The Petroleum Oil and Gas Corp. of South Africa (Pty) Ltd v FR8 Singapore Pte Ltd.

Where apparently absolute charterparty obligations coexist with a clause incorporating the Hague-Visby Rules, the provisions should be reconciled if reasonably possible. The more specific obligation prevails only where there is a clear and direct conflict. A clause paramount may therefore qualify an apparently absolute obligation by importing a due-diligence standard.

For the Hague-Visby exception concerning acts, neglect or default in the management of the vessel, the relevant question is whether the failure primarily concerned care of the ship or care of the cargo. Failure properly to operate or maintain inert-gas equipment used to prevent cargo contamination concerns cargo management and does not fall within the exception.

A contractual demurrage time bar requiring supporting documents does not necessarily bar the whole of a composite claim because documentation is missing for only one constituent part.

The claim arose from the carriage of Gasoil and Mogas under an amended BPVoy4 charterparty. The Charterers alleged cargo contamination caused by failures in the vessel’s inert-gas system and sought to establish liability under express charterparty terms and the Hague-Visby Rules.

The Owners counterclaimed demurrage. The parties agreed preliminary issues concerning the nature of the inert-gas obligations, the scope of the Hague-Visby management exception, and the effect of allegedly incomplete supporting documentation on the demurrage claim.

1. Clauses 12.1 and 12.2. The obligations concerning the inert-gas system were subject to the due-diligence protection incorporated by clause 38. An undertaking is not necessarily absolute. The charterparty should be construed as a whole, and apparently conflicting provisions should be reconciled where they can sensibly and commercially operate together. The more specific clause prevails only where the conflict is clear and direct. The approach was supported by Marifortuna Naviera SA v Government of Ceylon [1970] 1 Lloyd’s Rep 247, Sabah Flour and Feedmills SDN v Comfez [1988] 2 Lloyd’s Rep 18, The Leonidas [2001] 1 Lloyd’s Rep 533, The Saxon Star [1959] AC 133 and The Satya Kailash [1984] 1 Lloyd’s Rep 588.
2. Article IV rule 2(a). The exception for neglect or default in the management of the vessel did not apply. Although an inert-gas system may protect the vessel against explosion, the relevant parts of the system were being used to prevent contamination between cargoes. Failure to operate or maintain them properly therefore concerned management of the cargo, not management of the ship. The court applied the reasoning in The Iron Gippsland [1994] 1 Lloyd’s Rep 335 and the principle in Gosse Millerd v Canadian Government Merchant Marine (1927) 29 Ll. L. Rep. 190. The Hector [1955] 1 Lloyd’s Rep 218 was not directly applicable and was distinguished in substance.
3. Demurrage. Clause 19 concerned terminal operations and did not apply to ship-to-ship discharge. The absence of a terminal representative’s signature therefore did not defeat claims relating to ship-to-ship operations. The court declined to follow the construction adopted in The Sabrewing [2008] 1 Lloyd’s Rep 286. Clause 20 did not bar the entire demurrage claim merely because supporting documentation was missing for one constituent part. The Owners’ submissions on issues 2, 3 and 4 were accepted; issue 1 was conceded.