Minerva Navigation Inc v Oceana Shipping AG

Under clause 15 of the New York Produce Exchange time charterparty, full working is assessed by reference to the service immediately required of the vessel at the relevant time. The loss of time is the actual time lost during the period when that service is prevented, not delay measured against the chartered service or maritime adventure as a whole.

A charterer need not establish that the off-hire event caused a net delay to later operations. Hypothetical delays or events occurring after the off-hire period are irrelevant. This approach avoids speculative calculations and permits hire deductions to be assessed promptly.

The dispute arose from two consolidated arbitrations concerning time charterparties on materially identical New York Produce Exchange terms. The vessel’s Master stopped and drifted in international waters instead of proceeding to the roads at Benghazi as ordered by the charterers. The arbitrators found that the orders were valid and that the vessel was off-hire for the 10.9416-day drifting period, although the vessel would not have berthed or discharged earlier had she proceeded directly.

Walker J allowed the owners’ appeal, holding that there had been no net loss of time to the chartered service. The charterers appealed from that decision. The central issue was whether clause 15 required proof of delay to the chartered service overall, or only actual loss of time in performing the service immediately required during the off-hire event.

The appeal was allowed. The judgment of Walker J was set aside and the arbitrators’ decision was restored.

1. Service immediately required. Clause 15 is triggered by a specified cause preventing the full working of the vessel. Full working means the ability to perform the service immediately required at the relevant time. It does not mean complete efficiency for every possible operation during the whole charter. This follows from Hogarth v Miller Brothers & Co [1891] AC 48 and the observation in Tynedale Steamship Co v Anglo-Soviet Shipping Co [1936] 54 Ll L Rep 341 that the relevant efficiency is task-specific.
2. Measurement of time lost. The expressions loss of time, time thereby lost and time so lost refer to actual time lost while the off-hire event prevents the full performance then required. Clause 15 is therefore a net-loss-of-time clause only in the limited sense that hire ceases for time actually lost during the period of inefficiency. It does not require comparison with the hypothetical progress of the entire chartered service. The approach in Vogemann v Zanzibar Steamship Co Ltd [1902] 7 Com Cas 254, Sig Bergesen DY & Co and Others v Mobil Shipping and Transportation Co (The “Berge Sund”) [1993] 2 Lloyd’s Rep 453 and The Pythia [1982] 2 Lloyd’s Rep 160 supported that construction.
3. Later events. Events after the end of the off-hire event cannot be used to calculate the loss. At the conclusion of the event it must be possible to identify the net time lost in consequence of it. A contrary approach would produce intricate and speculative inquiries and could produce inconsistent results under back-to-back charters. The reasoning in Forestships International Ltd v Armonia Shipping and Finance Corporation (The Ira) [1995] 1 Lloyd’s LR 103 was not accepted to the extent that it relied on later employment orders or their causative effect, although its ultimate result was regarded as correct on the proper immediate-service analysis.
4. Application. The Master’s default was a specified cause under clause 15. During the drifting period the service immediately required was to proceed to the roads at Benghazi. The vessel failed to perform that service for 10.9416 days. The possibility that berthing, discharge or documentary problems would have caused a later delay did not reduce the actual time lost. Hire was therefore suspended for the drifting period.

Lord Justice Lewison and Lord Justice Underhill agreed with Lord Justice Tomlinson.

• Court of Appeal (Civil Division) — The charterers’ appeal was allowed. The High Court judgment was set aside and the arbitrators’ decision restored.
• High Court, Commercial Court — Walker J allowed the owners’ appeal from the arbitration, holding that there was no net loss of time to the chartered service: [2012] EWHC 3608 (Comm).
• Arbitration — The arbitrators found that the vessel was off-hire during the 10.9416-day period in which the Master drifted instead of proceeding to Benghazi.