Carboex SA v Louis Dreyfus Commodities Suisse SA

A laytime exception for strikes or other causes beyond the charterer’s control that prevent or delay discharging is concerned with time actually lost by the vessel. It is not confined to delays while the vessel is alongside or physically handling cargo. It may cover berth congestion and the after-effects of a strike, including delay to a vessel arriving after the strike has ended, provided the necessary causal link is proved. An agreement permitting notice of readiness whether in berth or not allocates the general risk of congestion to the charterer, but does not prevent a specific exception reallocating that risk.

Louis Dreyfus, as owner, entered into a contract of affreightment with Carboex, as charterer, for the carriage of coal. Four vessels were delayed at Ferrol by a nationwide haulage strike, its consequences, and an assumed later unofficial stoppage. Carboex relied on clause 9, which excluded time lost through strikes and other causes beyond the charterer’s control that prevented or delayed discharging. Louis Dreyfus argued that the clause applied only when the vessel was berthed and ready to handle cargo.

The arbitrators answered preliminary questions against Carboex. On appeal under section 69 of the Arbitration Act 1996, Field J held that the questions should be answered affirmatively and set aside the award in [2011] EWHC 1165 (Comm). The appeal concerned whether clause 9 applied to after-effects of a strike, vessels arriving after the strike, and berth congestion caused by the strike.

1. Appeal dismissed. Lord Justice Moore-Bick gave the judgment, with the Master of the Rolls and Lord Justice Toulson agreeing. Each preliminary question was answered: yes, provided the strike was the effective cause of the delay.
2. General allocation of congestion risk. The words whether in berth or not both start the laytime clock and transfer the general risk of congestion to the charterer. They do not create a presumption that the parties intended to transfer every specific risk of delay away from the charterer. Clause 40 therefore did not require a narrow construction of clause 9.
3. Meaning of clause 9. The expression the discharging naturally referred to the discharging operation viewed as a whole. The clause contained no wording restricting it to time when the vessel was alongside and physically handling cargo. A strike preventing a vessel from entering berth could therefore prevent or delay discharging. The clause excluded time actually lost by the vessel, not every period during which it was unable to berth.
4. Causation. The charterer had to establish that the event fell within the exception and was the effective cause of the delay. Mere congestion or the existence of a strike was insufficient. Whether the necessary causal link existed was a question of fact. The vessel’s position in the queue might affect the ease of proving causation, but each case depended on its facts.
5. Authorities and duration. The Leonis and Reardon Smith supported treating causation as a factual question and recognising delay in reaching berth. Central Argentine Railway v Marwood was authority for the requirement of actual time lost and effective causation, but its berth-focused passages were dicta and did not confine clause 9 to berthed vessels. Clause 9 concerned the consequences of an excepted event, not merely its duration. It could therefore apply to delay after a strike had ended and, in principle, to a vessel arriving after the strike.
6. Clause 4. The different wording of the loading-port exception reflected the charterer’s separate duty to have cargo ready for loading. Clear words were required to relieve that duty from remote shore-side risks, as illustrated by Grant v Coverdale and reaffirmed in The Nikmary. That distinction did not narrow clause 9.

• Court of Appeal (Civil Division): Appeal by Louis Dreyfus dismissed. The preliminary questions were answered affirmatively, subject to proof that the strike was the effective cause of delay. [2012] EWCA Civ 838.
• High Court, Queen’s Bench Division, Commercial Court: Field J allowed the appeal from the arbitral award, answered the questions affirmatively, and set aside the award. [2011] EWHC 1165 (Comm).
• Arbitration: The arbitrators’ declaratory award answered the preliminary questions negatively.