Kriti Akti Shipping Co. SA v Petroleo Brasiliero SA

In a time charter, an express margin such as “15 days more or less in charterers’ option” is not confined to unforeseen delays on a voyage begun during the basic term. It gives the charterer commercial flexibility to use the vessel and give final-voyage directions during the margin, provided the voyage could reasonably be expected to finish by the final terminal date. An off-hire extension elected under an extension clause forms part of “the period of this charter” and is added before the express margin. A final-voyage clause construed to permit completion beyond the terminal date operates by reference to that enlarged period. An earlier decision concerning a period-extension clause did not control the construction of a materially different final-voyage clause.

Owners of a tanker appealed against Moore-Bick J’s decision on two preliminary questions arising from a Shelltime 3 charterparty. The charter provided for 11 months, 15 days more or less at charterers’ option, and separately allowed off-hire time to be used as an extension. The charterers sought to rely on a final-voyage clause after adding both off-hire days and the 15-day margin to the basic period. The arbitrators accepted the off-hire extension but rejected the further margin, relying on The Aspa Maria. Moore-Bick J answered both questions in the charterers’ favour. The central issue was whether the enlarged period formed part of “the period of this charter” for the purposes of the final-voyage clause.

1. Appeal dismissed. Lord Justice Mance held, with Brooke LJ and Park J agreeing, that both preliminary questions should be answered in the charterers’ favour. The judgment and order of Moore-Bick J dated 9 July 2003 were upheld.
2. An extension taken under the off-hire clause formed part of the period of the charter for all relevant purposes, including the final-voyage clause. The off-hire days were to be added first. The resulting terminal date carried with it the 15-day margin in the basic period clause.
3. The words “15 days more or less in charterers’ option” gave the charterers full commercial use of the vessel for a period between 11 months less 15 days and 11 months plus 15 days. The margin was not restricted to maritime exigencies affecting a voyage begun during the basic period. The words “more or less” were not to be deprived of practical effect.
4. Under the ordinary legitimate-last-voyage principles discussed in The Dione [1975] 1 Lloyd's Rep. 115 and The Peonia [1991] 1 Lloyd's Rep. 100, directions given during the margin could be legitimate if the voyage could reasonably be expected to finish by the final terminal date. There was no requirement that the directions or the voyage commencement occur during the basic period.
5. Clause 18 had to be construed in accordance with The World Symphony [1991] 2 Lloyd's Rep. 251. It permitted a final round voyage to continue beyond the final terminal date at the charter rate. The court rejected the attempt to restrict that clause by giving the margin an abnormal meaning.
6. The Aspa Maria [1976] 2 Lloyd's Rep. 643 did not compel a different result. It concerned a period-extension clause, whereas clause 18 operated on the existing charter period and provided a hybrid final-voyage entitlement. Precedent concerning materially different contractual wording required caution. The court left open whether any separate limitation on an extreme-length voyage might arise under the principle invoked in Margetson & Co. v. Glynn [1893] AC 351.

• Court of Appeal (Civil Division) dismissed the owners’ appeal and upheld the answers given by Moore-Bick J: [2004] EWCA Civ 116.
• Queen’s Bench Division (Commercial Court) Moore-Bick J determined appeals on two preliminary questions on 9 July 2003. He answered both questions in favour of the charterers.
• Arbitration The arbitrators’ interim final award of 21 November 2002 answered the off-hire extension question in favour of the charterers but the express-margin question in favour of the owners.