England and Wales High Court (Commercial Court) Decisions

IN THE MATTER OF AN ARBITRATION APPLICATION
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Folio No: 2001/515 Royal Courts of Justice Strand, London, WC2A 2LL
		21 December 2001

Mr Justice Andrew Smith :

1. This is an appeal with leave of the Court under section 69 of the Arbitration Act 1996. The award under appeal is a final award dated 5 April 2001 given by Messrs Colin Peerless, William Robertson and Bruce McKenzie, in which they awarded Stolt Tankers Inc. the sum of US$146,580.38 in respect of a demurrage claim. The question of law for decision has been formulated as follows: "whether (in the absence of any relevant provision in the governing voyage charterparty) laytime or time on demurrage is interrupted because, while the vessel is waiting for charterers' berth to become available, she engages in operations in respect of cargo carried under another charterparty". Although questions have been raised by the respondents about the precise formulation of this point of law in the course of argument, it suffices for present purposes.
2. The appellants are Stolt Tankers Inc., the owners of the vessel the "Stolt Spur". The Respondents are Landmark Chemicals SA, the charterers. The Stolt Spur is a parcel tanker, that is, a tanker vessel designed or adapted to carry several liquid cargoes at the same time. The owners entered into a charterparty of the vessel with the charterers on an amended Asbatankvoy form dated 9 July 1996 for the carriage of a minimum of 4,000 metric tonnes of paraxylene (5% more or less at the charterer's option). The contractual voyage was from Rotterdam to "one safe anchorage Bombay (Mumbai) or one safe berth Pirpau jetty, Bombay at Charterer's option". Demurrage was payable at the rate of US$18,500 per day for any period that loading, discharging and used laytime exceeded the laytime of 80 hours allowed to the charterers. However, the Asbtankvoy form provided that "The Charterer shall not be liable for any demurrage for delay caused by strike, lockout, stoppage or restraint of labor for Master, officers and crew of vessel or tugboat or pilots" and also provided for demurrage at half rate in specified circumstances which do not arise in this case. As to the commencement of laytime when the vessel arrives at a discharge port, the Asbatankvoy form provides that it runs from six hours after receipt by the charterers or their agent of Notice of Readiness or, if earlier, from the vessel's arrival in berth. It continues until the hoses have been disconnected. This charterparty also included various "Landmark Additional clauses", but it is not suggested in the Award or in the submissions made to me that they deal with the question which I have to decide.
3. The dispute concerns the calculation of laytime and demurrage after notice of readiness was given at Mumbai. The essential facts are as follows:

a) The vessel arrived off Mumbai and tendered notice of readiness at 09.30 on 3 September 1996. That notice of readiness was, as the Arbitrators held, effective.

b) The vessel's intended berth, Pirpau Jetty, could not be reached on arrival because of congestion. Shortly after the vessel's arrival, the agents informed the owners that the berth would not be free for about fifteen days. In the event, it was not available until 20 September 1996.

c) The vessel left her anchorage (which was designated "anchorage B") at 08.18 on 4 September 1996. She shifted to what was designated "anchorage C-2" in order to discharge cargo carried under other concurrent charterparties. After completion of discharge of that cargo on 7 September 1996, the vessel proceeded out to sea for tank cleaning. She returned to anchorage B at 10.06 on 10 September 1996. This period from 08.18 on 4 September to 10.06 on 10 September 1996 has been referred to as the "first period".

d) At 12.18 on 16 September 1996, the vessel again left anchorage B and shifted to an inner anchorage position designated TA-1, in order to load a cargo of rape acid oil for other charterers. She returned to anchorage B at 12.00 on 17 September 1996. This period from 12.18 on 16 September 1996 to 12.00 on 17 September 1996 has been referred to as the "second period".

e) The vessel commenced shifting to Pirpau Jetty to discharge the charterer's cargo at 11.45 on 20 September 1996 and disconnected hoses after completion of discharge at 09.00 on 21 September 1996.

4. The Arbitrators found that laytime was interrupted during the first period, and the vessel being on demurrage from 01.08 hours on 12 September 1996, the time on demurrage was interrupted during the second period. The effect of their decision on these points was to disallow the owners' demurrage claim as to US$124,123.
5. The Arbitrators express their reason for this decision as follows. (Although the drafting has gone slightly awry, the thrust of their thinking is, I think, clear.) "We found for the Charterers on this point since it is clearly wrong that laytime can count against them when the vessel was engaged in cargo operations for third parties elsewhere. In fact, the laytime against the charterers ceased at 12.18 hours on 16 September when the vessel left the outer anchorage and proceed to TA-1 inner anchorage for the purposes of loading the rape acid oil. Nor could laytime resume until the vessel had reached Mumbai anchorage "B" at 10.06 hours on 10 September because, in the intervening period, she has proceeded out to sea and engaged in tank cleaning. During that period, it is clear that she was not available to Charterers for discharging the subject cargo".
6. The owners' complaint is that, the Arbitrators, having held that the vessel's intended berth was unavailable because of congestion during the first and second periods, erred in law when they held that, because the vessel was unavailable for discharge during the first and second period, those periods do not count for the purpose of laytime and time on demurrage. They say that the Tribunal paid no proper regard to the cause of the vessel's delay. Their case is that the relevant principles of law are accurately stated in Cooke on Voyage Charters (1998) at p.328: "If delay is caused by a breach of charter by the shipowner, then clearly liability for demurrage does not accrue. The same is true even where an exceptions clause would relieve the shipowner from liability in damages for that breach: Blue Anchor Line v Alfred C. Toepfer International (The Union Amsterdam) [1982] 2 Lloyd's Rep. 432. For this principle to apply, there must be both wrongful conduct by the shipowner, or by someone for whom he is responsible, and that conduct must be the effective cause of the delay. If either element is lacking, demurrage continues to accrue, even if the charterer has been prevented from performing his part of the loading or discharging process…Where the shipowner's conduct does not amount to a breach (whether excepted or not) but it is not justifiable as a necessary part of the safe and lawful execution of the loading or unloading process (cf. Houlder v Weir [1905] 2 KB 267 – shifting ballast) and it has the effect of causing the vessel not to be at the disposition of the charterer, demurrage stops accruing for that period, save, it is submitted, insofar as the shipowner can show that no loading or unloading (as the case may be) would have taken place during that period: see Ropner Shipping v Cleeves Western Valley Anthracite Collieries [1927] 1 KB 879…"
7. Schofield in Laytime and Demurrage (4^th Edition) is to broadly similar effect: "It is well established that while a charterer's obligation to complete loading or discharging within the prescribed lay times is unconditional, nevertheless lay time will not run whilst there is a delay caused by the fault of the ship owners or those for whom they are responsible. In other words, the delay and the cause of the delay must be contemporaneous…" (at para 4.17). Again, when discussing the decision of the Court of Appeal in Ropner Shipping Company Limited v Cleeves Western Valleys Anthracite Collieries Limited [1927] KB 879, (1927) 27 Lloyd's Law Rep. 317 (which I shall consider below), Schofield suggests that laytime or time on demurrage would continue to run if, the charterers not having cargo available to load, the owners removed the vessel from a waiting berth to bunker, "provided, of course, she was an Arrived ship and providing her removal did not result in a loss of turn" (para 4.34).
8. The charterers, on the other hand, do not accept these passages in Cooke and Schofield. They contend that the law is correctly stated in Scrutton on Charter Parties (20^th Edition) in the following passage (italics added): "Demurrage becomes payable when the lay-days allowed for loading or unloading have expired. Such lay-days begin when the ship arrives at the place agreed upon in the charter for the commencement of lay-days, and is there ready to proceed to her loading or discharging berth and prepared to load or discharge when she gets there. They run continuously in the absence of express agreement or custom of the port to the contrary from that date. When the lay-days have expired, demurrage in the absence of express agreement runs continuously from the end of the lay-days until the loading or discharging is completed. Nor is the charterer or bill of lading holder excused by the absence of the ship from the port of loading or by the inability of the ship to load or discharge, e.g. if she is damaged by collision or by any other cause, unless due to the default of the shipowner or covered by an express exception; for the charterer is, on the expiration of the lay-days, in breach of his obligations as to loading or discharging. However, in order to be entitled to claim demurrage, the shipowner is under an obligation to have the vessel ready and available to load or discharge. Thus, if the shipowner for his own purposes removes the vessel from the charterer's disposition, e.g. for bunkering, or if when on demurrage at the first port of loading she is moved to a second loading port named in the charter, no demurrage is payable for the period when the vessel is so removed from the charterer's disposition or is on passage." (at p.302, Article 155).
9. The sentence in italics was introduced into the 20^th Edition of the work which was published in 1996, and is not found in the 19^th Edition, published in 1984. The authority cited in support of it is the decision of Evans J. in Ellis Shipping Corporation v Voest Alpine Intertrading (The Lefthero) [1991] 2 Lloyd's Rep. 599 at p.608.
10. Before I consider that decision, I refer to Halsbury's Laws of England, 4^th Ed Vol 43(2) (1997) (edited by Prof Ivamy and Dr Debattista), which at para 1511 puts the matter thus: "The liability for demurrage is not …suspended where the loading is interrupted by an excepted peril, unless the term expressly so provides. Even if, by reason of a collision or otherwise, the ship is rendered unavailable for loading, or is compelled to leave the port, demurrage is payable for the period while she is under repair or is absent, provided that these events are not due to the voluntary act of the shipowner or to default on his part." Thus, Halsbury, like Scrutton, contemplates that if the vessel is not available to load (or discharge) through the act of the owners, demurrage is not payable, but adds the qualification (perhaps implicit in Scrutton) that the act of the owners must be voluntary.
11. Although these views are expressed in relation to whether demurrage is payable, the same principles must apply to the question whether laytime runs.
12. The "Lefthero" (cit sup) concerned the charterparty of a vessel for a voyage to Bandar Khomeini in 1983, at the time of Iran/Iraq war. Because of the war the pilot refused to take the vessel north of Bushire, and in the end the parties agreed terms under which the cargo was to be discharged there. Discharge at Bushire took longer than it would have taken at Bandar Khomeini, and the first point that arose for decision upon the owners' claim for demurrage was whether the charterers were protected by a provision exempting responsibility for the result of "restraint of princes". Evans J. held that they were. However, the charterers advanced a second defence to the demurrage claim, that the additional period of delay resulted from the owners' own breach of contract in failing to proceed to Bandar Khomeini, and this "default" prevented them from claiming demurrage, even though the breach was excused by the "restraint of princes" provision. Evans J. held that the owners were not guilty of "default" or "fault". However, he continued as follows: "It seem to me that charterers, if they are to succeed on this issue, must rely upon the "wider principle" referred to by Mr Justice Parker, in The Union Amsterdam and which formed the basis of his third reason for rejecting the claim for demurrage in that case. That principle was the basis of the Court of Appeal's judgment in Re Ropner Shipping Co. Ltd. (1927) Ll.L.Rep. 317; [1927] 1 K.B. 879. There, charterers were not liable for demurrage where the shipowners removed the ship to take on bunkers, for reasons unconnected with the charter in question, and there was no finding by the arbitrator that the charterers would not have been able to load, even if the ship had been there.

The authorities show, therefore, that the charterer undertakes an absolute obligation to pay demurrage, subject to exceptions and to "fault", but this depends in its turn, in my judgment, upon the shipowners' obligation to have the vessel ready and able to give discharge in accordance with contract. This cannot be stated as an absolute obligation, for the reasons given in the Cantiere Navale judgment, but it is nevertheless a qualified obligation, non-performance of which will prevent the shipowner from recovering demurrage. Thus, no claim lies when the ship is proceeding from one loading, or discharging, port to another; not because the time on passage is an exception, but because the ship is proceeding on the voyage, not being detained by the charterers, during that period: Breynton v Theodorou & Co. (1924) 19 Ll.L. Rep. 409. The wider principle underlying the authorities is like the larger theme which goes through the Enigma Variations, but which is never played."

On the basis of this "wider principle" and because Bushire never became the contractual destination, in any relevant sense, Evans J. held that the longer time taken to complete discharge was caused by the ship's failure to reach Bandar Khomeini and that the owners could not hold the charterers liable for the resultant delay.

13. In the Court of Appeal [1992] 2 Lloyd's Rep. 109, the decision of Evans J. about demurrage was reversed. The Court of Appeal took a different view of the effect of the "restraint of princes" provision and was not persuaded by the charterers that there was "fault" on the part of the owners in that the vessel did not reach Bandar Khomeini. Lloyd LJ. (at page 114) distinguished the Ropner Shipping case as follows: "In that case the vessel was withdrawn from the service of the charterers for the owners' own purposes, namely, taking on bunkers. In the present case there was no question of removing the vessel from the service of the charterers for the owners' purposes or for any other purpose". With regard to the "wider principle" canvassed by Evans J., Lloyd LJ. simply records that the charterers did not seek to rely upon it before the Court of Appeal, and the other members of the Court do not comment upon it.
14. Mr T Houghton of Holmes Hardingham, who appeared for the owners before me, disputed the "wider principle" stated by Evans J in the "Lefthero" and reflected in Scrutton. He submitted that it is not justified by the decision in the Ropner Shipping case to which Evans J refers, and argued that it is contrary to the principle established in Budgett v Binnington, [1891] 1 QB 53 and re-stated in subsequent authorities that, in the absence of some relevant contractual provision, once a ship is arrived, laytime or time on demurrage will run unless the shipowner or those for whom he is responsible prevent the charterer from loading or unloading cargo. I must consider the authorities on which he relies in some detail.
15. In Budgett & Co. v Binnington, [1891] 1 QB 35, the Court of Appeal considered whether the "freighters" were liable to pay the owners demurrage when a strike of stevedores at the port of discharge so interrupted unloading that it could not be resumed until after the expiration of the laydays. It was decided at first instance that demurrage was payable. On appeal it was argued that "it is a condition precedent to the claim for demurrage that the shipowners should be ready to perform their duty under the contract in assisting to unload the ship" (cit sup at p.36). That argument was rejected by the Court of Appeal. Lord Esher MR said that the only condition attaching to the obligation to pay demurrage was "that the laydays shall have commenced and run out, and, that condition being fulfilled, the obligation arises. Directly the shipowner shows that state of facts, he has proved his case, and it lies on the other side to show, not only there has been no breach of contract, but that he is excused from performance – in other words his case is one of confession and avoidance and the whole burden of proof is on him. Speaking generally of all contracts a breach is excused where the party committing the breach has been prevented by the other side from carrying out his contract. Here the condition is that the cargo should be out of the ship in a certain number of days; and if the shipowner, by any act of his, has prevented the discharge, then, though the freighter's contract is broken, he is excused." The Court considered that the owners had not failed in their duty to co-operate in the discharge of the cargo through any default of their own or persons for whom they were responsible. Since the owners were not responsible for the act of the striking workmen of the stevedore, there was nothing to relieve the freighters from the "absolute contract to pay demurrage".
16. In Houlder v Weir [1905] 2 KB 267, a decision of Channel J to which Cooke refers, discharge of the cargo was interrupted by the owners taking on ballast. The charterers were liable for demurrage in respect of time so spent because what the owners did was not in breach of any obligation but "a thing necessary to be done" to ensure the safety of the remainder of the cargo and the vessel. Channel J considered that this was tantamount to the discharge being interrupted by some act beyond the owners' control.
17. The law as established in Budgett v Binnington is reflected in the succinct statement of the position of Lord Shaw of Dunfermline in William Alexander & Sons v Aktieselskabet Dampskibet Hansa [1920] AC 88 at p.96: "The risk of vicissitudes which prevent the loading or discharge of cargo within the stipulated lay-days lies unconditionally with the charterer. This is the prescription of the general law. To avoid its application either (1) the contract of parties must be absolutely clear; or (2) it must be established that the failure of the charterer's duty arose from the fault of the shipowners or those for whom they are responsible". The case concerned a claim for demurrage as a result of slow discharge at Ayr because of a shortage of labour at the port. It was the custom of the port for discharge to be a joint venture in that it was the responsibility of the owners to put the cargo on the quay and of the charterers to remove it from there. The House of Lords, like the Second Division of the Court of Session, considered that the shortage of labour was not the fault of the owners, and there was no fault on their part.
18. The next case to which I should refer is Cantiere Navale Triestina v Russian Soviet NAFSA Export Agency [1925] 2 KB 172. It concerned a vessel which, after she had arrived at Batoum and Notice of Readiness had been given, was ordered out of port and Russian waters by the authorities as a result of a dispute between the Russian and Italian Governments. After permission was obtained for her to load at Batoum, she returned after being absent from port for something over two weeks. The owners' claim for demurrage, on the basis that lay-days continue to run on the absence, was successful. The Court of Appeal expressed their disagreement with a statement in the 11^th Edition of Scrutton on Charterparties (Article 129) to the effect that: "If the ship has to be removed from the port or becomes unfit for loading or discharging, e.g. by reason of a collision, the period of such removal or unfitness will be cut out from the period demurrage". Pollock MR said (at p.197) that he "could not accept so wide a proposition" which, he said, ran counter to the law laid down in the William Alexander case.
19. Atkin LJ said (at p.205), "…in a charter with a fixed time for loading I should have thought there could be no doubt at all that demurrage was payable on the principle, for which there is ample authority, that in such a charter there is an absolute obligation on the charterer to load the vessel within the time that is stipulated for loading her, and that he is not excused from doing that by any cause unless it is one for which he has stipulated in a properly drawn exception, or unless the failure to load arises by reason of the shipowners' default". He went on (at p.206), "It is said that the time should not run while the vessel was away from the port, because during that time obviously the vessel was not ready and willing to load. That appears to be disposed of by the authority of Budgett & Co. v Binnington & Co., which indicates that it is not an implied condition of the right of the shipowner to demurrage in these circumstances that the ship should be ready and willing to load"; and (at p.207): "…if one comes to think of it, there can be no reason why the absence of the ship from the harbour, once the lay-days have begun to run, without any fault on the part of the owner, should prevent the lay-days from continuing to run and the ship going on demurrage. A ship may be prevented from loading by causes quite outside the will of either the shipowner or the charterer and yet the charterer is liable for demurrage. It appears to me to make no difference whether the vessel is in harbour fifty yards away from a berth and cannot get to it or whether she is fifty miles away. In either case the charterer has undertaken to load and is liable for the delay, because he has entered into a contract to load the ship within a certain time, and if he does not do so he pays a fixed sum for the delay."
20. Similarly Sargant LJ, at page 213, having observed that there was "an absolute or unconditional contract by the charterers to load and unload within a definite number of hours", said that "the mere absence of the vessel from port during the lay days does not…exclude this absolute contract".
21. The case therefore shows that the principle laid down in Houlder v Weir applies even though the vessel has left port. If this comes about through no fault of the owners but through something beyond their control or their act was "a thing necessary to be done", it does not prevent laydays running or demurrage accruing. Mr Houghton observes that Atkin LJ says that the charterer is excused only if the failure to load arises by reason of the shipowners' default. That is undoubtedly true, but on the facts in Cantiere he did not need to explore the nature of the causal connection required.
22. This was the law when the Court of Appeal decided Ropner Shipping Company Limited v Cleeves Western Valleys Anthracite Collieries Limited [1927] 1 KB 879, (1927) 27 Lloyds' Law Rep 317. The case was one in which, after the vessel had come on demurrage, the owners removed her from berth in order to bunker. Had bunkering been carried out during laytime, then the time taken would have been excluded under the terms of the charterparty. The owners argued that they were entitled to demurrage in respect of the time that she was shifting to bunker. At first instance (1926) 26 Lloyd's Rep 58, Roche J had considered that the charterers were not liable for demurrage because it did not lie in the mouth of the owners to say that their act was not wrongful. He went on to refer (at p.61) to the owners' argument that "that the vessel was withdrawn from the actual place or position in which she was loading, but that had not she been so withdrawn she would not have been loaded any sooner or any better", and said that, "That contention would have been a formidable one had there been the necessary facts to support it".
23. The Court of Appeal did not decide the case on that basis. Instead, Bankes LJ, having considered that cases of Budgett v Binnington, Houlder v Weir, and Cantiere v Russian SNEA, said that that owners could not claim that their vessel was being detained by the charterers and therefore they were not entitled to demurrage during the time when for their own convenience they had removed the vessel for bunkering. Sargant LJ put it thus: "In order that demurrage may be claimed by the owners, they must at least do nothing to prevent the vessel from being available and at the disposal of the charterers for the purpose of completing the loading of the cargo" (at p. 888, p.302).
24. Bankes LJ insisted that the case fell to be decided on the basis that the owners had simply bunkered for their own convenience. He held that it did not lie in the mouths of the owners to say that the vessel was detained by the charterers and claim demurrage. The charterers' counsel, Mr Jowitt QC and Mr Dickinson, had said in argument that they did "not question the proposition that if the charterers have no cargo ready, the owners can bunker during the demurrage period and make the charterers liable for the whole time" (p.84). Nevertheless Bankes LJ was emphatic that he would not express an opinion about the position if bunkering had taken place "in order to trim the vessel, or for some equally good reason, or was done because no cargo was available for loading" (p.887, p.319). He left entirely open the question which arises in this case, whether the charterers are liable for demurrage in respect of time when the vessel used the time to bunker because, or when, the charterer could not have loaded cargo in any event.
25. Sargant LJ agreed with Bankes LJ on the point that arose for determination. However, with regard to the position if cargo was not available, he said this (at p.888): "We have had a very ingenious argument to the effect that the charterers must show not only that the vessel was rendered unavailable for them but must also show that they had cargo ready to load upon the vessel. On that point I agree with Roche J. It seems to me that when it is shown that, by the act of the owners, the vessel has been placed in the position which renders her unavailable for the charterers' purposes in loading the cargo, it is for the owners who claim demurrage to show that the charterers had not in fact cargo available for loading during the period the vessel used for bunkering".
26. The third member of the court, Avory J, simply indicated his agreement with the other members of the court. He cannot be regarded as endorsing Sargant LJ's obiter dictum.
27. Therefore, both Roche J and Sargant LJ apparently considered that if the owners had discharged the burden of proving that cargo was not available, then the charterers would have been liable for demurrage notwithstanding the vessel was "unavailable for the charterers' purposes". However, their views were expressed by way of obiter dicta.
28. The owners also draw to my attention the decision of Atkinson J. in Petrinovic & Co Limited v Mission Francaise Ds Transport Maritime (1941) 71 Ll. Rep. 208. In this case a vessel departed from Bordeaux in June 1940 when the German occupation was imminent with only part of her cargo discharged. The charterers argued that the departure of the vessel put an end to their obligation to pay demurrage, and Atkinson J. upheld that submission. He went on to say, "It is quite true that a charterer may continue to be liable to pay demurrage, although the discharging is interfered with by, for example, temporary or by voluntary departures of the ship, such as being driven out to sea, or some temporary inability of the ship to discharge if, for instance, she is damaged in a collision; but I think it is perfectly clear that the obligation to pay demurrage cannot continue if the ship is taken away finally for her own purpose, for her own safety, under such circumstances as to make it quite clear that there is no intention whatever of her coming back to the port of discharge to enable the discharge to be completed". The owners refer to the reference to "voluntary departures of the ship" as showing that demurrage might continue to be payable even if owners choose to go about fulfilling their own purposes and remove the vessel from port in order to do so. In my judgment, this is reading too much into what Atkinson J said. Since Houlder v Weir and Cantiere (cit sup) it has been established that laytime and demurrage are not necessarily interrupted if an act of the owner, as opposed to an act of a third party or the elements, prevents the vessel being available for cargo operations.
29. Next, the judgment of Lord Denning MR in Overseas Transportation Co v Mineralimportexport (The "Sinoe"), [1972] 1 Ll L R 201, a case about who was responsible for excessive time spent discharging the cargo because the stevedores were incompetent. The decision turned upon the interpretation of the particular charterparty. Mr Houghton cited the case for the statement by Lord Denning MR (at p.205) that, "the shipowners are prima facie entitled to claim demurrage from the charterers because the charterers were under an absolute obligation to unload the ship in the stated time. But, on the other hand, the charterers can resist that claim by showing that it was the shipowners' own fault that the unloading was delayed….". This does not seem to me to add anything to the statements by Lord Shaw in William Alexander and Atkin LJ in Cantiere to which I have referred.
30. Finally, the owners also rely upon the decision of Donaldson J. in Gem Shipping v Babanaft ("The Fontevivo") (1975) 1 Lloyd's Rep. 339. In this case the vessel, which was on a tank vessel voyage charter, arrived at Lattakia in Syria, but after her arrival and when only part of her cargo was discharged, she sailed away because the Master considered the port unsafe owing to war risks. She returned three days later and the issue was whether the time when she was away from her berth counted as part of the laytime. Donaldson J. held (at p.342) that "the mere fact that the shipowner by some act of his prevents the continuous loading or discharging of the cargo is not enough to interrupt the running of the laytime; it is necessary to show also that there was some fault on the part of the shipowner". The issue was whether the discharge of the vessel was prevented by some action on the part of the shipowners and if so whether that action constituted fault on the shipowners' part. Donaldson J concluded that, while the initial burden of proof lay upon the charterers to show that the discharge of the vessel was prevented by some action on the part of the shipowners, they satisfied that by showing that the vessel was removed from berth in the course of discharging, and then the burden was upon the shipowners to justify the action or to show that it was involuntary. In the case before him, Donaldson J concluded that the owners had not shown that.
31. Although the owners relied upon this case to show that there must be fault on the part of the owners which causes the delay, the reasoning of Donaldson J. is that if the owners acted voluntarily in removing the vessel from berth that suffices to prevent demurrage being payable. He does not indicate that there need be any causative link between the action of the owners and the prevention of discharge of the vessel beyond the very fact that the vessel was removed from berth during discharge. It suffices for the charterers to show that the vessel was so removed: the charterers do not need to show that had the vessel not been removed, discharge could have concluded.
32. Relying on these authorities, Mr Houghton submits that laytime or time for demurrage does not cease to run simply because the vessel is not available to load or discharge cargo, nor simply because the owners have by their voluntary act removed the vessel from berth so that she is no longer available. He submits that it is necessary that there be "fault" on the part of the owners. The notion of fault here, of course, arises in the context of the loading and discharging of cargo, which necessarily imposes responsibilities upon both the owners and the cargo interests. Moreover, Mr Houghton accepts that it is not necessary that the fault be of the nature of an actionable wrong: that follows from the decision in Ropner Shipping. "Fault" connotes that "the shipowner has not done his part in regard to something which it was within his power to do". Leeds Shipping Co Ltd v Duncan Fox & Co Ltd (1932) Comm Cas 213 at p.217 per Mackinnon J. But Mr Houghton submits that "fault" here necessarily implies that the owners have prevented the charterers from loading or discharging the vessel. He refers to the judgment of Webster J in Total Transport Corp v Amoco Trading Co (The "Altus"), [1985] 1 Ll L R 423. Having considered the judgment of Donaldson J in The "Fontevivo", Webster J continued, "I would assume, therefore, that laytime can be suspended or interrupted by an act of a shipowner, which has the effect of preventing the completion of loading or the commencement of the voyage, even without a breach of contract on his part, if that act constitutes a fault falling short of a breach of contract, or it lacks lawful excuse".
33. In some cases where there is fault on the part of the owners it is meaningful to consider whether or not it had any causative effect at all on the loading or unloading of the vessel. This is illustrated by the case of IRISL v Ierax Shipping ("The Forum Craftsman"), [1991] 1 Ll L R 81, a case in which cargo was wet damaged through leaking hatch covers for which the owners were responsible, but the charterers failed to establish any causal relationship between that and excessive time spent in discharging the cargo. However, whenever a vessel is not available to the charterers to load or discharge cargo, that necessarily prevents the cargo operations taking place. The real question which is raised by this appeal is whether it matters that there is another cause which would in any event have delayed the cargo operations. In other words, the nature of Mr Houghton's submission is that the act of the owners, if it is to prevent laytime or time for demurrage running, must be the effective cause of the cargo operations not taking place (and this is indeed the view expressed in Cooke on Voyage Charters (cit sup)). It is not sufficient for him that the conduct of the owner was a reason that cargo operations were delayed.
34. Once this is recognised, the owners find little help in the authorities which are to the effect that laytime will run or demurrage accrue unless the failure to load or discharge results from the owners' default. Of the authorities which were cited by the owners and to which I have referred, only the views expressed obiter by Roche J and Sargent LJ in the Ropner Shipping case consider the position where there are concurrent causes of the vessel not loading or unloading. These do provide some support for the owners' argument, but especially in view of the reservation emphatically expressed by Bankes LJ, they are, in my judgment, far from conclusive.
35. Mr Houghton argued that once a vessel is Arrived at her place of discharge, the owners are not thereafter responsible for keeping the vessel ready and available to discharge, and the risk that she is not ready and available is prima facie borne by the charterers. Certainly the risk is borne by the charterers in as much as events outside the control of either owners or charterers do not interrupt laytime or prevent demurrage running, and it is undoubtedly the law that (in the absence of contractual provision to the contrary) the owners are not generally under an absolute obligation to keep the vessel ready and available. As Evans J. pointed out, the owners' obligation is qualified in that they are not in breach of it if they are driven by circumstances from having the vessel ready and available to discharge. In this case there is no suggestion but that the owners chose to use the first and second periods as they did for their own convenience.
36. Evans J in the Lefthero (cit sup) acknowledged that the "wider principle" reflects a qualified, and not an absolute, obligation upon the owners. He also acknowledged that it often does not find expression in the authorities. However, it seems to me that there are first instance judgments other than the Lefthero in which it is recognised. These cases seem to me to support the view of Evans J. that the obligation of the charterers to pay demurrage depends upon the owners fulfilling a qualified obligation to have the vessel ready and able to give discharge in accordance with the contract.
37. In Surrey Shipping Co Limited v Companie Continentale (France) SA (The "Shackleford"), Donaldson J. (at [1978] 1 Ll. L.R. 191) and the Court of Appeal (at [1978] 2 Ll. L.R. 154) considered whether laytime was interrupted under the terms of a charterparty when a vessel was shifting from one berth to another for the purpose of bunkering. (It does not appear from the report how the time spent in bunkering itself was to be treated.) Donaldson J. observed (loc. cit. at page 199) that the point was important because of a "general impression that all shifting time falls to be excluded from laytime", and pointed out that that was not correct. He said that if the shifting occurred after the vessel had become "an arrived" ship, the carrying voyage was at an end, and laytime had begun to count, shifting time would be excluded from laytime only if (a) it was excepted by the terms of the charterparty or by the custom of the port or (b) "the shift is for the shipowner's own purposes and to suit his own convenience, e.g. in order to bunker or repair, and the shift occurs at a time or in circumstances which deprive the charterer of the use of the vessel. If the shift occurs after laytime has expired, similar considerations will apply save that any exception expressed in the charterparty must specifically be directed at demurrage time in order to be operative" (at p.199). He held on the facts of the case that "the shift to the bunkering berth was admittedly for the shipowner's own purposes but it did not deny the charterers the use of the vessel" (at p.200), and so the time taken was not to be excepted from laytime or demurrage. I interpret this judgment as providing an example of a case where, although shifting for bunkering purposes, the vessel could properly be regarded as at the charterers' disposal in a business and mercantile sense, and the implication of the judgment of Donaldson J. is that, had that not been the case, the time would not count for the purposes of laytime or demurrage.
38. The case went to the Court of Appeal, but the appeal was dismissed. The leading judgment was given by Sir David Cairns. He expressed the view that, on the basis that the vessel was an arrived ship, "all the shifts took place during the discharging stage and the rule that laytime once begun continues subject to exceptions in the charterparty and to the exclusion of time lost by reason of fault of the owners or interruption of discharge purely for the owners' purposes, applies" (at p.162).
39. Support for Evans J's "wider principle" is found in the judgment of Parker J. in Blue Anchor Line Limited v Alfred C Toepfer International GmbH (The "Union Amsterdam") [1992] Lloyd's Rep. 432, to which Evans J refers. Here the vessel having arrived at the discharge port, and laytime having expired before a berth was available, the pilots boarded the vessel to take her into berth, but the vessel grounded in a dense fog through what was held to be negligence. The owners claimed that demurrage continued to accrue during that period, relying upon a clause in the charterparty which provided that they were not liable for delay to the cargo for causes excepted by the US Carriage of Goods by Sea Act 1936; and that demurrage therefore did not run because there was no actionable fault on their part. The relevant passage of the judgment of Parker J. is this: "…the grounding was due to the negligence of the owners or those for whom they were responsible and what owners are really saying is: 'although the delay was caused by our negligence you must nevertheless pay for the detention of the vessel because were you claiming damages for delay, which you are not, you could be defeated by clause 35'. This argument cannot, in my judgement, succeed. In the first place on general principles an exception clause should be given no wider operation than its words allow. In the second place a breach of duty remains a breach of duty, and therefore fault, not withstanding that liability for the breach is excluded. In the third place, far from doing nothing to prevent the vessel being available, owners have, by negligent navigational management, prevented her and, as Lord Justice Bankes said [in the Ropner Shipping case], it does not lie in their mouths to say the vessel was being detained by the charterers during the period when by their negligence she was grounded".
40. I have already mentioned that Mr Houghton does not contend that in order for there to be fault which prevents time running for the purposes of laytime or demurrage there must be actionable fault. However, the third reason given by Parker J. for his decision takes the matter further: Parker J. considered that if the owners have by their action prevented the vessel from being available for cargo operations through negligence for which they are responsible, that in itself prevents time from running. His statement is not qualified by a requirement that that depends upon the discharge of cargo being delayed through the owners' act.
41. Next I should refer to Ricargo Trading SA v Spliethoff's Bevrachtingskntor BV (The "Tassos N") [1983] 1 Lloyd's Rep. 648. The case concerned a time chartered trip to the Red Sea. The vessel arrived at Aqaba but the port was very congested and after laytime had expired it was agreed that the vessel would be diverted to Mercin. The question arose whether time ran during the passage between Aqaba and Mercin. Lloyd J. held that it did. He referred to the argument of the sub-charterers (who were liable for any demurrage) that the owners might be entitled to some compensation for continuing the voyage from Aqaba to Mercin, but that it could not be styled as demurrage and went on: "I do not accept this argument. In one sense it is, of course, true that the carrying voyage was resumed when the vessel left Aqaba and sailed for Mercin. But it was not the contractual carrying voyage – and I emphasise the word "contractual". The contractual carrying voyage had come to an end at Aqaba. Thereafter it was up to the sub-charterers to discharge the vessel in time, or to pay demurrage in default. It does not seem to me to matter where the vessel was or what she was doing in the meantime, provided she was not taken away by the owners for their own purposes." The charterers rely upon these last words of Lloyd J., submitting that in this case the owners did take away the vessel for their own purposes. The owners point out that this is an obiter observation of Lloyd J., and say that in as much as that it does not refer to a requirement that the action of the owners caused delay in discharge, it is wrong.
42. Finally, I mention the decision of Evans J, in Rashtriya Chemicals and Fertiliser Limited v Huddardt Parker Industries Limited (The "Boral Gas") [1988] 1 Lloyd's Rep. 342, which the charterers cite as another authority which reflects the "wider principle". In this case discharge was delayed because the owners exercised a lien over the cargo. One submission of the charterers in that case was that, even if the lien was lawfully exercised, laytime did not count and no demurrage accrued during the period of its exercise because the owners during that period did not permit the charterers to take the cargo, and therefore could not claim that the vessel was delayed by the charterers rather than themselves. They relied upon what Evans J referred to as "the considerable line of authority" that a shipowner cannot recover demurrage (i) because the ship is absent from the discharging place or is unable to give delivery there "due to his own default" or (ii) where the shipowner has removed the ship "for his own purposes". Evans J. observed that the cases are well known but not always easy to reconcile, and the meaning of "default" in this context is unclear. Having referred to some of the cases he declined to express a view upon this point. The charterers cited this authority to me in support of their proposition that the requirement that the vessel be available was a separate doctrine from that of owners' fault. I do not consider that it does.
43. Drawing together these authorities, I conclude that the "wider principle" recognised by Evans J in The Lefthero is reflected in the judgments of Donaldson J in The Shackleford, of Parker J in The Union Amsterdam, and of Lloyd J in The Tassos N. It might be that it is properly to be regarded as a kind of "fault" on the part of the owners, which by its very nature prevents cargo operations. It might be regarded as a separate principle from that whereby fault prevents laytime or demurrage from running. Unless the principle in Budgett v Binnington requires that the fault for which the owners are responsible be the only cause, or the only effective cause, of the cargo operations not progressing, it does not seem to me to matter which of these views is preferred.
44. I consider that if a vessel is unavailable for cargo operations, it is natural to regard that in itself as preventing the loading or discharge of the vessel. It is a cause of any delay in cargo operations. This, it seems to me, is why the "wider principle" in no way conflicts with such authorities as William Alexander and the judgment of Atkin LJ in Cantiere. Nor do I consider the obiter dicta of Roche J and Sargant LJ sufficient reason for me to reject the "wider principle" in view of the relatively recent authorities to which I have referred.
45. Mr Houghton submits that this conclusion would introduce uncertainty into the routine and largely mechanical calculation of laytime and demurrage, and raise questions as to whether it would be necessary for the vessel throughout her wait to maintain an absolute state of readiness to shift to her berth. I am not persuaded by these arguments: the requirement is one of what Hobhouse J. in the "Virginia M" [1989] 1 Lloyd's Rep. 603 at 606 described as "readiness in a business and mercantile sense [which] does not involve completion of what are mere formalities".
46. Demurrage is payable, as Donaldson J pointed out in Navico AG v Vrrontados Naftiki Etaira PE, [1968] 1 Ll L R 379 at p.383 because the shipowner, having agreed freight to cover the voyage and an agreed time for loading and discharging processes, "faces serious losses if the processes take longer than he had bargained for and the earning of freight on the ship's next engagement is postponed", and the charterer agrees to compensate him for those losses by way of demurrage. If a vessel is not available for the charterers' cargo operations but being used by the owners for their own purposes, there is no reason that they should pay compensation. She is not being detained by the charterers.
47. The commercial arbitrators in this case came to the clear view that it would be wrong for the owners to be able to claim that laytime ran during the first period and demurrage accrued during the second period when they were employing the vessel for their own purposes. I agree with that view, and uphold their award.