 287) served at the opening of office hours
the next working day, on the assumption that the NOR is first read at that time by the
charterers or their agents.74
10.2.3.10 The calculation of laytime
The principle is that once laytime has commenced it runs continuously until loading or
discharging, as the case may be, has been completed. It will be interrupted only by three
factors.

1. The occurrence of a period of time that does not fall within the description of
laytime under the charter.

The description of laytime determines the type of day or time that qualifies as laytime. If the
actual time does not fall within the description, then it cannot be laytime. The simplest
example is that of ‘weather working days of 24 hours’. With this description, any day, such
as a Sunday or a holiday, which is not a working day, cannot be counted as laytime; similarly
with a day when the weather would not permit work to be done on the ship and cargo in
question. In both these cases, it is irrelevant whether the ship actually worked the Sunday
or holiday, or was in a position to work on the day the bad weather occurred. In other
words, it is not necessary to prove that the Sunday or holiday, or the bad weather, actually
caused work to be interrupted.

2. The occurrence of a period that the charter says is to be excepted from laytime.

Charters often contain terms which specifically provide that, on the occurrence of a certain
event, laytime shall be interrupted. An example of such a clause is clause 7 of Asbatankvoy
which provides:

If regulations of the Owner or port authorities prohibit loading or discharging of the

cargo at night, time so lost shall not count as used laytime.

Under such a clause, only the time during which cargo would in fact have been worked but
for the prohibition of night work will be deducted from laytime. In other words, it is
necessary to prove that the prohibition caused a loss of time to the ship.
The same principle applies to the following provision, also from clause 7 of Asbatankvoy:

Time consumed by the vessel in moving from loading or discharge port anchorage
to her loading or discharging berth, discharging ballast water or slops, will not
count as used laytime.

In order to stop laytime running, an exception must be clearly worded as applicable to

laytime. A general exception will normally be interpreted in this way. Thus, the (p. 288)
events listed in the general exceptions clause of the Asbatankvoy, clause 19, will not apply
to laytime, despite the mention of ‘delay’ in the opening words of that clause. More specific
wording, such as ‘delay in the loading or discharge of the cargo’, would be needed if the
exceptions listed in the clause were to apply to laytime.

3. A loss of time caused by some breach of charter or other action by the owners.

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 In the dry cargo trades, where ship’s gear is being used for cargo operations, a loss of time
caused by the breakdown of the ship’s gear would not count as laytime. Where, as often
happens, one crane breaks down but the remainder continue to work normally, the loss of
time is reduced in proportion to the total number of cranes required. Thus, in the case of a
ship with four cranes, only one-quarter of the total breakdown time is deducted from
laytime. Sometimes there is an express provision in the charter to this effect—see clause 5
of the Gencon. Clause 7 of the Asbatankvoy similarly provides:

but any delay due to the Vessel’s condition or breakdown or inability of the Vessel’s
facilities to load or discharge cargo within the time allowed shall not count as used
laytime.

If, however, the ship is ordered by the port authorities to stop loading or move away from
the berth for safety or other reasons, laytime will continue to run, unless the charter
provides otherwise. This is an illustration of the general principle that laytime, once started,
runs continuously in the absence of the three factors listed.
The situation is, however, different if it is the owners that order the ship to move, for
example from the anchorage at which it is waiting for a berth to a bunkering berth. It was
originally thought that laytime continued to run during this period, on the basis that there
was no loss of time to the charterers if they had no use for the ship. But the case of the Stolt
Spur75 decided that whenever and for as long as the ship is engaged in work for owners’
account, laytime ceases, even if there is no loss of time to the charterers.
The principle that laytime runs continuously does not mean, however, that the charterers
must load or discharge continuously. The charterers may use the laytime as they wish. Thus,
they can stop loading just short of a full cargo, in order to obtain bills of lading with a later
date—see The ‘Vrontados’.76 But once the loading operation is completed, the charterers
have no right to delay the ship, beyond, say, a couple of hours for the completion of
documentation, without risk of a claim from the owners for detention.77 The reason for this
is that laytime finishes at the time cargo operations finish. It will not continue beyond that
time, even if the ship is delayed in sailing by the need to issue the cargo documents, which
can usually be (p. 289) done only once loading is completed. But ‘loading’ will include any
time spent in the necessary securing of the cargo, ready for the sea passage.78 In the tanker
trades, however, it is usual for the charter to provide that laytime will not cease until the
cargo hoses have been disconnected from the ship. This is logical; whilst the hoses are still
connected, the ship is physically detained by the cargo interests. Clause 11 of Asbatankvoy
so provides.
It is also common, in the tanker trades—but not in Asbatankvoy—for the owners to warrant
that the ship’s pumps are capable of discharging the entire cargo within twenty-four hours
or, alternatively, of maintaining a pressure of 100 PSI,79 equivalent to 7 bar, at the ship’s
manifold,80 provided the shore facilities are capable of receiving the cargo in this time or at
the stated pressure. Where the ship’s pumps are not capable of meeting the warranted
performance, the charterers may add to laytime, or deduct from demurrage, all time used in
excess of twenty-four hours. In these circumstances, the owners will, wherever possible,
seek to limit the warranty to an average rate of 100 PSI, so as to set off any time during
which the pumps were over-performing against anytime during which they were
underperforming.
A separate laytime calculation is usually made for each port at which the ship loads or
discharges. But in some cases the charter will provide for laytime to be ‘reversible’ or
‘averaged’. Where laytime is reversible, charterers may add together the laytime for loading
and for discharging and make one calculation of despatch—see Section 10.2.3.12—or
demurrage based on the total time used in cargo operations. Where laytime is to be
averaged, a separate calculation is made for each port but a day’s despatch at one port may

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 be set off against a day’s demurrage at another. This has the advantage for the charterers
that, at the cost of a day’s despatch (calculated at half the rate of demurrage), they avoid
paying a day’s demurrage at the full rate.
The Gencon charter makes provision, in clause 6(b), for laytime to be reversible but makes
no reference to laytime being ‘averaged’. In Asbatankvoy, there is no express reference to
either alternative but in the tanker trades, laytime is usually reversible, in that laytime is
expressed in terms of so-many running hours ‘in total’.
10.2.3.11 The calculation of demurrage
Once laytime has expired, demurrage begins. Like laytime, the principle is that demurrage
runs continuously. The only interruptions are those expressly agreed in the charter or those
which arise from some fault on the part of the owners. This principle is often expressed in
the maxim ‘once on demurrage, always on demurrage’. Demurrage falls due day by day.
This is expressly set out in clause 7 of the Gencon. Similarly, Asbatankvoy states in clause 8:
‘Charterers shall pay demurrage (p. 290) per running hour and pro rata for a part thereof at
the rate specified in Part I for all time that loading and discharging and used laytime as
elsewhere herein provided exceeds the allowed laytime elsewhere herein specified.’
The description of laytime is irrelevant for the calculation of demurrage. Thus, where
Sundays and holidays are not included in laytime, they will be included in demurrage. In
like manner, the exceptions to laytime in the charter will not apply to demurrage. Again,
general exceptions which do not apply to laytime will also not apply to demurrage. If the
charterers wish to exclude time from demurrage, they must be able—in the absence of fault
on the part of the owners—to point to a specific provision in the charter to that effect.
Such specific provisions exist, at clause 16 in the Gencon and at clause 8 in Asbatankvoy.
Demurrage, like laytime, continues until the cargo operations are completed. Delay beyond
that point may amount to detention of the ship, depending on the length of the delay.
Demurrage is the owners’ only remedy for delay, unless delay has also arisen by breach of
some other duty on the part of the charterers. In such circumstances, the owners may claim
both demurrage and damages for the charterers’ breach.81
10.2.3.12 Despatch
At common law, the charterers are not entitled to any reward in the event that they
complete loading or discharging operations in less than the laytime allowed—despite the
fact that it is usually to the owners’ advantage to have the ship leave the port as quickly as
possible. In the dry cargo trades, however, most charters provide for the owners to pay the
charterers a ‘reward’ or bonus, for so doing. This is known as ‘despatch’. It is calculated by
reference to the time saved, and is usually paid at half the demurrage rate. The time saved
can be calculated in two ways: either as laytime saved or as all time saved. In the latter
case, the charterers are credited with all the time saved to the ship that would have been
used had laytime run to expiry. This may well exceed the laytime saved, since credit will be
given for periods of time, such as Sundays and holidays, which do not count as laytime.
Tanker trade charters, on the other hand, make no provision for despatch.
10.2.3.13 Responsibility for loading and discharging
At common law, the responsibility for loading and discharging lies upon the owners. This is
still the case in the liner trades; indeed, the phrase ‘liner terms’ means that the owners
have the responsibility for arranging and paying for the loading and discharge operations.
(p. 291)
In the dry bulk tramp trades, however, the common law position is almost invariably altered
by the terms of the charter. It is very common for the ship to be fixed on an ‘FIO’ or ‘FIOS’
basis, meaning ‘free in and out’ and ‘free in and out and stowed’ respectively. ‘Free’ means
‘free of cost’ to the owners. But these phrases are probably not sufficient by themselves to

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 transfer the risk as well as the cost of these operations to the cargo interests. In order to
achieve a transfer of risk, the charter needs to provide for the charterers (or shippers or
receivers) to arrange for these operations to be performed. Thus, the Gencon form provides
in clause 5:

Loading/Discharging
(a) Costs/Risks
The cargo shall be brought into the holds, loaded, stowed and/or trimmed,
tallied, lashed and/or secured and taken from the holds and discharged by the
Charterers, free of any risk, liability and expense whatsoever to the Owners.

Even where the Hague/Hague-Visby Rules apply, such wording is sufficient to pass from
owners to charterers/cargo interests the risk of damage to cargo arising from negligence in
the loading or discharging operations, despite the provisions of Article III Rule 2 to the
effect that the carrier (owners) ‘shall properly and carefully load, handle, stow, carry, keep,
care for and discharge the goods carried’.82
In the tanker trades, however, the position is different. By the very nature of the trade,
‘cargo pumps in and ship pumps out’. This means that the cargo interests must take
responsibility for getting the cargo to the ship’s manifold on loading and, on discharge, the
ship must take responsibility for pumping the cargo out of the tanks to the ship’s manifold.
Thus clause 10 of Asbatankvoy provides:

10 Pumping In and Out

The cargo shall be pumped into the Vessel at the expense, risk and peril of the
Charterer, and shall be pumped out of the Vessel at the expense of the Vessel, but at
the risk and peril only so far as the Vessel’s permanent hose connections, where
delivery of the cargo shall be taken by the Charterer or its consignee.

10.2.3.14 Freight
In this section, the term ‘freight’ is used to describe the amount of money paid to the
owners by the charterers in return for the owners agreeing to carry the cargo in question
from the port of loading to the port of discharge.(p. 292)
The rule at common law is that freight is payable only on delivery.83 This means that freight
is at the risk of the owners; if they are unable to deliver the cargo at destination, they will
not earn any freight,84 even if their inability to deliver it is the result of some peril that is
excepted under the charter. The owners can, of course, insure their freight against loss by
marine perils.
Thus clause 2 of Asbatankvoy provides:

Freight shall be at the rate stipulated in Part I and shall be computed on intake
quantity . . . as shown on the Inspector’s Certificate of Inspection. Payment of
freight shall be made by Charterer without discount upon delivery of cargo at
destination . . .

The owners are still entitled to freight if the cargo is delivered in a damaged condition,
provided it is still recognizable as the cargo loaded. No freight is due, however, if the cargo
is damaged beyond recognition.85

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 Freight is frequently calculated on the amount of cargo—as in clause 2 of Asbatankvoy
above—and, in that case, it is important to specify whether the intake or outturn quantity is
to be used for that purpose. Certain types of cargo lose weight during the voyage and, in
such cases, it is in owners’ interest for freight to be calculated on intake quantity, again as
Asbatankvoy provides.
Alternatively, freight may be payable on a lump sum basis. Where a lump sum freight is
payable on delivery of the cargo and not all the cargo is in fact delivered, the owners can, it
appears, still recover the whole of the lump sum freight, even if they are responsible for the
non-delivery of part of the cargo, provided a reasonably substantial proportion of the cargo
is delivered.
The owners, however, much prefer to receive payment in advance, rather than in arrears,
and frequently include clauses in the charter that override the common law position. Thus
clause 4 of the Gencon provides:

(b) Prepaid.
If according to Box 13 freight is to be paid on shipment, it shall be deemed earned
and non-returnable, Vessel and/or cargo lost or not lost.

Under this wording, the risk of paying the freight without receiving the cargo at destination
is on the charterers but, again, that risk can be insured. Furthermore, in the event of loss of
or damage to the cargo for which the owners are responsible, cargo interests can recover
the freight as an element of the damages incurred. It is part of the market value of the
cargo at destination.
Under English law, freight paid in advance is non-refundable. This principle is unique to
English law. Further, the words ‘earn’ and ‘pay’ have distinct meanings. (p. 293) Thus,
freight that is, under the charter, deemed earned on shipment but not payable until, say,
three days later, will be payable, even if the ship sinks after shipment but before the expiry
of the three-day period.86
A further principle developed by English law is that freight must be paid in full and without
deductions, unless the charter provides otherwise. This rule is long established but its
rationale is unclear. Its most common application is in relation to cargo claims. Even where
cargo is delivered damaged or short of the contractual quantity, the cargo interests cannot
set off their claim against any outstanding freight that may be due. The cargo claim must be
brought either as an independent claim or as a cross-claim in the owners’ suit for freight.87
As we shall see, the same rule does not apply to hire due under a time charter.

10.3 Time Charters

10.3.1 Introduction
Under a time charter, the owners undertake to place their ship at the disposal of the
charterers for a defined period of time for the carriage of goods in accordance with the
charterers’ instructions. The charterers’ right to the commercial exploitation of the ship is,
as mentioned in Section 10.2.3, usually subject to certain trading limits and to the exclusion
of the carriage of certain cargoes, particularly those that are perceived to have dangerous
or noxious properties. Under a time charter, the ship remains in both the ownership and
possession of the owners, since the officers and crew who man it will be the employees of
the owners, not the charterers.
In compensation for putting the ship at the charterers’ disposal, the owners earn
remuneration in the form of hire. The charterers are obliged to pay hire continuously for
the entire period of the charter, unless they are denied the use of the ship by a breach of
charter by the owners. The obligation to pay hire continuously is also interrupted if certain

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 events occur which deprive the charterers of the full use of the ship. These events are
usually set out in a specific clause of the charter, called the ‘off-hire’ clause. This subject is
addressed in more detail later in this section.
Outside these two exceptions, the risk of delay to the ship in its commercial operations lies
on the charterers, not the owners. This is the reverse of the situation that prevails under a
voyage charter. As a result, owners will, when the market allows, prefer to charter their
ship on a time, rather than a voyage, basis.(p. 294)
In addition to paying hire, the charterers will pay all the voyage costs, including port and
canal charges, and for the fuel that the vessel consumes in the form of bunkers. Again, this
is the reverse of the position under a voyage charter.

10.3.2 Seaworthiness
In return for the payment of hire, the principal obligation of the owners under a time
charter at common law is to deliver the ship in fit condition for the charterers’ service—
essentially the carriage of cargo. By contract, that duty is usually extended to maintaining it
in that condition for the period of the charter. Thus, clause 2 of the NYPE form provides
that the ship on its delivery ‘shall be ready to receive cargo with clean swept holds and
tight, staunch, strong, and in every way fitted for ordinary cargo service’ whilst clause 6
requires the owners to ‘maintain the vessel’s Class and keep her in a thoroughly efficient
state in hull, machinery and equipment for and during the service . . .’.
Shelltime4 deals with the matter in more detail, in clauses 1 and 2. In particular, clause 1
provides:

(b) she shall be in every way fir to carry crude petroleum and/or its products:
(c) she shall be tight, staunch, strong, in good order and condition, and in
every way fit for the service, with her machinery, boilers, hull and other
equipment . . . in a good and efficient state:

Clause 3 sets out the duty to maintain:

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 or
restore the vessel.

The obligation to deliver the ship in proper condition for the service is, at common law, a
strict obligation, not—as we have seen above—dependent on negligence, but in the case of
the NYPE form the incorporation of the US Clause Paramount at clause 31 reduces the duty
to one of exercising due diligence ‘before and at the beginning of the voyage’. But to which
voyage or voyages does the due diligence obligation apply? According to the decision of the
House of Lords in The Saxon Star88 the obligation will apply to each voyage under the
charter, whether loaded or in ballast.
The Shelltime4 does not incorporate a Clause Paramount into the charter; it provides only
that all bills of lading issued under the charter are to include the form of Clause Paramount
set out in clause 38.
Breach of these provisions by the owners will usually entitle the charterers only to claim
damages—see the case of The Hongkong Fir referred to earlier. In addition, (p. 295) where

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 the breach of the clause has deprived the charterers of the full use of the ship, they will
usually be able to put the ship ‘off-hire’.

10.3.3 Description of the ship

A time charter normally contains a description of the ship. This is crucial to the charterers
as it enables them to assure themselves that the ship is appropriate for the trade(s) in
which they intend to employ it. So, the NYPE form provides that the ship shall fly a given
flag, be classed with a specific classification society, be of a given deadweight tonnage and
cubic capacity, and capable of a certain speed on a given fuel consumption—see the
Description of Vessel clause in the preamble to the charter.
Nowadays, a more detailed description of the ship and its capabilities is frequently provided
in an additional clause, based on Intertanko’s89 Standard Tanker Chartering Questionnaire
88 (Q88).
In Shelltime4, the description of the ship is covered in a detailed schedule called Form B
which is attached to the charter. Its opening rubric reads:

This form is to be completed and returned to Charterers as soon as possible after

charter negotiations are commenced. When completed and agreed the form will
eventually be incorporated into any Charter Party ultimately concluded and the
particulars contained therein will be taken as representations by Owners in reliance
upon which Charterers will enter into such Charter Party . . .

There then follow eighteen sections of detail which the owners must complete.
Again, a misdescription of the ship in such a clause will usually entitle the charterers only
to claim damages, rather than to repudiate the charter as a whole. But see The Aegean
Dolphin90 for a case where the charterers were held entitled to repudiate the charter on the
grounds of a misdescription of the ship’s speed.
If market conditions permit, the owners will try and reduce the rigour of the description
clause by qualifying language. Thus, the clause may contain the words ‘all details about’.
These words have been held appropriate to modify a speed and performance warranty,
namely that the ship shall perform at a certain speed on a given daily consumption of
bunkers. In this context, the word ‘about’ is generally interpreted as allowing a slippage of
half a knot in speed and an over-consumption of between 3 and 5 per cent in bunker
consumption. On the other hand, such words would probably not be appropriate to excuse a
ship with five hatches being described as one with six.
In an extreme case, the description clause may be qualified with the words ‘without
guarantee’. It was held in the case of The Lipa91 that these words are sufficient to (p. 296)
negate any warranty of accuracy in the ship’s description, unless the owners had acted in
bad faith.
We have addressed at Section 10.2.2.3 the issue of the time at which the description
applies. In the context of a time charter, the charterers may well want the ship to comply
with its description both at the date of the delivery and thereafter for the duration of the
charter. To achieve this, the charterers must contract for it. We have seen above that a
provision to this effect is included in the Shelltime4 at clause 3(i). There is no specific
corresponding provision in the NYPE form but the incorporation of the Clause Paramount
achieves substantially the same effect.

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 10.3.4 Safe ports
This topic has been largely covered in Section 10.2.3.4 covering voyage charters. Given the
nature of a time charter and the large choice of ports to which the charterers may order the
ship, the charter will be subject to an implied term that those ports must be safe for the
ship to use. In practice, time charters include specific provisions relating to the safety of
ports. Thus, the NYPE form provides in clause 5 that ‘The Vessel shall be employed in such
lawful trades between safe ports and safe places within [the trading limits] excluding . . . as
the charterers shall direct’.
Furthermore, clause 12 requires that the berths or places at which the ship may load or
discharge shall also be safe.
In Shelltime4 the issue is dealt with in clause 4 in the following terms:

Charterers shall use due diligence to ensure that the vessel is only employed
between and at safe places (which expression when used in this charter shall
include ports, berths, wharves, docks, anchorages, submarine lines, alongside
vessels or lighters, and other locations including locations at sea) where she can
safely lie always afloat. Notwithstanding anything contained in this or any other
clause of this charter. Charterers do not warrant the safety of any place to which
they order the vessel and shall be under no liability in respect thereof except for
loss or damage caused by their failure to exercise due diligence as aforesaid.

This wording qualifies the charterers’ obligation at common law as regards the safety of
ports by limiting it to one of ‘due diligence’. These words have been considered in two
cases, The Saga Cob92 and The Chemical Venture,93 with the result that charterers would
be in breach of this provision only ‘if a reasonably careful charterer would on the facts
known have concluded that the port was prospectively unsafe’.94 The obligation to exercise
due diligence is not personal to the (p. 297) charterers. Thus, the charterers will be
responsible for any lack of due diligence on the part of a port authority or terminal
operator, if they have ordered the ship to a port where the selection of the berth is in the
hands of these parties.95
10.3.5 The charter period
A time charter will contain provisions regarding its duration. In the NYPE form, these are
found in clause 1; in Shelltime4, they are in clause 4. The duration may, for example, be
expressed as ‘six months’ or ‘one year’ from the date of delivery. In such a case, the court
will allow the charterers some margin, recognizing that it is often difficult in practice to
predict exactly when the ship will be free of cargo and ready for redelivery to the owners
after its final voyage. The amount of the margin may well be influenced by the duration of
the charter itself. Thus, in the case of The Berge Tasta,96 a margin of ten to eleven days was
considered reasonable on a charter for thirty months, amounting to approximately 1 per
cent of the charter period. Where the issue is determined in arbitration, the appropriate
length of the overrun—or ‘overlap’, as it is called97—will be a matter of fact for the
arbitrators to determine. In the case of The Dione,98 arbitrators considered an overlap of
8.4 days not unreasonable in the context of a charter for some 200 days; this amounted to
approximately 4 per cent of the charter period.
Alternatively, the charter may itself prescribe the amount of the margin; for example, the
period might be expressed as ‘one year, plus or minus 15 days in charterers’ option’. In
such a case, the court will not add any additional margin. If the charterers, for whatever
reason, other than delay occasioned by the owners’ breach of charter, redeliver the ship
later than the maximum period of the charter, they will be in breach of charter and liable to

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 compensate the owners for the period of the overlap at the market rate, if it is higher than
the charter rate.
It is often the case, particularly in trip time charters, that the period of the charter is
expressed in terms of ‘about x days, without guarantee’. In such a case, the charterers are
entitled to keep the ship on charter for the time that the contemplated voyage actually
takes, whether less or more than the ‘x’ days mentioned. The only obligation on the
charterers in such a case is to make the estimate of duration in good faith; the charterers
must be able to demonstrate that, at the time of fixing the ship, they ‘genuinely believed
that the trip would last about the number of days specified’—see The Lendoudis Evangelos
II.99(p. 298)
It is usual for the time of delivery and redelivery to be expressed in UTC.100 Where,
however, they are expressed in local time and there is a time difference between the two,
the period of the charter is reckoned accordingly to the actual time that has elapsed since
the charterers took delivery of the ship—see The Arctic Skou.101

10.3.6 Payment of hire

The principle is that once the ship has been delivered to the charterers, they must then pay
hire at the agreed rate until the time of redelivery. This is the case even where the
charterers are unable to find employment for the ship. Thus clause 10 of the NYPE form
provides:

The Charterers shall pay for the use and hire of the said Vessel at the rate of $. . .
U.S. currency, daily, or $. . . U.S. currency per ton on the Vessel’s total deadweight
carrying capacity . . . on summer freeboard, per 30 days, commencing on and from
the day of her delivery, as aforesaid, and at and after the same rate for any part of a
month; hire shall continue until the hour of the day of her redelivery in like good
order and condition, ordinary wear and tear excepted, to Owners . . .

The equivalent clause in Shelltime4 is clause 8.

Under the standard forms of time charter, hire is always payable in advance, rather than in
arrears. A common provision is that hire is payable in advance, every fifteen days, as in the
NYPE form, or per calendar month, as in Shelltime4, to a bank account nominated by the
owners in the charter. In earlier versions of the NYPE form, hire was to be paid ‘in cash’ but
since this was clearly impractical in most cases, the phrase was interpreted to mean ‘funds
immediately available’ to the owners.102 In the latest version of the NYPE form, hire is to be
paid ‘in funds available to the Owners on the due date’ (cl. 11(a)). Shelltime4 requires the
hire to be paid ‘in immediately available funds’ (cl. 9).
By when must the hire be paid? The courts have interpreted ‘in advance’ strictly, so that,
when a payment of hire falls due on a non-banking day, the charterers must arrange for the
hire payment to reach the owners’ bank before the due date.103 But the charterers do have
the benefit of the full day. Thus, if hire is payable on Monday 9 July, the charterers may
make payment at any time before midnight on that day, even after normal banking hours—
see The Afovos.104 Thus, a funds transfer that reaches the owners’ bank at 11.30 pm that
day will be good payment, even though (p. 299) the owners may not know about the
remittance at that time, given that the bank would be closed. This factor is increasingly
important as electronic transfers become the norm.

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 10.3.7 Deductions from hire
The charterers have the right not to pay hire in only three sets of circumstances:

1. where the full working of the ship is prevented by the occurrence of some event
specified in the off-hire clause;
2. where the charter provides for specific deductions, such as ship’s disbursements
for owners’ account or the estimated value of bunkers on redelivery;
3. where the owners have, by reason of their breach of the charter, deprived the
charterers of the full benefit of the ship’s services. This is known as the right of
‘equitable set-off’.

An off-hire clause is found in all standard forms of time charter. In the NYPE form it is
clause 17:

In the event of loss of time from deficiency and/or default and/or strike of officers or
crew, or deficiency of stores, fire, breakdown of, or damages to hull, machinery or
equipment, grounding, detention by the arrest of the Vessel, (unless such arrest is
caused by events for which the Charterers, their servants, agents or subcontractors
are responsible), or detention by average accidents to the Vessel or cargo unless
resulting from inherent vice, quality or defect of the cargo, drydocking for the
purpose of examination or painting bottom, or by any other similar cause preventing
the full working of the Vessel, the payment of hire and overtime, if any, shall cease
for the time thereby lost . . .

The corresponding provision in Shelltime4 is clause 21, comprising some fifty lines of text.
To be deductible from hire, the event causing the loss of time must prevent ‘the full working
of the vessel’ (NYPE) or prevent ‘the efficient working of the vessel’ (Shelltime4). For the
meaning of these phrases, see The Aquacharm.105 Under the NYPE form, payment of hire
ceases for ‘the time thereby lost’. The provision is therefore a ‘net loss of time’ clause—see
The Marika M.106 Shelltime4, on the other hand, provides that ‘the vessel shall be off-hire
from the commencement of such loss of time until she is again ready and in an efficient
state to resume her service from a position not less favourable to Charterers than that at
which such loss of time commenced’. This is a ‘period off hire clause’—see The Bridgestone
Maru (No. 3).107(p. 300)
Note that off-hire is usually triggered simply by the occurrence of the event specified in the
clause, irrespective of any fault or negligence on the part of the owners.
As for point 2 above, charters usually include clauses entitling the charterers to deduct
from hire money advanced for ship’s disbursements—see clause 11(d) in the NYPE form and
clause 30 in Shelltime4. Similar provision is made in respect of bunkers remaining on board
on redelivery, which the owners are obliged to purchase from the charterers—see clause
11(c) in the NYPE form and clause 19 of Shelltime4.
As regards point 3 above, the concept of equitable set-off was principally developed in the
case of The Nanfri, a Court of Appeal decision of 1978.108 In that case, the court formulated
the principle that where the owners, acting in breach of charter, had effectively deprived
the charterers of the full use of the ship to which they were entitled, then the charterers
could deduct from hire the damages they had suffered in consequence. These would usually
be the hire the charterers had paid for the period during which they had been denied the
full use of the ship. In making such deductions, charterers are only required to make ‘a

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 reasonable assessment in good faith’ of the amounts in issue; they do not have to get the
figures right to the last dollar.109
Unless the charter so provides, the charterers cannot make deductions from hire in respect
of anticipated expenses not yet incurred. Nor can they deduct from hire days in the future
when it is anticipated that the ship will be off-hire by reason, for example, of drydocking.110
Charters do, however, usually contain specific terms regarding payment of what is
anticipated to be the last instalment of hire, that is, the payment for the period during
which the ship is to be redelivered to the owners. In these circumstances, the charters
provide for the payment of hire sufficient to cover the period up to the anticipated date of
redelivery—see clause 11(c) of the NYPE form and clause 19 in Shelltime4—any balance
due or owing by reference to the actual date of redelivery to be settled in arrears.

10.3.8 Redelivery
The various ways in which the period of the charter may be expressed have been already
addressed at Section 10.3.5. Problems arise in practice when the ship is approaching her
final voyage under the charter. When the charterers give orders to the ship for its final
voyage, they are required so to plan the ship’s employment (p. 301) that they will, in all
reasonable expectation, be able to redeliver it to the owners on or before the termination
date of the charter, after making allowance for any margin permitted by the charter terms.
Such an order is described as a ‘legitimate’ last voyage order. If, in the event, despite the
reasonable expectation, the ship is redelivered late, the charterers will be in breach of
charter and liable to pay damages to the owners for the overlap period, calculated at the
market rate, where that is higher than the charter rate, or at the charter rate, where it is
higher than the market rate—see The Peonia111 and The London Explorer.112
Similarly, where the final voyage is completed ahead of expectation, so that the ship is
redelivered before the minimum period of the charter has expired (an underlap), the
charterers are obliged to continue to pay hire at the charter rate until the expiry of the
minimum period.
On occasion, the late redelivery will mean that the owners lose a profitable follow-on
fixture. The courts have, however, determined that the owners cannot claim the loss of
profits under that fixture as damages for late redelivery. Their damages are limited to the
difference between the market rate and the contract rate for the period of the overlap—see
The Achilleas.113
In the event that charterers’ orders for the last voyage are such that there is no reasonable
expectation that the ship, on completion of that voyage, can be redelivered by the final
termination date of the charter, that order is an ‘illegitimate’ last voyage order and the
owners have the right to refuse it and require the charterers to give fresh orders that do
allow a reasonable expectation of redelivery by the required date. If the charterers still
refuse to change their orders, the owners have a choice; they can either treat the
charterers’ refusal as a repudiation of the charter, thereby bringing it to an end, or accept
the charterers’ order under protest, and claim damages on the basis set out above for any
overlap that actually occurs.
Charters often contain clauses addressing the consequences of overlap. Thus, in The Black
Falcon,114 the charter clause read ‘Charterers having the option to complete last round
voyage under performance prior to redelivery at charterparty rate’.
The court held that this clause did not entitle the charterers to order the ship on an
illegitimate last voyage; it provided only that the charter rate of hire was to apply to any
overlap that occurred on a legitimate last voyage. A similar conclusion was reached in The
Ambor,115 where clause 19 of the Shelltime4 charter was so (p. 302) construed as not to
legitimize orders for a last voyage that would clearly exceed the maximum period of the
charter. If, however, the last voyage clause of the charter is so worded as to give the

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 charterers the right to give an otherwise illegitimate last voyage order, the court will give
effect to it—see The World Symphony,116 a case on the wording of the Shelltime3 charter,
wording which differs from the equivalent provision in Shelltime4.
The time at which the legitimacy or otherwise of the last voyage order is to be tested is that
at which its performance falls due, not at an earlier date when the order was first given,
since circumstances may change between the date of the original order and the date at
which that order is to be carried out—see The Gregos.117

10.3.9 Early redelivery

Changes in market conditions can induce the charterers to terminate a charter prematurely.
Where such early termination is contrary to the terms of the charter, the charterers are
regarded as having repudiated the charter. This leaves the owners with the problem of
finding alternative employment for the ship.
What are the owners’ rights in such a situation? The traditional view is that the owners
have an obligation in such circumstances to mitigate their damages by finding alternative
employment for the ship for the remaining period of the charter. Damages are usually,
therefore, calculated as the difference between the charter rate and the market rate (where
it is lower) for a fixture for the remaining charter period, irrespective whether or not the
ship is actually fixed on that basis. If, however, there is no available market, in the sense of
willing owners and willing charterers, then the owners’ loss is measured by the difference
between the charter rate for the remaining period and their earnings under the fixtures
actually performed during that period. This is the case even where, subsequent to the
repudiation, an available market materializes—see Zodiac Maritime Agencies Limited v
Fortescue Metals Group Limited.118
In calculating the period in respect of which damages are to be payable, regard must be
had to any provision of the charter which would have led to its premature termination, such
as an option to terminate the charter on the outbreak of hostilities which subsequently
occurred—see The Golden Victory.119(p. 303)
As an alternative to the traditional view, the owners, as the innocent party in this situation,
have the right to affirm the contract and insist that the charterers pay hire until the agreed
termination date. During this period, the owners must, in order to earn that hire, keep the
ship at the charterers’ disposal, even if that means the ship lying idle in some port, awaiting
orders from the charterers that never come. The only constraint upon this right is that the
owners must not exercise it ‘wholly unreasonably’—whatever that may mean—see The
Aquafaith.120
10.3.10 The right to withdraw the ship on non-payment of hire
While most charters require the full and punctual payment of hire, such payment is not
generally regarded as a condition of the charter, sufficient to entitle the owners to
terminate the charter immediately on non-payment.121 If the owners want this right (which
they usually do), then they must contract for it. It is, therefore, common to find in time
charters an express clause entitling the owners to withdraw the ship from the charterers’
service on either non-payment or late payment of the hire when due.
The relevant clause in the NYPE form reads:

11

(a) Failing the punctual and regular payment of the hire . . ., the
Owners shall be at liberty to withdraw the Vessel from the service of the

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 Charterers without prejudice to any claims they (the Owners) may
otherwise have on the Charterers.

The relevant clause in Shelltime4 (cl. 9(a)) reads:

In default of such proper and timely payment

(a) Owners shall notify Charterers of such default and Charterers shall within
seven days of receipt of such notice pay to Owners the amount due including
interest, failing which Owners may withdraw the vessel from the service of
Charterers without prejudice to any other rights Owners may have under this
charter or otherwise . . .

As we have seen above, ‘punctual’ means what it says. These clauses give the owners an
option, available for use if the right circumstances occur. It has been described as ‘legally
and morally’ neutral,122 so that, in its exercise, considerations of fair play or of
unconscionable behaviour are irrelevant.
On the other hand, withdrawal of the ship is a drastic remedy. As such, its exercise is often
subject to what has been described as an ‘anti-technicality’ clause, which (p. 304) requires
the owners to give the charterers a given number of hours or days’ notice of the intended
withdrawal, once the default in payment has occurred.
The anti-technicality clause in the NYPE form reads:

11

(b) Grace Period

Where there is failure to make punctual and regular payment of hire
due to oversight, negligence, errors or omissions on the part of the
Charterers or their bankers, the Charterers shall be given by the
Owners ___ clear banking days (as recognized at the agreed place of
payment) written notice to rectify the failure, and when so rectified
within those . . . days following the Owners’ notice, the payment shall
stand as regular and punctual.
Failure by the Charterers to pay the hire within . . . days of their
receiving the Owners’ notice as provided herein, shall entitle the
Owners to withdraw as set forth in Sub-clause 11(a) above.

The equivalent clause in Shelltime4 is quoted above. The clause guards against the risk of
the ship being withdrawn in a case where the charterers had the intention of paying the
hire in full and on time but some technical problem had occurred in the banking chain
which delayed the payment beyond the due date.
Even in the absence of an anti-technicality clause, owners may not be able immediately to
exercise their right to withdraw the ship on late payment. Where, for example, the owners
have accepted a particular course of conduct in respect of the payment of earlier
instalments, they must give the charterers notice that, as regards future instalments, they
will insist on punctual payment in accordance with the charter terms—see Tankexpress A/S
v Compagnie Financière Belge des Pétroles.123 Contrast the result in this case with that in
The Scaptrade124 where the owners had accepted without protest late payment of hire on
sixteen out of twenty-two previous occasions. Such conduct, the court said, did not amount

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 to a representation that the right to withdraw would not be exercised on late payment in
the future.
At the time the owners exercise their right of withdrawal, the ship may have cargo on
board, which it will have loaded in accordance with the charterers’ instructions. Once the
ship is withdrawn, however, the charter is at an end and the ship is no longer bound by
charterers’ orders. On the other hand, the owners remain bailees of the cargo and, if bills of
lading have been issued prior to withdrawal, may be under an obligation to the holders of
those bills to carry that cargo to destination. The owners’ responsibilities in such
circumstances have been addressed by the Petroleo Brasiliero case referred to above—see
note 122. In that case, cargo on board the ship at the time of withdrawal, in respect of
which no bills of lading had been issued, was—after some delay arising from charterers’
refusal to accept the withdrawal—eventually discharged ashore at the port of loading. The
court held (p. 305) that, on withdrawal, the owners became non-contractual bailees of the
cargo, with a duty to take reasonable care of it. In consequence, the owners were held
entitled to recover damages for the detention of the ship at the market rate whilst reception
facilities were readied and the cargo discharged ashore. These damages included also the
cost of bunkers consumed during that period.
As no bills of lading had been issued in that case, the court did not have to consider the
consequences of the ship being withdrawn in such circumstances but two of the judges
opined that the owners would, notwithstanding the withdrawal, have the right to be
indemnified by the charterers against the costs incurred in delivering the cargo to its bill of
lading destination. We examine the owners’ rights under the so-called ‘Employment and
Indemnity clause’ in the next section. In the recent case of The Bulk Chile,125 the court held
that the owners were entitled to receive from sub-charterers a quantum meruit
remuneration where they, at the request of the sub-charterers, had fulfilled their obligations
to bill of lading holders in respect of cargo on board when the intermediate time charterers
became insolvent.
Unless the charter specifically so provides, the owners have no right to suspend services as
opposed to withdrawing the ship. Thus, owners who, wanting to put pressure upon the
charterers, perhaps to obtain payment of hire which has become overdue, withdraw the
ship temporarily from the charterers’ service, will be in breach of charter. In consequence,
the charterers will be entitled, under the law of equitable set-off, to recover damages from
the owners, corresponding to the hire paid for the time during which the service was
suspended. Where, however, the charter contains terms giving the owners the right of lien
‘on all cargoes’, they may be able—if the place at which the temporary withdrawal of
service takes place is at or off the port of discharge—to defeat the charterers’ claim by
asserting that right of lien.126
The more modern forms of charter address this issue specifically. Thus, clause 11(a) of the
NYPE form provides:

At any time after the expiry of the grace period provided in Sub-clause 11 (b)
hereunder and while the hire is outstanding, the Owners shall, without prejudice to
the liberty to withdraw, be entitled to withhold the performance of any and all of
their obligations hereunder and shall have no responsibility whatsoever for any
consequences thereof, in respect of which the Charterers hereby indemnify the
Owners, and hire shall continue to accrue and any extra expenses resulting from
such withholding shall be for the Charterers’ account.

There is no equivalent provision in Shelltime4.(p. 306)

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 Where the owners decide to withdraw the ship, they must give appropriate notice to the
charterers.127 The notice must make clear that the ship is withdrawn at the time the notice
is given; a notice to the effect that the ship will be withdrawn at some later stage, such as
on the completion of discharge, is probably ineffective.128

10.3.11 Employment and indemnity clause

Time charters give the charterers wide powers over the employment of the ship, including
the right to require the owners to enter into contractual relationships with third party cargo
interests, under bills of lading or similar contracts of carriage. If, by obeying charterers’
orders, the owners are committed to liabilities greater than, or different from, those agreed
in the charter, they are entitled to an indemnity from the charterers. Generally speaking,
such an indemnity will be implied as a matter of law129 but in most cases such an indemnity
will be set out expressly in the charter. Thus, the relevant clause in the NYPE form is clause
30, which reads:

(a) The Master shall sign the bills of lading or waybills for cargo as presented
in conformity with mates or tally clerk’s receipts . . .
(b) All bills of lading or waybills shall be without prejudice to this Charter
Party and the Charterers shall indemnify the Owners against all consequences
or liabilities which may arise from any inconsistency between this Charter
Party and any bills of lading or waybills signed by the Charterers or by the
Master at their request.

The equivalent clause in Shelltime4, clause 13 reads:

Bills of Lading
13.

(a) The master (although appointed by Owners) shall be under the

orders and direction of the Charterers as regards employment of the
vessel, agency and other arrangements, and shall sign bills of lading as
Charterers or their agents may direct . . . without prejudice to this
charter. Charterers hereby indemnify Owners against all consequences
or liabilities that may arise:

(i) from signing bills of lading in accordance with the directions of

Charterers or their agents, to the extent that the terms of such
bills of lading fail to conform to the requirements of this charter,
or . . . from the master otherwise complying with Charterers’ or
their agents’ orders;
(ii) from any irregularities in papers supplied by Charterers or
their agents.

Thus the indemnity will apply in cases where charterers’ agents, acting under delegated
authority from the master, have signed clean bills of lading for cargo (p. 307) that was not
in apparent good order and condition. In such circumstances, the owners will claim under
the indemnity for any compensation that they have been obliged to pay to the receiver that
would not have been payable had the bills been correctly claused. If, on the other hand,
such bills have been signed clean by the master himself, in circumstances where they
should have been claused, the owners will not be able to claim under the indemnity, on the
grounds that the charterers could not have validly ‘ordered’ the master to sign a document

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 that amounted to a fraud on the third party bill of lading holder. The master should simply
have refused to sign bills of lading in that form—see The Nogar Marin.130
In the absence of express provisions in the charter, charterers cannot, as a matter of law,
order the owners to deliver cargo other than against presentation of the relevant original
bill of lading—see The Houda131—but if they do so and the master complies, in
circumstances where there is nothing to indicate that the receiver is not entitled to the
cargo, the owners may rely on the indemnity if the delivery is ultimately determined to be
wrongful—see Strathlorne SS Co. v Andrew Weir & Co.132 and The Sagona.133 In the tanker
trades in particular, it is normal practice for the owners to deliver the cargo against an
express indemnity from the charterers or the receiver, since it is almost unknown for the
bill of lading to be available at the port of discharge, the cargo having been sold and resold
en route, perhaps many times. Shelltime4 deals with this issue in clause 13(b), as follows:

(b) Notwithstanding the foregoing, Owners shall not be obliged to comply

with any orders from Charterers to discharge all or part of the cargo . . .

(ii) without presentation of an original bill of ladingunless they have

received from Charterers both written confirmation of such orders and
an indemnity in a form acceptable to Owners.

The NYPE form is silent on this point.

Further, the owners will not be able to recover under the indemnity any loss they may incur
from a risk which they have agreed to bear under the charter. Thus, in the case of The
Aquacharm,134 the court held that the owners were not entitled to an indemnity from the
charterers for the costs of transhipping cargo in the Panama Canal, as these costs had been
incurred by the master negligently overloading the ship initially. The judge said:

Are the owners entitled to recover under an implied indemnity? I think not. It is of
course well settled that owners can recover under an implied indemnity for the
direct consequences of complying with the charterers’ orders. But it is not every
loss arising in the course of the voyage that can be recovered. For example, the
owners (p. 308) cannot recover heavy weather damage merely because, had the
charterers ordered the vessel on a different voyage, the heavy weather would not
have been encountered. The connection is too remote . . .

See also The Kitsa,135 where owners failed in their claim to be indemnified against the costs
of cleaning the hull of the ship from fouling arising from a prolonged stay at a warm water
port, the court upholding the finding of the arbitrators that such expenses were ordinary
risks of trading that the owners had to bear.
In the case of The Kos,136 we saw in Section 10.3.10 that the Supreme Court held that the
owners could claim from the charterers under the indemnity damages for detention of the
ship, and the corresponding cost of bunkers consumed, during the period after withdrawal
of the ship from the charter for non-payment of hire, whilst they were acting as bailees for
cargo loaded on board prior to withdrawal. In the case in question, no bills of lading had
been issued but two of the judges expressed the view (obiter) that the indemnity would also
be available to the owners for the costs of carrying cargo to destination in accordance with
their bill of lading obligations. The rationale was that the cargo was loaded in accordance
with the charterers’ instructions and the need to discharge it at its contractual destination
was a natural consequence of those orders. Had the ship remained on charter, the
charterers would have borne those costs; once the ship had been withdrawn from the

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 charter, those costs fell in the first place on the owners, and were accordingly a proper
claim under the indemnity.
Matters of navigation and seamanship remain, however, the responsibility of the owners.
The NYPE form provides in clause 26: ‘. . . The Owners shall remain responsible for the
navigation of the Vessel, acts of pilots and tug boats, insurance, crew, and all other matters,
same as when trading for their own account . . .’
Shelltime4 has no exactly equivalent provision but in clause 2(b) owners guarantee that
‘throughout the charter service the master shall . . . prosecute all voyages with the utmost
despatch’.
The distinction between ‘navigation’ and ‘employment’ has been clarified by the decision of
the House of Lords in The Hill Harmony.137 In that case, the charterers were held entitled,
when giving the ship its voyage orders, to specify the route that the ship should take to the
port of discharge. The court took the view that ‘the choice of ocean route was, in the
absence of some over-riding factor, a matter of the employment of the ship. It related to her
scheduling and trading and therefore to the exploitation of her earning capacity’.(p. 309)
As for distinguishing between the two terms, the court said:

It is not hard to think of orders which plainly relate to the employment of the vessel
and others which plainly relate to its navigation. It is much less easy to formulate
any test which clearly distinguishes between the two. The charterers’ right to use
the vessel must be given full and fair effect; but it cannot encroach on matters
falling within the specialized professional maritime expertise of the master,
particularly where the safety or security of the vessel, her crew and her cargo are
involved. He is the person, on the vessel, immediately responsible. Technical
questions concerning the operation of the vessel are for him. Thus a decision when,
in the prevailing conditions of wind, tide and weather, to sail from a given port is
plainly a navigational matter . . .138

Footnotes:
1
The term ‘freight’ is also sometimes used to describe the cargo carried by the ship, as
opposed to the price paid by the charterer for that carriage. In this Chapter, the word is
used to describe the latter.
2
Per Lord Diplock in EL Oldendorff & Co. GmbH v Tradax Export SA (The Johanna
Oldendorff) [1973] 2 Lloyd’s Rep 285.
3
FC Bradley & Sons Ltd v Federal SN Co. (1926) 24 LlL Rep 446, 454 per Scrutton LJ.
4
Riverstone Meat Co. Pty v Lancashire Shipping Co. (The Muncaster Castle) [1961] AC
807.
5
The Vortigern [1899] P 140.
6
(1875) 45 LJQB 78.
7
[1962] 2 QB 26.
8
International Convention for the Unification of certain Rules relating to Bills of Lading
1924, enacted in the United Kingdom by the Carriage of Goods by Sea Act 1924.
9
Baltic and International Maritime Council (BIMCO), 1 October 1997.
10
See Glynn v Margetson [1893] AC 351; Leduc v Ward (1889) 20 QBD 475; Frankel v
MacAndrews & Co. [1929] AC 545.

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 11
Scaramanga v Stamp (1880) 5 CPD 295.
12
J & E Kish v Charles Taylor & Sons & Co. [1912] AC 604.
13
Art. IV Rule 4.
14
[1932] AC 328.
15
[1983] 1 Lloyd’s Rep 498.
16
Joseph Thorley v Orchis SS Co. [1907] 1 KB 660; Morrison v Shaw Savill [1916] 2 KB
783; US Shipping Board v Bunge & Born (1925) 42 TLR 174; Hain Steamship v Tate & Lyle
(1936) 41 Com Cas 350.
17
Photo Production v Securicor [1980] AC 827; Kenya Railways v Antares Co. Pte Ltd (The
Antares No. 1) [1987] 1 Lloyd’s Rep 424 (CA).
18
Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The ‘Kapitan Petko Voivoda’)
[2003] EWCA Civ 451, [2003] 2 Lloyd’s Rep 1 (CA).
19
(1863) 3 B & S 751, 122 ER 281 (Court of Exchequer Chamber).
20
Bentsen v Taylor Sons & Co. (No. 2) [1893] 2 QB 274 (CA).
21
Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos)
[1971] 1 QB 164 (CA); see also Bunge Corporation New York v Tradax Export SA [1981] 1
WLR 711 (HL).
22
Pennsylvania Shipping v Compagnie Nationale de Navigation (The ‘Vendémiaire’) [1936]
2 All ER 1167.
23
(1863) Hurl & C 750, 159 ER 310 (Court of Exchequer).
24
Cosmos Bulk Transport Inc. v China National Foreign Trade Transportation Corporation
(The Apollonius) [1978] 1 Lloyd’s Rep 53.
25
Hongkong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha Ltd (The Hongkong Fir) [1961]
2 Lloyd’s Rep 478 (CA).
26
Compagnie Générale Maritime v Diakan Spirit SA [1982] 2 Lloyd’s Rep 574.
27
(1877–8) LR 3 CPD 163 (CA).
28
(n 24).
29
Triton Navigation Limited v Vitol SA (The Nikmary) [2003] EWCA Civ 1715 (CA).
30
Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Co. for
Agricultural Products [1961] AC 135, [1960] 1 Lloyd’s Rep 623 (HL).
31
Glencore Grain Ltd v Goldbeam Shipping Inc.; Goldbeam Shipping Inc. v Navios
International Inc. (The Mass Glory) [2002] EWHC 27 (Comm).
32
Universal Cargo Carriers Corp. v Citati No. 1 [1957] 2 QB 401.
33
Sueton D Grant & Co. v Coverdale Todd & Co. (1883–4) LR 9 App Cas 470 (HL).
34
(1868) LR 3 QB 412 (Court of Exchequer Chamber).
35
Wallems Rederij A/S v Wm H Muller & Co. (Batavia) [1927] 2 KB 99.
36
Brass v Maitland (1856) 6 El & Bl 470, 119 ER 940.
37
See also the Merchant Shipping (Dangerous Goods and Marine Pollutants) Regulations
1997, reg. 1(2).
38
Effort Shipping Co. Ltd v Linden Management SA (The Giannis NK) [1998] AC 605 (HL).

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 39
Mitchell Cotts & Co. v Steel Bros & Co. Ltd [1916] 2 KB 610.
40
Bunge SA v ADM Do Brasil Ltda [2009] EWHC 845 (Comm), 2 Lloyd’s Rep 175.
41
Leeds Shipping Co. v Société Française Bunge SA (The Eastern City) [1958] 2 Lloyd’s
Rep 127 (CA).
42
Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc. (The Reborn)
[2009] EWCA Civ 531, [2009] 2 Lloyd’s Rep 639 (CA).
43
Atkins International HA of Vaduz v Islamic Republic of Iran Shipping Lines (The AJP
Priti) [1987] 2 Lloyd’s Rep 37 (CA).
44
Kodros Shipping Corporation v Empresa Cubana de Fletes (The Evia No. 2) [1982] 2
Lloyd’s Rep 307 (HL).
45
Tage Berlund v Montoro Shipping Corp. Ltd (The Dagmar) [1968] 2 Lloyd’s Rep 563.
46
[1956] AC 266 (PC).
47
Islander Shipping Enterprises SA v Empresa Maritima Del Estado SA (The Khian Sea)
[1979] 1 Lloyd’s Rep 545 (CA).
48
Unitramp SA v Garnac Grain Co. Inc. (The Hermine) [1979] 1 Lloyd’s Rep 212 (CA).
49
GW Grace & Co. Ltd v General Steam Navigation Co. Ltd [1950] 2 KB 383.
50
Limerick Steamship Co. Ltd v WH Stott & Co. Ltd [1921] 2 KB 568.
51
Pearl Carriers Inc. v Japan Line Inc (The Chemical Venture) [1993] 1 Lloyd’s Rep 508.
52
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp. of India (The Kachenjunga)
[1987] 2 Lloyd’s Rep 509.
53
Metcalfe v Britannia Ironworks (1877) 2 QBD 423.
54
The Owners of the SS Athamas v Dig Vijay Cement Company Ltd (The Athamas) [1963] 1
Lloyd’s Rep 287 (CA).
55
See Behn v Burness (n 19)—ship’s position inaccurately described; The Mihalis Angelos
(n 21)—ship’s expected date of readiness inaccurately stated.
56
Louis Dreyfus & Co. v. Lauro (The Verbania) (1938) 60 LlL Rep 94.
57
Monroe Bros Ltd v Ryan [1935] 2 KB 28 (CA).
58
Dunlop Pneumatic Tyre Co. Ltd v New Garage & Motor Co. Ltd [1915] AC 79 (HL).
59
Compania Naviera Maropan SA v Bowaters Lloyd Pulp and Paper Mills Ltd (The Stork)
[1955] 2 QB 68 (CA).
60
(n 2).
61
Federal Commerce & Navigation Co. Ltd v Tradax Export SA (The ‘Maratha Envoy’)
[1978] AC 1 (HL).
62
Compania Naviera Termar SA v Tradax Export SA [1966] 1 Lloyd’s Rep 566 (HL).
63
Aldebaran Compania Maritima SA Panama v Aussenhandel (Zurich) AG (The Darrah)
[1977] AC 157 (HL).
64
Bulk Transport Group Shipping Co. Ltd v Seacrystal Shipping Ltd (The Kyzikos) [1989]
AC 1264, [1989] 1 Lloyd’s Rep 1 (HL).
65
Nereide SpA di Navigazione v Bulk Oil International (The Laura Prima) [1981] 3 All ER
737, [1982] 1 Lloyd’s Rep 1 (HL).

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 66
K/S Arnt J Moerland v Kuwait Petroleum Corporation (The Fjordaas) [1988] 2 All ER
714, [1988] 1 Lloyd’s Rep 336.
67
Palm Shipping Inc. v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500.
68
PV Christensen v Hindustan Steel Ltd (The Maria LF) [1971] 1 WLR 1369, [1971] 1
Lloyd’s Rep 395.
69
Compania de Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB
264 (CA).
70
Ceylon v Société Franco Tunisienne d’Armement Tunis (The Massalia No. 2) [1960] 2
Lloyd’s Rep 352.
71
Shipping Developments Corp. v V/O Sojuzneftexport (The Delian Spirit) [1972] 2 QB 103
(CA).
72
Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1
Lloyd’s Rep 507 (CA).
73
Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] EWCA Civ 1068,
[2002] 2 Lloyd’s Rep 487 (CA).
74
Galaxy Energy International Ltd v Novorossisk Shipping Co. (The Petr Schmidt) [1998] 2
Lloyd’s Rep 1.
75
Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur) [2002] 1 Lloyd’s Rep 786.
76
Margaronis Navigation Agency Ltd v Henry W Peabody & Co. of London Ltd (The
Vrontados) [1965] 2 QB 430 (CA).
77
Owners of the Nolisement v Bunge y Born [1917] 1 KB 160 (CA).
78
Argonaut Navigation Co. Ltd v Ministry of Food (The Arbobec) [1949] 1 KB 572.
79
Pounds per square inch.
80
An array of valves on deck at the ship’s side to which the cargo hoses are connected for
the purposes of loading and discharging.
81
Aktieselskabet Reidar v Arcos [1927] 1 KB 352.
82
Pyrene Co. Ltd v Scindia Steam Navigation Co. Ltd [1954] 2 QB 402; principle aff’d in
GH Renton & Co. Ltd v Palmyra Trading Corp. of Panama (The Caspiana) [1957] AC 149
(HL) and in Jindal Iron & Steel Co. Ltd v Islamic Solidarity Shipping Co. Jordan Inc. (The
Jordan II) [2004] UKHL 49.
83
Dakin v Oxley (1864) 15 CB (NS) 646, 143 ER 938.
84
Hopper v Burness (1875–6) LR 1 CPD 137.
85
Asfar & Co. v Blundell [1896] 1 QB 123 (CA).
86
Bank of Boston Connecticut (formerly Colonial Bank) v European Grain & Shipping Ltd
(The Dominique) [1989] AC 1056, [1989]1 Lloyd’s Rep 431 (HL).
87
Henriksens Rederi A/S v Centrala Handlu Zagranicznego (CHZ) Rolimpex (The Brede)
[1974] QB 233, [1973] 2 Lloyd’s Rep 333 (CA); Aries Tanker Corp. v Total Transport Ltd
(The Aries) [1977] 1 WLR 185, [1977] 1 Lloyd’s Rep 334 (HL).
88
Adamastos Shiping Co. Ltd v Anglo Saxon Petroleum Co. Ltd [1959] AC 133 (HL).
89
International Association of Independent Tanker Owners.
90
Dolphin Hellas Shipping SA v Itemslot (The Aegean Dolphin) [1992] 2 Lloyd’s Rep 178.

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 91
Losinjska Plovidba Brodarstovo DD v Valfracht Maritime Co. Ltd and another [2001] 2
Lloyd’s Rep 17.
92
K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp. (The Saga Cob) [1992] 2
Lloyd’s Rep 545 (CA).
93
Pearl Carriers Inc. v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508.
94
The Saga Cob (n 93) 551 per Parker LJ.
95
Dow Europe SA v Novoklav Inc. [1998] 1 Lloyd’s Rep 306.
96
Skibsaktieselskapet Snefonn v Kawasaki Kisen Kaisha Ltd (The Berge Tasta) [1975] 1
Lloyd’s Rep 422.
97
Similarly, there is an ‘underlap’ where the charterers redeliver the ship before the
expiry of the charter period.
98
Alma Shipping Corp. of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115.
99
Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos
II) [1997] 1 Lloyd’s Rep 404.
100
Coordinated Universal Time (UTC) is the primary time standard by which the world
regulates clocks and time. For most common purposes, UTC is synonymous with GMT.
101
Ove Skou v Rudolf A Oetker (The Arctic Skou) [1985] 2 Lloyd’s Rep 478.
102
Tenax Steamship Co. v Owners of the Motor Vessel Brimnes (The Brimnes) [1973] 1
WLR 386, [1972] 2 Lloyd’s Rep 465.
103
Mardorf Peach & Co. Ltd v Attica Sea Carriers Corp of Liberia (The Laconia) [1977] AC
850, [1977] 1 Lloyd’s Rep 315 (HL).
104
Afovos Shipping Co. SA v R Pagnan & Fratelli (The Afovos) [1983] 1 WLR 195, [1983] 1
Lloyd’s Rep 335.
105
Actis Co. v Sanko Steamship Co. (The Aquacharm) [1980] 2 Lloyd’s Rep 237.
106
Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine SA (The Marika M)
[1981] 2 Lloyd’s Rep 622.
107
Navigas International v Trans-Offshore Inc (The Bridgestone Maru (No. 3) [1985] 2
Lloyd’s Rep 62.
108
Federal Commerce & Navigation Co. Ltd v Molena Alpha Inc. (The Nanfri) [1978] QB
927, [1978] 2 Lloyd’s Rep 132.
109
Ibid.
110
Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] EWHC 735
(Comm), [2005] 2 Lloyd’s Rep 389.
111
Hyundai Merchant Marine Co. v Gesuri Chartering Co. (The Peonia) [1991] 1 Lloyd’s
Rep 100.
112
Timber Shipping Co. SA v London and Overseas Freighters [1972] AC 1, [1971] 1
Lloyd’s Rep 523 (HL).
113
Transfield Shipping Inc. v Mercator Shipping Inc. (The Achilleas) [2008] UKHL 48,
[2008] 2 Lloyd’s Rep 275 (HL).
114
Shipping Corp. of India Ltd v NBB Niederelbe Schifffahrtsgesellschaft GmbH (The
Black Falcon) [1991] 1 Lloyd’s Rep 77.
115
(2000) Lloyd’s Maritime News Letter 549.

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 116
Chiswell Shipping and Liberian Jaguar Transports Inc. v National Iranian Tankers Co.
(The World Symphony and The World Renown) [1992] 2 Lloyd’s Rep 115 (CA).
117
Torvald Klaveness A/S v Arni Maritime Corp. (The Gregos) [1994] 1 WLR 1465, [1995] 1
Lloyd’s Rep 1 (HL).
118
[2010] EWHC 903 (Comm).
119
Golden Strait Corp. v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007]
UKHL 12, [2007] 2 Lloyd’s Rep 164 (HL).
120
[2012] EWHC 1077 (Comm).
121
But see Kuwait Rocks Co. v AMN Bulkcarriers Inc. (The ‘Astra’) [2013] EWHC 865
(Comm) where Mr Justice Flaux held (obiter) that the obligation to pay hire on time under
the NYPE charterparty form was a condition.
122
ENE 1 Kos Ltd v Petroleo Brasileiro SA Petrobras (The Kos) [2012] UKSC 17, [7] per
Lord Sumption.
123
(1948) 82 LlL Rep 43.
124
Scandinavian Trading Tanker Co. AB v Flota Petrolera Ecuatoriana (The Scaptrade)
[1983] 2 AC 694, [1983] 1 Lloyd’s Rep 146 (HL).
125
Dry Bulk Handy Holding Inc. v Fayette International Holdings Ltd [2012] EWHC 2107
(Comm).
126
Aegnoussiotis Shipping Corp. of Monrovia v Kristian Jebsens Rederi of Bergen AS (The
Aegnoussiotis) [1977] 1 Lloyd’s Rep 268.
127
Empresa Cubana de Fletes v Lagonisi Shipping Co. Ltd (The Georgios C) [1971] 1 QB
488, [1971] 1 Lloyd’s Rep 7 (CA).
128
The Aegnoussiotis (n 126).
129
Sig Bergesen DY & Co. v Mobil Shipping and Transportation Co. (The Berge Sund)
[1993] 2 Lloyd’s Rep 453 (CA).
130
Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1
Lloyd’s Rep 412 (CA).
131
Kuwait Petroleum Corp. v I&D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541
(CA).
132
(1935) 50 LlL Rep 185.
133
Hansen-Tangens Rederi III A/S v Total Transport Corp. (The Sagona) [1984] 1 Lloyd’s
Rep 194.
134
See n 105.
135
Action Navigation Inc. v Bottiglieri di Navigatione SpA (The Kitsa) [2005] EWHC 177
(Comm), [2005] 1 Lloyd’s Rep 432.
136
See n 122.
137
Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC
638 (HL).
138
Ibid, 646 per Lord Bingham.

From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.
Subscriber: Gujarat National Law University; date: 10 November 2020