Case Law: The Stena Primorsk [2022] EWHC 2147 (Comm)

Owners’ entitlement to disobey charterers’ order on safety grounds – under-keel clearance policy – laytime and demurrage – lightering expenses

The vessel was chartered on an amended Shellvoy6 form for the carriage of a cargo of oil from Bilbao to Paulsboro on the Delaware River.

As the vessel’s draft was equal to or less than the declared safe draft at the discharge port, a waiver of the vessel’s under-keel clearance (‘UKC’) policy was necessary. This was granted by the vessel’s technical managers, on the basis that discharge would commence promptly.

Shortly after the vessel berthed on 31 March 2019, the master was informed that unloading would take place at a reduced discharge rate. However, as per the master’s assessment this slower rate was not sufficient to meet the UKC policy and he decided to leave the berth and return to anchorage.

Despite the fact that on the next day the terminal was able to discharge the cargo at an increased rate, the technical managers refused to grant the waiver for safety concerns and the master was left with no option but to request that the vessel lighter cargo before discharge could take place at the berth.

Owners brought a demurrage claim against the charterers. The charterers defended the claim mainly on the basis that time was suspended because the owners were in breach of charter by having left the berth on 31 March and refusing to return on 1 April.

The key issue was whether the master’s decision not to return to the berth put the owners in breach of charter because the vessel could have safely reached the berth and discharged the cargo always safely afloat.

The High Court decision

The court found in favour of the owners and in reaching this decision, it focused on the following:

1) The charterparty terms highlighted the importance of operating the vessel safely and the importance attached to the master’s decisions in this regard. Although clause 3(1) of the standard Shellvoy6 form requests the vessel to proceed with ‘utmost despatch’, this is qualified by the requirement to remain safely afloat. Likewise, the owners’ obligation to comply with voyage instructions is not absolute but subject to such orders being safe.

2) Irrespective of the terms of the charter, it is clear from the authorities (see The Fontevivo [1975] 1 Lloyd's Rep. 339) that a charterer needs to establish some ‘fault’ on the part of the owner or those the owner is responsible for if time is to be suspended for demurrage purposes. The parties agree that fault is given a wide definition and does not require an actionable breach of contract to be established.

3) The UKC policy is integral to the charter and the requirement for a waiver to deviate from the UKC policy underlines its importance.

On the facts, including considerable expert evidence regarding the safety of the berth and the master’s decision, there was no fault on the part of the owners, and the refusal to grant a waiver was entirely reasonable.

Comment

The case is a good reminder that an owner is not obliged to follow charterers’ voyage instructions where it is unsafe to do so. The master’s decision, which was justified on the facts, did not interrupt laytime.

Further, the running of time for demurrage purposes will not be interrupted unless there is a ‘fault’ on the owners’ part in refusing to follow lawful instructions. In circumstances where an owner acts in a way authorised by the charterparty, it is unlikely that the owner will be found to be at fault, and hence laytime or demurrage will not be interrupted.

• Link to commentary by Mills & Co can be found here
• Link to commentary by Ince can be found here
• Link to the judgment can be found here

Category: Caselaw