ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH

A charterparty exception for delay caused by specified events does not require the charterer first to nominate a particular berth. The court should ask whether loading was prevented or delayed by an excepted peril and, if so, determine the causation and duration of the delay. Alternative arrangements do not prevent an event from causing relevant delay. A clause referring to mechanical breakdowns at mechanical loading plants ordinarily connotes an inherent mechanical problem, not destruction by fire. Government interferences requires action by a governmental entity in a sovereign capacity, rather than ordinary administrative rescheduling by a port authority. Events occurring before the vessel’s arrival may still cause delay within the clause.

The charterers appealed under section 69 of the Arbitration Act 1996 against an award upholding the owners’ claim for demurrage. The vessel was delayed at Paranagua after a fire destroyed the conveyor system serving the originally intended CBL terminal. The charterers relied on clause 28 of the charterparty, which excluded time lost when loading was prevented or delayed by specified events, including mechanical breakdowns at mechanical loading plants and government interferences.

The tribunal held that the charterers had to nominate an alternative safe berth and could not rely on clause 28 because the CBL berth was not named in the charterparty. It also rejected reliance on mechanical breakdown and government interference. The central questions were whether the berth obligation affected clause 28, whether destruction by fire constituted mechanical breakdown, whether port rescheduling constituted government interference, and whether the clause applied to a pre-arrival event.

1. Appeal dismissed. The arbitration award was affirmed.
2. The tribunal had asked the wrong legal question on the safe-berth issue. The question was whether loading was prevented or delayed by an excepted peril, not whether the charterers had first nominated an alternative berth. The proper inquiry was:
   1. whether there was prevention or delay in loading;
   2. whether it was caused by an excepted peril; and
   3. the duration of the relevant delay.
3. The charterers’ ability to make alternative arrangements did not prevent the fire from causing relevant delay while those arrangements were made. This applied whether or not the berth was named. The principle in Reardon Smith v Ministry of Agriculture (The Vancouver Strikes Cases) [1963] A.C. 691 supported the conclusion that the charterers could have required the vessel to wait for the original terminal to become usable.
4. The reference to mechanical breakdowns did not cover the destruction of the conveyor system by fire. On ordinary language and in the context of the charterparty, mechanical breakdown connoted an inherent mechanical problem. The wording differed materially from the broader wording considered in The Afrapearl [2004] 2 Lloyd’s Rep. 305 and The Thanassis A.
5. Clause 28 did not require the excepted event to begin only after the vessel arrived at or off the loading place. Such a construction would produce an uncommercial distinction based on whether the event occurred shortly before or shortly after arrival.
6. There was no finding that the port authority was a government entity or that it had suspended permission to berth. In any event, ordinary administrative rescheduling was not government interference. The phrase required governmental action in a sovereign capacity, distinct from ordinary port administration. The distinction identified in The Isabelle [1982] 2 Lloyd’s Rep. 81 was relevant.

The court therefore rejected the safe-berth argument but upheld the tribunal’s conclusions on mechanical breakdown and government interference. Costs were to be agreed or determined by the court.

1. Arbitration tribunal: The tribunal awarded the owners US$397,912.77 plus interest and costs for demurrage.
2. High Court (Commercial Court): On an appeal under section 69 of the Arbitration Act 1996, Mr Justice Eder dismissed the appeal and affirmed the award.