Smart Gain Shipping Co Ltd v Langlois Enterprises Ltd

A charterparty clause requiring underwater cleaning to be carried out at charterers’ time and expense can require compensation at the charterparty hire rate even when cleaning occurs after redelivery. The claim is for contractual compensation calculated by reference to hire, rather than damages requiring proof of actual loss of use. The word always must be given effect, and “at charterers’ time” is distinct from “loss of time”.

This was an appeal under Arbitration Act 1996, section 69, from a partial final arbitral award concerning a time charter. The vessel remained idle in tropical waters for at least 42 days, engaging a rider clause requiring underwater hull cleaning at charterers’ time and expense. The charterers redelivered the vessel without cleaning. The owners later arranged cleaning before the vessel entered a new employment and claimed the hire rate for the cleaning time and related expenses.

The tribunal held that the clause created a debt claim at the hire rate, regardless of whether cleaning occurred before or after redelivery. The central issue was whether that construction was correct, or whether the owners were confined to damages for proven loss of time.

1. The appeal was dismissed. The clause required the charterers to compensate the owners at the hire rate for time spent on underwater cleaning, although the cleaning occurred after redelivery. It did not confer a claim for hire itself, but a specific contractual compensation claim calculated by reference to the hire rate.
2. The natural meaning of “always at Charterers’ time” was that the charterers must always pay for the time associated with underwater cleaning. “At the first workable opportunity” covered cleaning both before and after the charterparty. The distinction between “at Charterers’ time” and “loss of time” supported that construction.
3. The clause allocated responsibility for fouling caused by the charterers’ orders that the vessel remain idle. Requiring compensation at the hire rate was commercially sensible and avoided incentivising redelivery without cleaning.
4. The clause did not require the charterers to undertake or arrange the cleaning themselves after redelivery. The tribunal had expressed this inaccurately, but its essential findings and conclusion remained valid.
5. The Nicki R was analogous and binding. It supported recovery at the charterparty hire rate as a debt where charterparty wording placed repair time at charterers’ expense, even though repairs occurred after completion of the contractual trip. The reported London arbitrations were materially different or insufficiently reported to displace that conclusion.

The appeal was brought under section 69 of the Arbitration Act 1996 against a partial final arbitral award made in October 2022. The High Court dismissed the charterers’ appeal.