Case law: London Arbitration 6/22

Charterparty – Hold Cleaning – Whether vessel off-hire during hold cleaning – COVID-19 Pandemic – Whether vessel off-hire due to alleged crew sickness

The vessel was chartered for a trip time charter from India to China, on an amended NYPE form. Two disputes arose between the owners and the charterers:

1. whether the charterers were entitled to place the vessel off-hire for hold cleaning at the first load port; and
2. whether the charterers were entitled to place the vessel off-hire, while awaiting a quarantine officer’s permission to discharge at the disport as a result of alleged Covid-19 case onboard the vessel. 

As the disputes are distinct and fact specific, these are addressed separately.

Hold cleaning dispute

The vessel was delivered to charterers on 29 June at 13:44 lt. It arrived at the first load port on 30 June at 4:30.

The charterparty provided for the vessel’s holds to be washed down and be ready in all respects to receive the charterers’ intended cargo at the first discharge port.  The relevant provision in the charterparty reads “charterers will give 24 hours free time during ballast passage from…to intended load port… to owners for cleaning the holds. Any further time and costs required for cleaning for holds to load charterer’s intended cargo to be on owner’s account”.

The cleaning of the holds was completed on 30 June at 19:22. Owners accepted that the 24-hour period allowance was exceeded and that the vessel was off-hire from 30 June at 13:44 to 30 June 19:22. However, the charterers did not believe that the hold cleaning had been completed then and saw further sailing by the vessel after the end of the drifting period as an attempt to delay the vessel’s arrival time to enable further cleaning.  They argued that the vessel should therefore be off-hire until the vessel tendered the NOR at the first load port.

The tribunal found in owners’ favour and held that:

1. Charterers failed to provide any evidence to prove that the cleaning continued after 30 June 19:22. A pre-delivery message from owners was not relevant to what actually happened.
2. The 24-hour allowance was specifically for the cleaning of the holds and did not extend to the sailing time or time spent completing the ballast voyage to the first load port after cleaning was completed.  Once the holds were clean, the vessel was performing the service required and was thus on hire.

Crew sickness

The charterers placed the vessel off-hire between 26 July 14:40 and 28 July 15:30, period during which the vessel was waiting permission from the local authorities to discharge the cargo. Permission was required as one crew member had temperature of 37.4°C.

The charterers argued that this was a ‘deficiency of men’ or, alternatively, it fell under ‘any other cause’ within the standard off-hire clause.  Further, charterers relied on clause 45 which provided that ’Officers and crew to comply with vaccination and sanitary regulations in all ports of call and corresponding certificates to be available on board, enabling the vessel to obtain free pratique by radio.’ 

The owners argued that the delay was due to the port authorities’ health requirements, and evidence demonstrated that the crew member was neither sick or unable to perform his duties, and that owners had complied with all vaccination and sanitary requirements at the port. The delay was caused by the requirements of the port, which the charterers ordered the vessel to go to.

The tribunal found in owners’ favour and held that that the crew member was not sick (the temperature was within the normal range) and hence the actions of the authorities were ‘excessive, seemingly arbitrary and unjustified’.  Further, it held that the circumstances of the delay did not fall within the deficiency of men or any other cause provisions of the off-hire clause in the charterparty, nor was there a breach of clause 45 as there was no evidence of any failure to comply with local regulations.  Therefore, the vessel remained on hire for the above period.

Comments

While the decision of the tribunal on both disputes is based on the factual circumstances and evidence presented by the parties, it provides useful guidance on how arbitrators are likely to interpret clauses in the charterparty and decide on issues involving delays caused by the Covid-19 pandemic. In this case, in deciding on the dispute relating to the crew sickness, the tribunal relied on the underlying evidence regarding the crew’s health and compliance with local requirements, rather than be persuaded by the actions of the local authorities. While the tribunal acknowledged that the events occurred at the outbreak of Covid-19 in China, and hence it was a sensitive time, it concluded that the quarantine officer’s actions were unjustified and that circumstances did not give rise to an off-hire event under the relevant clause in the charterparty.

Category: Caselaw