Emeraldian Ltd Partnership v Wellmix Shipping Ltd & Anor

A laytime exception referring to a partial interruption of the business of a port may cover interruption at a particular berth. The interruption need not be fortuitous or beyond the control of the charterers unless the charterparty so provides. However, an exception does not protect a charterer from the consequences of its breach of another charterparty obligation, such as the safe-berth warranty. Where delay is caused by that breach, damages may be measured by the agreed demurrage rate. A berth is unsafe where the vessel cannot use it without danger that ordinary navigation and seamanship cannot avoid. The court also considered the applicable law and enforceability of a foreign guarantee connected with an English-law charterparty.

The claimant owners claimed demurrage from the charterers following delay in berthing the vessel VINE at an iron-ore terminal in Brazil. The delay arose while berth repairs were being carried out after incidents involving other vessels. The claimant also claimed against Guangzhou Iron & Steel Corporation Limited under an alleged guarantee of the charterers’ obligations.

The principal issues were whether notice of readiness was validly accepted before port clearance, whether the delay fell within contractual laytime exceptions, whether the nominated berth was unsafe, and whether the guarantee was authorised and enforceable despite Chinese exchange-control requirements.

1. Notice of readiness. The berth operator had authority to waive the requirement for port clearance before acceptance of notice of readiness. The statement of facts showed that it had done so. Laytime therefore commenced when notice of readiness was tendered.

2. Laytime exceptions. A partial interruption of the business of a port includes interruption at a particular berth. The interruption need not be fortuitous. The words requiring a cause to be beyond the control of the Seller appeared only in sub-clause 5.10(ix) and did not qualify sub-clauses (i)–(viii). The delay therefore fell within the partial-interruption exception.

3. The charterers’ delegation of loading operations to the berth operator did not make an earlier failure to repair the berth a failure within the charterers’ control for the purposes of the exception. The accident exception was not established because the continuing need for repairs, rather than an accident alone, was an effective cause of the delay.

4. Safe berth. The charterers warranted that the nominated berth was prospectively safe. The berth was unsafe because safe berthing required more than ordinary navigation and seamanship, the master and pilots were not informed of material dangers and the reduced capacity of a dolphin, and the dolphin had previously suffered excessive force. The berth’s unsafety caused the damage to D2 and was an effective cause of the delay. Any negligent navigation would not have broken the chain of causation.

5. Delay caused by breach of the safe-berth warranty remained recoverable at the demurrage rate, even if there was no breach of the separate obligation to load within the laydays. Judgment was therefore entered against the charterers for demurrage, subject to credit for despatch.

6. Guarantee. An adverse inference from inadequate disclosure established that the signatory had actual authority. The guarantee was governed by English law. Chinese exchange-control illegality did not make it contrary to English public policy to enforce the guarantee, particularly because Chinese law itself recognised civil liability arising from it. Judgment was entered against the guarantor for 100 per cent of the charterers’ liability.