Minerva Navigation Inc v Oceana Shipping AG

An off-hire clause in a time charterparty is applied by reference to the service immediately required of the vessel when the specified event occurs. The relevant loss is the actual time lost during the period in which full working is prevented, not hypothetical delay to the chartered service as a whole. Later events and speculative calculations about what might otherwise have happened are irrelevant. Where a master’s default prevents the vessel from performing the service then required, hire ceases for the actual time thereby lost. This remains so even if the vessel would not ultimately have completed the wider adventure any sooner.

Minerva Navigation Inc owned the vessel Athena, which was time-chartered to Oceana Shipping AG and then sub-chartered to Transatlantica Commodities SA. After the cargo was rejected in Syria, the charterers ordered discharge at Benghazi. The owners instructed the master to stop and drift outside Libya, contrary to the charterers’ orders, for 10.9416 days.

The arbitrators held that the orders were valid and that the vessel was off-hire during the drifting period, although they found no recoverable loss on the alternative damages claim. Walker J allowed the owners’ appeal, holding that there had been no net loss to the chartered service overall: [2012] EWHC 3608 (Comm). The central issue was whether Clause 15 measured loss by the immediately required service or by the net delay to the wider chartered adventure.

1. Appeal allowed. The order of Walker J was set aside and the arbitrators’ decision was restored.
2. Clause 15 of the New York Produce Exchange form is triggered by a specified cause preventing the full working of the vessel. Full working is assessed by reference to the service immediately required of the vessel at the relevant time. It is not assessed by reference to every function of the vessel, the entire maritime adventure, or the chartered service as a whole. This approach was supported by Tynedale Steam Shipping Company v Anglo-Soviet Shipping Company [1936] 54 Ll L Rep 341, Hogarth v Miller Brothers & Co [1891] AC 48 and The “Berge Sund” [1993] 2 Lloyd’s Rep 453.
3. The expressions time thereby lost and time so lost identify actual time lost during the period when full working is prevented, limited to the loss attributable to that inability. They do not require comparison with a hypothetical voyage or with the progress of the chartered service overall. Such an approach would create intricate and speculative calculations. The reasoning in Vogemann v Zanzibar [1902] 7 Com Cas 254 and The Pythia [1982] 2 Lloyd’s Rep 160 supported that construction.
4. Events occurring after the off-hire event has ended cannot be used to calculate the loss. At the end of the event it must be possible to determine the net time lost in consequence of it. The Court approved the result in The Ira [1995] 1 Lloyd’s LR 103, but rejected reasoning which treated later employment and its causative effect on the charterers’ overall position as relevant.
5. During the drifting period, the service immediately required was proceeding to the roads at Benghazi. The master’s default prevented that service and caused an actual loss of 10.9416 days. The fact that berthing and discharge would not have occurred earlier did not affect the off-hire calculation. The contractual off-hire claim operated independently of the alternative damages claim.

1. Court of Appeal (Civil Division): allowed the appeal, set aside Walker J’s order and restored the arbitrators’ decision: [2013] EWCA Civ 1273.
2. High Court of Justice, Queen’s Bench Division, Commercial Court: Walker J allowed the owners’ appeal from the arbitrators, holding that there was no net loss to the chartered service overall: [2012] EWHC 3608 (Comm).