HBC Hamburg Bulk Carriers GmbH And Co. K.G v Tang Shan Haixing Shipping Co. Limited (2006) EWHC 3250.
In an interesting appeal to the Commercial Court Morison J was asked by HBC, time charterers of the vessel "Fu Ning Hai", to decide if they had been entitled to cancel the charter because the vessel had been off-hire for more than 30 days. HBC had appealed the Tribunal's decision against them on grounds of serious irregularity, as well as on a point of law.
The amended NYPE charterparty form contained the following clauses:
15. that in the event of loss of time from .... dry docking for the purpose of examination or painting bottom, or by any other cause whatsoever preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost ....
56. if the vessel has been off-hire for a period of more than 30 days, the charterers are at liberty to cancel the balance of this charterparty ....
70. the vessel's next dry docking is due May/July 2005, owners intend to dry dock the vessel in PR chain about 15 days .... for which charterers endeavour to bring the vessel to Singapore/Japan range and deliver it to Owners for dry dock. The vessel to be placed off-hire upon Dlosp.......
The disponent owners had sought HBC's permission to allow the vessel to carry out a voyage for COSCO, the head owners, of about 15 days before going to dry dock at Nang Tong. HBC confirmed this proposal provided it was agreed that the vessel would be off-hire when Dlosp last discharge port and that this discharge port was not in the Singapore/Japan range. The counter proposal went on to say "all rights/obligations under the C/P otherwise to be unaffected".
Before the vessel completed dry dock HBC purported to cancel the charterparty pursuant to Clause 56 on the grounds that the vessel had been off-hire for more than 30 days.
At arbitration, the Tribunal ruled in owners’ favour that the cancellation was wrongful. HBC and disponent owners had agreed to allow COSCO the use of the vessel and accordingly had not paid hire for that period. The Tribunal considered this arrangement to be different to an off-hire event under Clause 56.
On appeal, Morison J. held without reservation that the Tribunal had not only arrived at a conclusion that was not obviously wrong but rather one which was obviously right. Although the agreement for COSCO to have the use of the vessel coupled with the dry dock period meant the vessel would be unavailable to HBC for more than 30 days, the 15 day period when hire was not paid prior to the dry docking fell outside the charterparty. Therefore, this period of time was not a period when the vessel was off-hire but when hire was not payable. HBC had benefited from the agreement by the varied delivery and to be able to rely on the charterparty needed to have done more when agreeing to the use of the vessel by COSCO than simply to state that their rights/obligations under the charterparty were “otherwise to be unaffected”. Morison J. held that the arbitrator was required to say no more than that.
As to the off-hire clause Morision J expressed concern that:
“Clause 15 has attracted a great deal of judicial and academic attention. In my view, this clause is in danger of being made invisible through gloss painted over it. In this case, Mr. Jacobs [for HBC] was forced to contend that it was the agreement of the parties that prevented the working of the vessel, and that since an agreement could fall within the words “any course whatsoever” the conditions of Clause 15 were satisfied.”
Morison J held that clause 15 could not cover an event that charterers had expressly agreed. Clause 15 was intended to deal with the events which prevent the full working of the vessel, the consequence of which was that it made commercial sense for the payment of hire to stop. Morison J held that if a charterer agrees to the vessel being taken out of service so that no hire is to be paid, the element of prevention is missing and Clause 15 does not bite.
Morison J plainly had no time for HBC’s argument on Clause 15. Indeed, it would make little commercial sense if periods of off-hire were treated as equivalent to periods when a vessel was not trading under a charterparty. HBC should have made their position clear when negotiating the agreement for COSCO to have the use of the vessel, although had they done so, and because of the obvious risk of cancellation under Clause 50, presumably owners would not have agreed.
