Triton Navigation v. Vitol SA

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Triton Navigation Limited v Vitol SA
English Court of Appeal: Simon Brown, Mummery and Mance LJJ: 2 December 2003

T Hill and R Aswani, instructed by Waterson Hicks, for Vitol
Ms V Selvaratnam QC and P Riches, instructed by Shaw Lloyd & Co, for Triton
A charterer who decides not to exercise a right to cancel a charter must continue to meet its obligations under that charter. In this case, the obligation in question was the duty to provide cargo ready for loading. The fact that the charterer's arrangements with the supplier meant that the cargo was not available could not detract from that duty. Shipowner’s claim for demurrage during waiting period upheld

DMC Category Rating: Confirmed

This case note is based on an Article in the December 2003 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website

On the 3 November 2000, Vitol chartered the Nikmary from Triton on the Asbatankvoy form (as amended), to load a cargo of gasoil it had contracted to buy from a refinery in India operated by Reliance Petroleum. The port of loading was Sikka.

Vitol's contract with Reliance gave Vitol a berth to load the cargo between 17 and 21 November 2000. The refinery produced a continuous stream of gasoil of one grade. Only one vessel could berth at a time and the storage tanks had limited capacity. In order to maintain continuous production, therefore, Reliance had to ensure that the product was moved continuously out of the storage tanks.

The charter between Vitol and Triton provided for laydays "Commencing 17 November 2000: Cancelling 22 November 2000". The laytime allowance was 84 hours. Clause 6 stated that laytime would commence 6 hours after receipt of a notice of readiness or on the vessel's arrival in berth, whichever first occurred: "However, where delay is caused to vessel getting in to berth after giving notice of readiness for any reason over which Charterers have no control, such delays shall not count as used laytime or demurrage".

Clause 18 provided that the shipowner would clean the tanks and pipes to the satisfaction of the charterer's inspector. Under clause 30(c), however, the charterer was given an option to cancel if, after inspection, the vessel was found not to be clean "to the satisfaction of jointly appointed inspector". Alternatively, the charterer could require the owner (at the owner's expense) to carry out further cleaning until the vessel was passed clean by a jointly appointed inspector. The owner was liable to indemnify the charterer for all costs and consequences as a result of the vessel not being clean. If the charter was not cancelled, "all time until connection of hoses after the vessel has been passed as clean to the satisfaction of jointly appointed inspector shall not count as laytime, or if on demurrage, as time on demurrage".

The Nikmary was delayed in arriving at Sikka for reasons that were not Triton's fault and Triton and Vitol agreed extensions to the charterparty to 2 December 2000. Vitol, however, did not attempt to negotiate a corresponding extension with Reliance, merely keeping Reliance informed of the vessel's updated estimated time of arrival.

On 2 December, the vessel entered the port and served notice of readiness and, on 3 December, proceeded to a berth arranged by Reliance. If the tanks had been clean at that time, Reliance would have allowed loading to begin, despite the late arrival. As it was, surveyors jointly appointed by Reliance and Vitol pronounced the tanks unclean. Vitol did not exercise its right to cancel the charter and, following further cleaning and further rejections, the same surveyor and another appointed by the vessel's P&I club finally passed the tanks clean on 5 December. A further notice of readiness was given on the same date.

By this time, however, Reliance had received its December quota of orders and was unwilling to provide a cargo until after it had met all those commitments. As a result, the vessel was not allowed to berth until 2 January 2001 and completed loading the following day.

Triton argued that laytime ran from 6 December (6 hours after the notice of readiness of 5 December) and expired on 9 December. The vessel was accordingly on demurrage for 25 days, 8 hours and 45 minutes until 3 January when the cargo documents were provided following completion of loading. The judge at first instance agreed and awarded demurrage of US$291,691.75.

Vitol appealed. It said that under clauses 6 and 30(c) of the charter and under common law principles, laytime and demurrage had not begun to run until connection of the hoses on 3 January 2001 because of Triton's failure to present clean tanks. Triton responded that the delay arose from Vitol's failure to provide cargo available for loading. To this, Vitol argued that it had had cargo available at all times, but that loading was delayed by "scheduling congestion". In the circumstances, it had fulfilled its obligation to provide cargo within a reasonable time.

The Court of Appeal agreed with the judge that the delays in loading this cargo were not due to congestion, as Vitol claimed. The problems had not arisen out of obtaining access to the berth but from Vitol's contractual relationship with Reliance. After the expiry of the November shipment slot, the exact nature of this relationship was unclear, but whether there was a variation of the original contract or whether a new contract had begun, Reliance had been given considerable freedom as to when to supply the cargo. This meant, in effect, that Vitol had no cargo available to load until early January 2001.

A voyage charterer owes an absolute and non-delegable duty to provide cargo and have it ready for loading at the place of loading. Unless there is very clear wording, exceptions in the charterparty (for instance, in respect of strikes) will not normally protect a charterer in respect of its duty to provide cargo (Grant v Coverdale [1884] 9 App. Cas 470, Bunge y Born v Brightman [1925] AC 799).

Vitol argued that this duty was to provide cargo within a reasonable time. Whilst this would normally be in time to enable the cargo to be loaded within the laydays, what was reasonable would depend on the circumstances. In the unusual circumstance of this case, it had provided the cargo for loading within a reasonable time.

The Court of Appeal would not accept this argument. The time for providing cargo had to be closely tied in with the loading process itself to enable the main duty (loading) to be completed within the laydays prescribed in the charter. There was nothing to support the argument that the duty could be extended so that cargo could be provided even though it was too late to load it within the laydays.

The delays incurred prior to the notice of readiness of 5 December had not breached the charterparty. Vitol had had a right to cancel when the tanks were rejected, but had decided not to exercise that right. Once it had decided not to cancel, it was subject to the normal obligations regarding the provision of cargo and the timing of that provision. It was for Vitol to ensure that it had appropriate back-to-back arrangements with its suppliers.

Clause 6 of the charterparty did not give Vitol any protection because the clause only applied to delays caused to the vessel getting into berth "for any reason over which Charterer has no control". But Vitol's contractual arrangements with Reliance were clearly within Vitol's control. Clause 30(c) did not apply because there had not been a "jointly appointed inspector" (that is, one appointed by Vitol and Triton). The fact that the tanks were inspected at the same time by inspectors who had been appointed separately did not meet the express requirements of the clause.

Even if this had not been the case, the Court of Appeal would have found that the clause did not assist. Although it was widely worded ("all time until connection of hoses"), the parties could not have intended that any delays, whether caused by re-cleaning or by any other cause, would not count. There had to be some link between the delay and the tanks being found dirty. The delay after the vessel became ready to load was not caused by the cleaning of the tanks but by Vitol's failure to provide cargo. Vitol's appeal against the judge's award of demurrage was therefore dismissed.



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