Frontier v. Swissmarine

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Frontier International Shipping Corporation v Swissmarine Corporation Inc
English High Court, Queen’s Bench Division, Commercial Court: Nigel Teare QC: 11 January 2005
Michael Ashcroft, instructed by Lawrence Graham, for the Respondent charterers, Frontier
Charles Kimmins, instructed by Hill Taylor Dickinson, for the appellant owners, Swissmarine
In this case, which turned on the construction of a strikes clause in a voyage charterparty, the court held that, in order to except from demurrage delay caused by a strike by consignee’s employees, the charterers had to show, not only that the strike caused the delay, but also that it was beyond the control of the consignee. This they were unable to do, with the result that the owners succeeded in their claim for demurrage.

DMC Category Rating: Confirmed

This case note is based on an Article in the February 2005 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website.

On 9 October 2001, Swissmarine chartered the vessel Cape Equinox to Frontier International for a voyage from Australia to Mexico. The vessel arrived at the discharge port on 12 December 2001 and discharge began on 13 December. On 17 December, employees of the consignee went on strike and this did not end until 16 January 2002. Discharge was completed the following day.

The voyage charterparty was in the Americanised Welsh Coal Charter Form (amended 1979). Under clause 4, liability for demurrage at the loadport was expressed to be that of the charterers whereas, under clause 9, liability at the discharge port was that of the consignee. If discharge was delayed beyond the allotted time, the consignee would pay demurrage at $10,500 per day, but "in case of strikes, lockouts, civil commotions, or any other causes or accidents beyond the control of the consignee which prevent or delay the discharging, such time is not to count unless the vessel is already on demurrage …".

Under clause 26, charterers' liability ceased as soon as the cargo was shipped, except for "all other matters provided for in this CP where Charterers’ liability is specified, and the freight, dead freight and demurrage in loading/discharging (if any) are paid, the Owner having a lien on the cargo for freight, demurrage and average". It was accepted that the effect of the word "discharging" in this clause meant that the charterers were liable for demurrage at the discharge port as well.

The owners claimed demurrage from the charterers for the delay, relying on clause 26. The charterers sought to rely on the strikes clause, arguing that the natural reading of clause 9 was that, in the event of one of the named causes (such as a strike) preventing or delaying discharge, laytime would stop, whether or not the cause was beyond the control of the consignee. It was only in respect of other, unspecified events ("or any other causes or accidents") that one had to show the cause was beyond the consignee's control in order to stop time running.

The owners argued that all the specified causes of delay, as well as the unspecified ones, had to be beyond the control of the consignee. This strike by the consignee's own employees was not something beyond the consignee's control.

The dispute went to arbitration, where the arbitrators found in favour of the owners. In order to rely upon clause 9, the charterers had to prove, not only that the strike prevented or delayed discharging, but also that it was beyond the control of the consignee, and this they failed to do. The tribunal awarded the owners demurrage against the charterers in the sum of US$236,763. The charterers appealed.

The High Court agreed with the arbitrators. The natural construction of clause 9 was that the words "beyond the control of a consignee" applied not only to "any other causes or accidents" but also to the specified events. It made no sense to interrupt the running of laytime for causes that were within the control of the consignee.

Even though, by the addition of the word "discharge" to clause 26, charterers were effectively made liable for demurrage at the discharge port, this did not mean that clause 9 should be construed in a different way from its natural meaning. The consignee would still arrange and participate in the work of discharge, so it made sense that the cause of any delay had to be beyond the consignee's control in order to stop the clock running. Had the parties wanted to amend clause 9 so that the cause had to be beyond the charterers', rather than the consignee's control, they could have done so, but they had not.

The charterers argued that, if this was correct, the strikes exception would rarely apply because it could always be said that the consignee could have ended the dispute by giving in to the demands of its workforce. But this ignored the possibility that the strike causing the delay involved workers not employed by the consignee, or that it was called for a reason not related to pay or conditions. It would be a question of fact in each case whether the strike was beyond the control of the consignee. The judge appreciated that this meant there would have to be an investigation into the cause of the strike, but he felt this was unavoidable. The appeal was dismissed.

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