4 INTERRUPTIONS AND EXCEPTIONS TO LAYTIME
4
Interruptions and exceptions to laytime
4.1 In this book, the term “interruptions to laytime” is used to cover those periods when laytime does not run because they are outside the definition of lay-time as expressed in the laytime clause. Excepted periods, on the other hand, are those periods that are within the definition of laytime, but nevertheless excluded by an exceptions clause. The principal difference between the two is that with the latter it is necessary to show a causal connection between what is excepted and the failure to work cargo, whereas with the former all that need be shown for causation is that the excluded state of affairs exists at the place where cargo would have been worked.
4.2 The same phenomenon may be either an interruption or an exception to laytime, depending on the terms of the charter concerned. Thus, adverse weather would be an interruption to laytime where this was defined in terms of weather working days because these are not words of exception but a definition of the only kind of time that may count. On the other hand, an additional clause providing that “any time lost through bad weather is not to count as laytime” is an exception, so a causal connection must be shown to prove that time was actually lost because of weather. Clearly, time could be lost only if the vessel concerned was in a berth or position where loading or discharging, as the case may be, could take place, whereas time may be interrupted whether the vessel was in berth or not once adverse weather is shown to exist.
4.3 As has already been mentioned,1 if a charterer has agreed to load or discharge within a fixed period of time, and therefore the charter is a fixed laytime one, the charterer is answerable for the non-performance of this agreement after laytime commences whatever may be the nature of the impediments, unless they are covered by provisions in the charter interrupting laytime or excepting the particular impediment or they arose through the culpable fault of the shipowner or those for whom he is responsible.2
4.4 In a customary laytime situation3 the position is usually reversed with the risk of delay after laytime has commenced normally falling to the shipowner. In this type of charter the charterer’s obligation is merely to perform his part in the operations of loading and discharging within a reasonable time in the circumstances prevailing in the particular port at the time in question. In this type of charter, there can only therefore be exceptions and not interruptions to laytime.
The contra proferentem rule
4.5 In a fixed laytime charter, the interruptions and exceptions will normally be in favour of the charterer, whereas in a customary laytime charter, where they are usually much less frequent, exceptions will be intended to increase the burden on the charterer and protect the shipowner. Exceptions clauses are construed against the party for whose benefit they are included in the charter. As was said by Lord Wilberforce in Photo Production Ltd v Securicor Transport Ltd,4 after setting out a particular exclusion clause:
These words have to be approached with the aid of the cardinal rules of construction that they must be read contra proferentem and that in order to escape from the consequences of one’s wrongdoing, or that of one’s servant, clear words are necessary.
4.6 It is thus first necessary to decide for whose benefit the clause was intended, since, if the clause is ambiguous or it is doubtful whether the given circumstances are covered by it, the issue will be decided in favour of the other party.
4.7 In some early charterparties it was customary to set out the duties of each of the parties in separate parts of the charter and not merely in separate clauses. This led to the view that exceptions in that part dealing with the shipowner’s duties only relieved the shipowner and not the charterer. This was so in Sjoerds v Luscombe,5 in Touteng v Hubbard,6 and in Blight v Page.7 In charterparties so framed it was inevitable that the exceptions should be construed as enuring for the benefit of the owner only. In the latter half of the nineteenth century, the form of charterpar-ties changed with the various duties of the owner and charterer being set out in separate clauses (rather than parts of the charter).
4.8 With this change of form, the attitude to exceptions clauses also changed, so that where they are general and may, or some parts of them may, equally refer to either owner or charterer, they are held to do so. One of the earlier cases where this occurred was Ford v Cotesworth,8 where Martin B was inclined to take this view with regard to a “restraint of princes” exception that formed part of a clause setting out the master’s duties, but the clause was followed by the words “throughout this charterparty”. In Barrie v The Peruvian Corporation9 Mathew J held that the general exceptions clause he was there considering was intended for the protection of the charterers as well as the shipowner.
4.9 This was followed with some hesitation by Bigham J in Newman and Dale Steamship Co Ltd v The British and South American Steamship Co,10 where an exception of fire was held to protect the charterers, although the general exceptions clause concerned did not contain the words “mutually excepted”, which were sometimes added to avoid doubt.
4.10 In Ralli Brothers v Compania Naviera Sota y Aznar Bailhache J reviewed the earlier cases and concluded:11
I take it that the law now stands that, unless a contrary intention is expressed or is to be gathered from the form of the charterparty, exceptions are mutual where they are contained, as is the modern practice, in one of the numerous separate clauses of a charterparty and do not form part of a clause dealing solely with the obligations of the shipowner or charterer as the case may be. Especially is that the case where, as here, there is only one set of exceptions and not, as in many modern charterparties two sets – one appropriate to the charterers’ and one to the owners’ obligations.
4.11 Whilst not dissenting from this, in Franco-British Steamship Co Ltd v Watson & Youell, Horridge J quoted some words of Scrutton LJ. Apparently the eminent Lord Justice had recently said:12
Ever since I was at the Bar it has been argued with considerable heat by counsel concerned whether or not certain exceptions of the charterparty apply for the protection of the charterer or only for the protection of the shipowners. In my view, it is quite impossible to lay down any general rule which will enable the question to be answered.
It is perhaps for this reason that two charters brought into use in the 1980s13 perpetuate the trend that has continued for many years now and expressly state which party is to have the benefit of which exceptions.
4.12 Even if it is held that an exceptions clause was intended to benefit one of the parties, it must still be shown that the circumstances concerned are covered by it. To overcome this difficulty, exceptions clauses have been developed so as to include omnibus phrases like “and any other causes beyond the charterer’s control” and words of general purpose like “hindrances and obstructions”.14 The scope of such general terminology will be considered later.15
General principles
4.13 An exceptions clause will normally be construed as applying only to the period covered by laytime. It will not protect the charterer after the vessel has come on demurrage, unless it explicitly so provides, although it may of course affect the time at which demurrage commences by suspending the laytime clock prior to this point.16
4.14 Furthermore, exceptions clauses will be limited to the loading and discharging operations and periods whilst these are going on unless they clearly indicate that they are also to apply to the operation of bringing the cargo down to the loading place or removing it after discharge.17
4.15 The charterer’s duty to have the cargo at the loading place ready for shipment at the right time is an absolute one. No matter what difficulties there may be in procuring the cargo and getting it despatched to the loading place, the charterer will be liable if it is not ready in time, unless the exceptions clause clearly covers not only the actual loading but also the preliminary operation. In Grant v Coverdale, Lord Selborne said:18
It would appear to me to be unreasonable to suppose that the shipowner has contracted that his ship may be detained for an unlimited time on account of impediments, whatever their nature may be, to those things with which he has nothing whatever to do, which precede the operation of loading and which belong to that which is exclusively the charterer’s business.
4.16 The authorities relating to the charterer’s duty to have a cargo ready at the port of loading were reviewed in The Nikmary,19 in which the Court of Appeal held that the charterer was not entitled to rely on a provision excluding delay beyond his control, where he lost his cargo nomination and thus had no cargo available to load.
4.17 However, the charterer fulfils his duty to have the cargo ready for shipment in time if he has sufficient at the loading point to allow loading to start when the ship arrives and is ready to load, and suitable arrangements had been made for the rest to be available at such time and in such quantities as will enable loading to continue without interruption.20 In The Stainless Emperor,21 the charterers warranted that the cargo to be loaded (and this was construed as the full cargo) would be available upon arrival of the vessel and that any delay resulting from a breach of this warranty should count as “used laytime”. There was also a holiday exception clause. The charterers argued unsuccessfully both in arbitration and in the High Court that the holiday exception should apply to reduce the used laytime that counted as a result of their failure to have a full cargo available. If local regulations require a percentage of the cargo to be on the quay ready for shipment, before the ship is allowed to enter the port or berth as the case may be, then the charterer must have the right proportion ready by the time the vessel is ready to enter the port (or berth). Putting this another way, the charterer cannot prevent the vessel becoming an Arrived ship and time starting to count against him by his own inactivity, or fault. However, it is always open to the parties to agree specifically that the vessel concerned should be kept at a port at the owners’ risk of delay until a cargo can be provided.22 A charterer may also be excused from his duty to provide a cargo by illegality if it is illegal to ship cargo of the contract description from the loading port for export to the country where it is to be discharged23 and also where the contract of carriage is frustrated.
Fault of the shipowner
4.18 It is well established that, whilst a charterer’s obligation to complete loading or discharging within the prescribed lay days is unconditional, nevertheless laytime or time on demurrage thereafter will not run whilst there is a delay caused by the fault of the shipowner or those for whom he is responsible. This is sometimes referred to as the rule in Budgett v Binnington. This raises two questions. What is meant by fault? And for whom is the shipowner responsible? Unfortunately the answers given by the courts to these questions have not always been as clear and separate as they might have been. The converse of this is that, if the shipowner is “prevented” from carrying out his part of cargo operations by the acts of persons over whom he has no control, he is not responsible for the consequent delay.
4.19 Many of the reported cases relate to events occurring after laytime had expired whilst the vessel concerned was on demurrage. It would seem that, in both cases, the same principles apply and apply independently of the terms of the charter. It is not therefore necessary to see whether any of the exclusion clauses in the charter covers the circumstances in question. That is not to say that it would not be possible to draft provisions excluding fault, however any attempt to do so is likely to be construed strongly proferentem against the party for whose benefit they were intended.24
4.20 Whether the delay occurs before or after laytime has expired, in both cases the defence of “fault” of the owners appears to be a simple defence rather than a cross-claim by the charterers of an equal amount, giving rise to a defence of circuitry of action.25 The defence is an example of the more general principle that a plaintiff cannot claim damages if the claim is based on his own fault or default.
To which delays does this principle apply?
4.21 It will be obvious from the way the principle was put in paragraph 4.18 above that the delay and the cause of the delay must be contemporaneous. Thus in London Arbitration 4/92,26 where a vessel suffered engine problems which extended the voyage which in turn, the charterers alleged, resulted in reinfestation of the vessel’s cargo, causing delay whilst it was refumigated, the tribunal held that time should run during the delay at the discharge port.27 Similarly in London Arbitration 20/14,28 where there was a further delay in discharging a second part cargo after a first part cargo had been discharged because by then the intended berth at which it was intended the second part cargo be discharged had become occupied, it was held that the defence of fault relating to the discharge of the first cargo did not extend to the consequential delay and that as with off-hire, time resumed with the end of the fault.
4.22 Whilst the default of the shipowner must relate to something that happens whilst laytime and demurrage are running, to come within the principle now under discussion, nevertheless if the default alleged caused delay at some other point in time, e.g. during the approach or carrying voyages, which in turn results in a delay at the next loading/discharging port, the charterer may be able to show a breach of a separate clause in the charter, other than the provisions relating to laytime and demurrage, and claim damages for that breach, namely the loss of time subsequently suffered. That would of course be a cross-claim and the charterer would have as usual to show that the loss he has suffered was a foreseeable consequence of the breach. The case reported as London Arbitration 15/9129 is best seen as an illustration of this principle, although the way it is reported suggests that it was argued on the basis that the alleged default was a straight defence to the claim for demurrage.
4.23 What happened was that the charterers sought to add an additional load port for topping off, for which the parties agreed an addendum to the charter in which the owners gave an estimate of the date of arrival of the vessel at the top-ping off port but which was said to be dependent on how loading went at the second load port. On the facts, the tribunal held that the estimate was honestly and reasonably given. However, had they found to the contrary, it is suggested that this should not have affected the running of time at the topping off port, and therefore owners’ claim for demurrage, but would have entitled the charterers to claim a breach of the ETA provision in the addendum, the damages payable for which would have been some or all of the demurrage payable to the owners.
Speed claims in voyage charters
4.24 Whilst it is unusual for a voyage charter to contain a speed warranty, the BPvoy 3 form of charter is an exception. Clause 3, after dealing with where the vessel shall load, continues:
Thereupon the Vessel shall proceed with such cargo at a speed which Owners undertake shall be (“Base Speed”) …
If the Vessel fails to maintain Base Speed… Owners shall be liable for all costs, losses, damages and expenses arising as a direct consequence thereof save to the extent that Owners that can prove to the satisfaction of Charterers that such failure was attributable to a reduction in speed necessitated by either adverse weather and sea state conditions or the safe navigation of the Vessel …
4.25 One question that arises is as to what is meant in clause 3 by losses arising as a direct consequence of a failure to meet the base speed. If a vessel misses a berthing slot because of delay on the voyage, and there is a queue of vessels as a result, is all the resulting delay a direct consequence? One case where this point was considered, although not in relation to a BPvoy 3 charter, was London Arbitration 8/05, where the tribunal held that even if there was a breach of the speed provision in that charter, the tribunal would not have concluded that that would have caused the charterers any damages that would be recoverable by way of counterclaim, or provided them with any defence to a demurrage claim.30
Fault
4.26 On the question of what amounts to fault on the part of the shipowner in relation to the running of laytime or demurrage, Donaldson J, as he then was, said in The Fontevivo:31
… the mere fact that the shipowner by some act of his prevents the continuous loading or discharging of the vessel is not enough to interrupt the running of the laydays; it is necessary to show also that there was some fault on the part of the shipowner …
4.27 What is clear is that it is not every act of the shipowner or those for whom he is responsible which results in delay that will suffice to demonstrate fault. Thus in Houlder v Weir Channell J held that where discharge of the cargo was held up because of a need by the ship to take on ballast,32 this was not in any sense culpable conduct on the part of the shipowner. In his judgment, Channell J said:33
In order that the charterers may succeed on that point, they must in my opinion, show that the delay was caused by an act of the shipowners or some one for whom they are responsible, which amounts to a breach of obligation on the part of the shipowners. Here there has not been a breach of obligation, but merely the performance of a necessary operation, no less for the protection of the cargo than for the protection of the ship.
The key phrase is that there must be a “breach of obligation”. Similarly in Leeds Shipping Co Ltd v Duncan Fox & Co Ltd, Mackinnon J said:34
… the charterer is liable to pay the agreed demurrage unless the failure to have the ship discharged in the agreed time is due to the fault of the shipowner, in that the shipowner has not done his part in regard to something which it was within his power to do. The result is that supposing there is a strike or an insufficiency of labour, although that may prevent the shipowner from doing his part of the discharge, yet that is not due to any failure on his part in regard to something it was in his power to do, and it is, therefore not due to the default of the shipowner.
The implication appears to be that the judge considered that fault arose where there was a causal connection between the failure to discharge timeously and the actions (or presumably inactions) of the vessel. In the particular case, the court had to consider an inefficiency of labour rather than an insufficiency, resulting in a much slower rate of discharge than that required by the charterparty. This was eventually cured by the master offering increased payment. The court held that not only was there no fault on the part of the ship, but that the charterers could not take advantage of a provision excusing the shipper for loss or damage arising without his neglect or default.
4.28 Once a vessel has reached her destination and given notice of readiness, she ought thereafter to be at the disposal of the charterers, certainly in so far as they may wish to make use of her, so as to enable them to complete their obligations relating to loading or discharging within the agreed lay days. Clearly any periods when they wish to make use of her, but are unable to do so either because of the owners requiring her to do something incompatible or by the owners failing to perform some essential act to enable the charterers to perform their obligations, should not count against either laytime or demurrage.35 This does not, however, explain what is meant by fault.
4.29 In The Stolt Spur36 Andrew Smith J held that for laytime or time on demur-rage to run, the shipowner must do nothing voluntarily to prevent his ship being continuously available for cargo operations, whether or not such operations are planned by the charterers. He accepted a statement in Scrutton on Charter Parties (20th edn)37 that:
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.
This was introduced into the 20th edition of the book published in 1996 and is not to be found in the 19th edition published in 1984. The authority given is the decision of Evans J in The Lefthero,38 where the judge said:
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.… The wider principle underlying the authorities is like the larger theme which goes through the Enigma Variations, but which is never played.
Specifically, Evans J referred to Parker J’s third reason for rejecting the claim for demurrage in The Union Amsterdam.39 That case concerned a claim for demurrage whilst the vessel was aground, and what Parker J said was that it did not lie in the mouths of the owners to say the vessel was being detained during the period when, by their negligence, she was aground. Clearly in that case, the charterers wanted the use of the ship and there was therefore a causal connection between the delay and her non-availability. Similarly in Ropner Shipping Co Ltd v Cleeves Western Valleys Anthracite Collieries Ltd,40 to which Parker J referred in the same vein, the Court of Appeal based their decision on the ship’s not being available for cargo operations when otherwise cargo might have been loaded.
4.30 The decision in The Lefthero went to the Court of Appeal41 where the court held that there was no question of the vessel being removed from the charterers’ service for the owners’ purposes or for any other purpose, so the issue identified by Evans J did not arise.
4.31 The judges in the Ropner42 case believed that they were stating the law as it had been since Budgett v Binnington43 was decided in 1891. The Ropner case appears in the 1927 law reports. In The Shackleford,44 Donaldson J decided in 1978, over 50 years later, that for laytime or time on demurrage to be suspended, the charterers must be denied the use of the vessel in the sense that they wanted to use it, but be denied its use because the owners want to use it for an incompatible purpose. In The Stolt Spur45 the judge appears to have accepted that there might be two different principles in issue, that relating to Budgett v Binnington if this required that the “fault” be the only cause or the only effective cause of the delay, and the “wider principle” said to have been identified by Evans J in The Lefthero, which deemed there to be fault on the part of the shipowners if their vessel was not continuously available for cargo operations, whether required by the charterers or not.
4.32 Whether there are two separate principles, one as stated in Budgett v Binnington46 and subsequent cases, requiring there to be a loss of time to the charterers before time ceased to count, and one as put forward by Evans J in The Lefthero47 must therefore await further judicial consideration. It is suggested that, despite what was found in The Stolt Spur,48 the decisions in the Ropner case and The Shackleford49 do support the proposition that it is only where the charterers have been deprived of the use of the vessel at a time when they wanted the use of her, that time is suspended.
4.33 Although the point does not appear so far to have been judicially considered, it is suggested that, as with off-hire in the context of a time charter, once the fault ceases to exist, time – whether that be laytime or time on demurrage – resumes. As was said earlier at paragraph 4.21, the delay and the cause of the delay must be contemporaneous or, to use another phrase, co-extensive. It follows that there is no scope for a claim for consequential delay after the ship in question has been restored to the charterers’ service. Thus some fault on the part of an owner might mean that after that fault ceases, the charterers’ intended berth is no longer available, but such consequential loss is not recoverable under this doctrine.
Other cases relating to fault
4.34 A slightly unusual set of circumstances arose for consideration in London Arbitration 29/84,50 which concerned a charter on the Gencon form. After the voyage, the owners presented a demurrage claim showing laytime starting at 14 00 on 29 December. On that basis laytime expired at 14 00 on 31 December and the ship was then on demurrage until 19 30 on 5 January. The New Year holiday and weekend therefore counted against demurrage. Subsequently, the charterers were informed that the vessel had been delayed on sailing from the load port by reason of the temporary absence, for personal reasons, of the chief engineer. Had there been no delay, the vessel would have arrived at the discharge port on 23 December and completed discharging on 30 December. The Christmas holidays and adjacent weekend would have fallen whilst the ship was on laytime and would not therefore have counted. The charterers therefore sought a refund of alleged overpaid demurrage.
4.35 The arbitrators held that the owners were in breach of contract and that, at the time the ship should have sailed from the load port, she was unseaworthy, being without her chief engineer. Clause 2 of the Gencon form did not protect the owners since the phrase “loss or damage or delay” had been held to be limited to goods.51 However, said the arbitrators, it was a fundamental principle that only those damages were recoverable that were “on the cards” or “not unlikely to occur” as a result of the breach viewed at the date when the parties entered into their contract. The answer given by the arbitrators was “There is a possibility that a weekend will fall within laytime rather than within a demurrage period, but since the ship will be carrying only a small quantity of cargo which will not take more than about 36 hours to discharge, and only 48 hours’ laytime is being allowed, it is not likely that such a happening will occur.” Thus, as at the date of entering into the contract, it could not be said that what subsequently happened was reasonably foreseeable and the charterers’ claim therefore failed.
4.36 The arbitrators, however, stressed that if the discharging time could reasonably have been expected to be greater than 48 hours, then the answer would have been different, and it would have been very much on the cards that at least the weekend would fall within laytime, if not the Christmas holidays.
4.37 In The Mobil Courage,52 the master’s refusal to sign a triplicate bill of lading against presentation of which the cargo could be discharged, as required by the charter, was held to disentitle owners to demurrage for the delay that ensued. In The Anna Ch53 the vessel concerned was destined for Bandar Khomeini, but the majority of officers and crew refused to proceed beyond Bandar Abbas, where the ship was waiting for a convoy, because of the risk of becoming involved in the Iran/Iraq war. Eventually charterers ordered the ship to discharge at Bandar Abbas and a dispute arose over the payment of demurrage for the period between the refusal to join the convoy and the vessel proceeding into Bandar Abbas to discharge. In arbitration it was held that the owners were entitled under the charter to refuse to proceed to Bandar Khomeini and an award of demurrage for the period in question was upheld on the basis of absence of fault by owners and any relevant exceptions clause.
4.38 Another case involving alleged cargo damage was London Arbitration 14/0654 where the charterers refused, unless the owners provided security for their claim, to discharge part of the cargo, alleging it was discoloured. The tribunal held that the charterers had not shown any breach of charter and could not refuse to discharge the cargo. The accrual of demurrage was the result of their own failure to discharge.
4.39 A somewhat unusual set of circumstances arose in The Forum Craftsman.55 What happened was that the ship was removed from her discharging berth because it was found that some of the cargo had been damaged by ingress of seawater through the hatches. At the time this happened, the vessel was already on demurrage and it was a further 79 days before she was allowed to re-berth, mainly caused by bureaucratic delay. In arbitration a delay of seven days was allowed against the vessel with demurrage running for the remainder of the period, a conclusion upheld on appeal.
4.40 In London Arbitration 4/9356 the shipowners were able to secure a finding that where delay was caused by the failure of a windlass motor due to a latent defect which meant the vessel was unable to shift from the anchorage to the multi-buoy mooring where she was scheduled to load, there was no breach or fault on the part of the owners and, even if there was, it was excluded by a general exceptions clause. On the latter point, it is usually accepted that general exceptions clauses do not apply to laytime or demurrage57 and, on the former, whilst a latent defect is obviously not foreseeable, in the context of laytime and demurrage, it nevertheless meant that the vessel was unable to perform the service required of it and, to that extent, the owners were in default of their obligation to perform what was required, namely to shift from the anchorage to the loading mooring. Whilst the possibility of establishing that such a delay was due solely to a latent defect must be comparatively rare, it would seem that, if it can be established, time will continue to run. In London Arbitration 1/0958 the charterers were unable to secure a finding in their favour where they alleged the vessel’s crane was unable to lift their warranted weights.
4.41 In London Arbitration 4/9559 the tribunal held that time spent by surveyors acting for the owners carrying out line displacements at a discharging berth to ascertain whether there was oil in the lines was not time lost by default of the owners.
4.42 In London Arbitration 14/9660 the tribunal considered whether a difference in description between the vessel as built and as described in Lloyd’s Register could be held to be the fault of the owners, and whether the design of the ship meant that the owners were in breach of their obligation to provide three “unobstructed” holds, where the absence of these meant that cargo operations took longer. On the facts, the tribunal held that the owners were not responsible for how the vessel was described in Lloyd’s Register but they were responsible if the design of the vessel meant there were obstructions in the holds.
4.43 In London Arbitration 12/0561 the charterers failed to persuade the tribunal that delays at the discharge port due to a need for further fumigation were due to the master starting to ventilate the cargo too early or the hatch covers being insufficiently gas tight to make the fumigation at the load port effective.
4.44 One of the issues in London Arbitration 4/1462 was whether laytime should be suspended for a period of 37 hours during which loading was stopped by the vessel because they thought there might be cargo contamination because particles of rust were found in samples of a cargo of ethanol. The shore filters were cleaned but the presence of rust remained. The shore lines were drained and cleaned. An analysis of the cargo already on board indicated the cargo was in order and loading resumed. No problems were encountered at the discharge port. The tribunal concluded that the probability was that the rust particles emanated from the cargo as loaded and it was reasonable for the vessel to stop loading whilst the matter was sorted out. Laytime therefore continued to run during the period of delay.
4.45 In London Arbitration 12/1562a, the owners decided unilaterally to perform an intermediate voyage before performing the voyage in question. This necessitated them seeking an extension of the cancelling date, which was reluctantly given. The vessel presented within the amended laycan, but the delay meant the vessel was neaped at the discharge port, for which delay the owners claimed demurrage, which was resisted by the charterers because of the insertion of the intermediate voyage.
4.46 A straightforward challenge because of fault would have failed because the delay and the fault were not co-extensive. Instead the charterers relied on cases such as Louis Dreyfus & Co v Lauro62b and Nelson v Dundee62c, and what was said at paragraph 4.1.3 of the 4th edition of Voyage Charters about “Intermediate Engagements”, where it was stated that in entering into an intermediate commitment, the owners run the risk of liability for failing to meet their despatch obligations under the charter in question. However those cases do not support the proposition that the owners will be liable for consequential delay at the discharge port. The charterers challenge therefore failed. In giving a laycan extension, the tribunal held that they were the authors of their own misfortune.
For whose fault is the shipowner responsible?
4.47 The earliest case to consider the problem was Budgett v Binnington itself.63 There, a ship on a fixed laytime charter was delayed during discharge by a strike of dock labourers, there being no strike exception in either the bill of lading or charter. The strike started during the period of laytime and came to an end some days after laytime had expired. Some of the dock labourers had been employed by the shipowners to do their part in the discharge and some by the consignees, who argued that since they could not do their part of the joint operation until after the shipowners had performed their part, they should be excused.
4.48 In London Arbitration 17/0564 the tribunal held that the charterers were entitled to concurrent loading of two parcels of cargo, which the vessel could do even though there was no warranty in the charter that the vessel could do this.
4.49 Holding that the consignees must be responsible for the delay, Lord Esher said:65
Now, has the shipowner failed in this duty through any default of his own, or of persons for whom he is responsible? The persons for whom he is responsible are the persons who represent him in his absence. If, for instance, the master refused to discharge the cargo, the owner would be responsible. How much further this rule of liability extends I am not prepared to say – whether, for instance, it extends to the case of the crew refusing to work …
A little later he added66 that the non-delivery (i.e. delay) was occasioned by something that the shipowners could not have foreseen and by the acts of people over whom they had no control, that is, the workmen employed by the stevedore who were in breach of their contract of employment.
4.50 The next case to consider for whom the shipowner should be held responsible came some two years later and was Harris v Best, Ryley & Co.67 This case is somewhat difficult to reconcile with the earlier decision, which is all the more surprising since the division of the Court of Appeal that considered it included both Lord Esher and Lopes LJ, who had both been party to the earlier decision.
4.52 On these facts, the court held that the stevedore was the servant of the owners and that the charterers were not liable for demurrage arising either from his delay or from the necessity of moving the cargo, and the charterers were also not liable for the additional expense involved. The earlier case, although cited in argument, was not mentioned in the judgment of Lord Esher, the only full judgment to be given.
4.53 In his judgment, Lord Esher stressed that loading was a joint act between the shipper or charterer and the shipowner,68 and that whilst each was to do his own part, he was also to do whatever was reasonable to enable the other to do his. Thus, it was the shipper’s duty to bring the cargo alongside and then the shipowner’s duty to load and stow it. However, the shipper must bring the cargo alongside in sufficient time to enable it to be loaded within the lay days.
4.54 The joint nature of loading and discharging was mentioned in the Scottish case of William Alexander & Sons v Aktieselskabet Dampskabet Hansa and others,69 a decision of the House of Lords, in which was also cited the decision of Lord Esher in Budgett v Binnington,70 apparently with approval. In this case, discharge of a cargo of timber was held up by a shortage of labour. At Ayr, the port in question, it was by custom of the port the duty of the shipowners to put the cargo on the quay and of the charterers to remove it. The same stevedore was employed for both operations and, as he could not get enough men, both were delayed.71 For this the House said the charterers must be responsible.
4.55 It would seem, therefore, that because loading and discharging are joint acts, where some extraneous event, e.g. a strike in Budgett v Binnington72 or a shortage of labour in the Scottish case,73 effectively delays both parties from performing their respective parts, then that is the fault of neither but, because of the nature of fixed laytime, demurrage will be payable if the time allowed is exceeded.
4.56 If, however, the extraneous event affects only one of the parties and that party is the shipowner, then demurrage will not be payable if the delay is caused by somebody for whom he is alone responsible. Thus, in Harris v Best, Ryley & Co74 the delay was caused by the acts and omissions of the master and the stevedore, who under the terms of the particular charter was also deemed to be employed by the shipowner.