Minerva Navigation Inc v Oceana Shipping AG

Under an NYPE clause 15 off-hire provision, charterers must show both that a prescribed event prevented the vessel from fully performing the service immediately required and that a net loss of time resulted to the chartered service overall. The deduction is limited to the period during which the clause is engaged and to the time thereby lost. This differs from a claim for damages for breach of contract.

Two consolidated arbitration appeals concerned back-to-back amended NYPE time charterparties for the M/V Athena. During the relevant period the vessel stopped proceeding towards Benghazi and drifted outside the Libyan coast because of problems concerning the bills of lading. The arbitrators found a breach of the charterers’ order but awarded recovery under clause 15, holding that an immediate loss of time in performing the service then required was sufficient, despite there being no net delay to the chartered service overall.

Leave to appeal was granted on the construction of clause 15. The central issue was whether charterers had to establish a net loss of time to the chartered service overall, or only a loss of time in relation to the service immediately required.

The appeals were allowed. The arbitrators’ crucial proposition was incorrect.

1. Engagement. Clause 15 is engaged where a prescribed cause prevents the full working of the vessel. The relevant service is the service immediately required of her. An inability to perform another service is irrelevant until that service is immediately required.
2. Consequences. Once engaged, hire ceases only for the time thereby lost. Charterers must establish a net loss of time to the chartered service overall. It is insufficient to show merely a net loss in relation to the service immediately required. The deduction remains limited to the duration of the off-hire event.
3. Authorities. Hogarth v Miller concerned a period-of-service clause. The Pythia established the temporal limit after the vessel again became fully efficient, but did not decide the present issue. The Berge Sund concerned engagement rather than consequences. The reasoning in The Ira concerning causative effect on the chartered service was compelling. The TS Singapore concerned a materially different clause.
4. A proposed alternative damages claim, based on deprivation of use and recovery of hire paid in advance, was a new head of claim not raised in the arbitration. Permission to raise it was refused.

The arbitrators issued separate awards on consolidated references under the head and sub-charterparties. They awarded the charterers’ claims under clause 15. Cooke J granted leave to appeal on the construction issue. The High Court (Commercial Court) allowed the appeals.