Utmost Despatch & Utmost Clarity - CSSA v Mitsui OSK
Posted on 15th April 2019 at 18:41
Utmost despatch and utmost clarity - CSSA Chartering and Shipping v Mitsui OSK (the "PACIFIC VOYAGER")  EWCA Civ 2413
Seeking as ever to optimise scheduling, owners often voyage charter out while a vessel is still performing a previous fixture, and will sometimes enter into an intermediate charter which they plan to complete beforehand.
Charterers’ and often sellers’ arrangements depend on valid arrival or loading dates, and owners must ensure that all such are genuine and reasonable. In giving them they must allow for transit, cargo operations and all ancillary matters, and will sometimes be held to account under familiar provisions and well established principles.
1. if a fixture says that owners will proceed with all convenient speed (or, often, with the utmost despatch) to a loadport, and also gives an ETA or ETRL, owners have an absolute obligation to start the approach voyage at a time when it is reasonably certain that the vessel will arrive on or around the given date;
2. any charterparty exceptions only apply once the approach voyage has begun.
A vessel might be delayed, in port or transit, for many reasons, including congestion, bad weather, breakdown or even casualty. Which side bears the risk of operational difficulty depends on what has been promised, or excluded, by the fixture wording. The "PACIFIC VOYAGER" is a good example of that.
Still laden under a prior charterparty, the vessel was fixed on an amended Shellvoy5 form for carriage to the FE, and had to "perform her service with utmost despatch and ... proceed to [Rotterdam] … and ... load ... ". This fixture had no loadport ETA or ETRL, but (by incorporating the previous charter itinerary for the Red Sea, eastern Mediterranean and English Channel) it gave an ETA at that final disport, near Le Havre.
During Suez Canal transit and through no fault of owners the vessel hit a submerged object. She needed extensive repairs and charterers terminated and sought damages. Subject to liability these were agreed at $1.2 million.
Before this decision, it was unclear whether the absolute obligation at (1) above in fact arose where no loadport ETA or ETRL had been given. So the question was whether, in those circumstances, such nevertheless existed, and by reference to (a) the previous itinerary or perhaps (b) the cancelling date.
It was agreed that (2) above meant that owners could not invoke any charterparty exception.
The trial Judge ruled that the various ETAs under the prior fixture equated to estimates on which charterers could rely in identifying the commencement of their chartered service, and in order to make loading arrangements, and were thus meant to perform the same function as a loadport ETA.
Owners were therefore under an absolute obligation to start the approach voyage to Rotterdam after a reasonable time for discharging at her final disport under the previous fixture.
Court of Appeal
Owners argued that:
(a) wording that differed from that in the decided cases meant a different outcome - here there was no loadport ETA or ERTL, and the utmost despatch obligation was expressly “subject to the terms of this charter”; so
(b) such could only arise when the vessel left the final disport under her prior charter; but
(c) it never arose, as that never happened (charterers countered that, if this was right, the utmost despatch obligation would not apply even if failure to leave the last disport had been entirely owners’ fault);
(d) just as for the common shorthand “bss iagw/wp”, the itinerary was simply to highlight that the vessel was still performing under a prior charterparty.
The Court of Appeal ruled that:
1. the itinerary was very important to charterers, and did not merely signpost that the vessel was still subject to a previous charter;
2. nor did “bss iagw/wp”, which instead emphasised that (as anyway required) the estimates were honest and on reasonable grounds, and owners got no help from “subject to the provisions of this charter”;
3. likewise, the utmost despatch obligation is important and is intended to assist a charterer. The prior itinerary plainly showed that the vessel was not to sail for the loadport "forthwith", and it could also be used to determine the alternative obligation, which was to start that approach voyage when the vessel would reasonably be supposed to have left her last disport after a reasonable time for discharging.
Owners were therefore in breach of their obligation, since they did not sail for Rotterdam, then or at any time, and were liable for $1.2 million.
(The trial judge referred to the cancelling date as another alternative, but the Court of Appeal expressed doubt on that.)
Sequential and intermediate fixtures are common, and will very often refer to a current itinerary. This decision shows that, even if there is no ETA or ETRL, if owners want to make the beginning of a charter service contingent on the conclusion of the prior one, very clear words will be needed.
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