A continental perspective on the interpretation of voyage charterparties by arbitrators: the example of the SYNACOMEX charter
A traveller wandering in the French countryside can figure out that very little has changed in the last two centuries. Landscapes still evoke fields and crops painted by Auguste Millet, a famous painter of the École de Barbizon. It is true that France is a leading producer of cereals, being for example the leading European exporter of wheat, competing worldwide with countries like Ukraine or Kazakhstan. This probably explains why, from 1957, market operators have been drafting and improving a specialised voyage charterparty, the Continent Grain Charterparty better known today as SYNACOMEX 2000. SYNACOMEX 2000, in its recent versions, is said to have been inspired partly by the NORGRAIN 73 and GENCON forms. It is offered on the market among other specialised charters such as GRAINVOY 74, CENTROCON and AUSTWHEAT 1990.
Although the French are sometimes said to be chauvinists, the SYNACOMEX form was drafted in the English language because it was meant to be used in international trade, outside the already wide zone of francophonie. This form incorporates specific clauses so as to address the issues raised by the carriage of grain. One of the main issues is the process of loading and unloading efficiently a cargo that, most of the time, is fit for human consumption. This firstly requires an advanced standard of seaworthiness, with lights allowing night work and operating handling gears, as provided for by clause 12:
12. Light and gears
Whenever required, Vessel shall supply free use of lights as on board but sufficient to carry on night work. Provided described as geared, Vessel, whenever required shall supply free use of all cargo handling gear on board, in good working order with the necessary power, and of runners, ropes and slings as on board; Shore hands shall be used to drive the gears at Shipper/Charterers/Receivers account. Any time actually lost on account of breakdown of Vessel gear shall not count as laytime or time on demurrage and any stevedore standby time charges incurred thereby shall be for Owner’s account.
This secondly requires a balance of risk as to the responsibility of loading and discharging between the shipowner on the one hand, and the shippers charterers receivers on the other hand. Indeed, the time and effectiveness for these operations highly depends on the facilities available in the ports chosen by cargo interests. Therefore, clause 5 shifts the risks of loading and discharging onto the shoulders of cargo, thus:
5. Loading and Discharging
Cargo shall be loaded, spout-trimmed and/or stowed at the risk and expense of Shippers/Charterers at the average rate stated in Box 14, weather permitting.
Cargo shall be discharged at the risk and expense of Receivers /Charterers at the average rate stated in Box 15 weather permitting.
Stowage shall be under Master’s direction and responsibility. Shippers’ and/or Charterers’ representatives have the right to be on board the vessel during loading, discharging or lightening for the purpose of inspecting the cargo and/or weighing. Charterers and Owners are allowed to work overtime, such expenses shall be for account of the party ordering same. If ordered by Port Authorities, overtime shall be for Charterer’s account. Overtime services rendered by the ship’s crew shall be in all cases for Owner’s account.
Another issue with SYNACOMEX is that charterparty bills of lading are meant to be issued and traded, so as to be finally endorsed or received by importers/buyers. The articulation of the charterparty contractual regime and the Hague-Visby Rules regime is of crucial importance. A certain alignment of regimes as regards the internal relations between the parties to the charterparty and external relations with receivers is provided for by clause 22:
22. Responsibilities and immunities
Except as otherwise provided and stipulated in this Charterparty, it is hereby expressly agreed that this Charterparty shall have effect subject to the Provisions of the Hague Rules contained in the international Convention for the Unification of certain rules relating to bills of lading dated Brussels the 25th August, as enacted in the country of shipment. These rules shall apply to any Bill of Lading issued under this Charterparty.
Therefore, the balance of interests achieved in this standard form seems fair. The common opinion1 in France is that this is not a pro-charterer charterparty. Though it was drafted by the Syndicat National du Commerce Extérieur des Céréales, it was also approved by the Comité Central des armateurs de France. Even if the 2000 version is more and more used, traders are still accustomed to the 1990 version (which is still referred to). Naturally, standard clauses have been incorporated such as the ISM Clause (clause 17), the Ice Clause (clause 23), the Strike Clause (clause 24) or the War Risks Clause (clause 27). But another clause is of special interests for the purposes of legal cultural diversity and comparative law. Clause 28 stipulates:
Any dispute arising out of the present contract shall be referred to Arbitration of Chambre Arbitrale Maritime de Paris – 16 rue Daunou – 75002 Paris. The decision rendered according to the rules of Chambre arbitrale and according to French Law shall be final and binding upon the Parties.
As a result, 22 published awards have been reported by Droit Maritime Français in the last ten years, not to mention settled and mediated cases. It is crystal clear that published awards2 constitutes a case law that strongly favour negotiation and settlement. Similarly, on the basis of ad hoc arbitration clauses, a similar number of cases has been adjudicated in London under English law.3 This gives a reasonable corpus of awards and court decisions to establish a comparison of the interpretation of a standard form in France and in England and Wales. Having in mind the recent amendment of the French Civil Code on contracts (which will come into force in October 2016),4 we will (1) first present some crucial elements of the rules of interpretation applied to charter terms; then (2) scrutinise cargo disputes arising under the SYNACOMEX form; and (3) look at disputes over time, that is laytime and demurrage.
The drafters of the original Code Napoléon wished to provide judges with rules on the interpretation of contracts contained in nine articles (the original Articles 1156 to 1164). These are now consolidated in five articles (Articles1188 to 1192). There is no hierarchy between these rules of interpretation; all are equally available to judges depending on circumstances. And each of these rules corresponds with one of the techniques of interpretation used by Common Law judges:
All the clauses of a contract are to be interpreted with reference to one another, by giving to each one the meaning consistent with respect for the transaction as a whole.
When, according to the common intention of the parties, several contracts are concluded for the purposes of the same transaction, they are to be interpreted with reference to this operation.
In case of doubt, negotiated contracts shall be construed against the creditor and in favour of the debtor. Standard contracts shall be construed against the party who put them forward.
If words are susceptible of two interpretations, an interpretation that gives the words effect prevails over one that gives them none.
When the words of a contract are clear and precise, they shall not be submitted to judicial interpretation. Such interpretation will render a decision liable to be quashed by the Cour de cassation.
One provision of the new Ordonnance includes a new rule of interpretation,5 inspired by article 4.1 of the Unidroit Principles, that refers to the reasonable man standard, thus converging with the objective interpretation of the contract already used by common law judges:
A contract falls to be interpreted by reference to the common intention of the parties, rather than being limited by the literal meaning of the words.
When this common intention cannot be found out, the contract falls to be interpreted shall preferably be construed according to the meaning that a reasonable person would accord to it in the same circumstances.
When one looks at the rules of interpretation referred to by judges of England and Wales, the difference with the rules of interpretation codified by the Code civil are probably smaller than imagined. The case of X v Y6 decided by Burton LJ, concerning the construction of a charter for three consecutive voyage, on appeal from a sole arbitrator, provides a good illustration of this convergence with civil law methods. The interpretation of a time-bar clause was at stake, especially the meaning of the words ‘final discharge’ and of the words ‘or termination of this charterparty’ that were alternatively the starting point of the time-bar. Burton LJ clearly explains the principles of construction, distinguishing additional clauses from standard clauses, and explaining why a time-bar clause should be construed strictly in relation with its object.
Originally, the Napoleonic Code did not have anything to say about standard-form contracts. Courts instead filled this so-called gap with a combination of various articles of the Civil Code, particularly the rule of interpretation contra proferentem and the rules governing consent. The academics, especially Saleilles,7 quickly developed a theory of ‘contrats d’adhésion’. And finally, specific legislation was enacted for consumer contracts in the Code de la consommation. As a result, for standard terms in B2B contracts, the legal regime was simple and rather predictable. This regime carved out in the case-law was, for instance, much easier to understand that the Chinese puzzle of the BGB in Germany. The new Ordonnance portant réforme du droit des contrats, du régime général et de la preuve des obligations has now given in to the fashion of expressly regulating contracts under standard terms. It contrasts negotiated contracts (‘contrats de gré à gré’) with contracts under standard terms (‘contrats d’adhésion’) in a new provision (Article 1110) that consolidates the previous case-law:.
A negotiated contract is a contract whose terms are freely negotiated by parties.
A standard-form contract concluded under standard terms is a contract whose standard terms, predefined by one of the parties, are outside of the scope of negotiation.
An analysis of this definition is needed because the Ordonnance establishes a new regime of judicial control of disproportion of the respective duties of parties in Article 1171:
In a standard-form contract, any clause that creates a significant imbalance between the contractual rights and duties of the parties shall be deemed to be not applicable.
In reckoning what is a significant imbalance, account shall not be taken either of the subject matter of the contract, or of the adequacy of the price to the characteristic performance of the contract.