Case Summary: The “WEHR TRAVE”

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SBT STAR BULK & TANKERS (GERMANY) GmbH & Co KG -and- COSMOTRADE SA (The “WEHR TRAVE”) [2016] EWHC 583 (Comm)

In this recent arbitration appeal the Commercial Court considered the meaning of a time charter trip and concluded that, ultimately, the scope of any “trip time charter” will depend upon the particular terms agreed between the parties.  However, the court also gave a number of useful general insights into the nature of a time charter trip.

Charterparty

Materially, the Charterparty (an amended NYPE 1946 form)provided as follows:

That the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for one Time Charter trip via via [sic] good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo, suitable for carriage in a cellular container vessel as described.

Facts

In brief, the Vessel was delivered in the Black Sea where she loaded cargoes at three ports (Sevastopol/Avitla, Novorossiysk and Constantza/Agigea).

She then proceeded on her route, discharging at one port in the Red Sea (Jeddah), one port in the Gulf of Oman (Sohar), and three ports in the Persian Gulf (Hamriyah, Jebel Ali and Dammam).

After completion of discharge at Dammam, charterers ordered the vessel to proceed to Sohar (Oman) in order to load a project cargo for delivery at New Mangalore or Cochin (West Coast of India).

Question of Law

The question of law for the purposes of the appeal was as follows:

On the true construction of the Charter, was the respondent charterer under a “one time charter trip”, after the vessel had discharged the entirety of all previous loaded cargo, entitled to order the empty vessel to another load port (Sohar) and discharge port to perform a further trip/voyage or only to order the vessel to proceed to the agreed Charter redelivery place having completed the agreed one time charter trip?

The arbitration tribunal concluded that charterers were entitled to order the Vessel to load another cargo.

On appeal, Owners submitted that charterers’ were entitled to load in "eastmed/blacksea" (where in fact she did load - Sevastopol, Novorossiysk, Agigea) for a trip to "redsea/pg/india/far east" (where in fact she did discharge - Jeddah, Hamriyah, Jebel Ali, Dammam) but Charterers were not entitled to load in "red sea/pg/india/far east". The “trip” therefore came to an end with the conclusion of the cargo carrying journey (i.e. at Dammam) and the entitlement to load cargo came to an end with that trip.

Decision

The appeal was refused.  The Court held that the charterers were entitled to order the vessel to load further cargo at Sohar.  Specifically that:

  • The charterers were not (as a matter of language) restricted to loading the vessel at a single port; and
  • That the charterers were, in principle, entitled to call at such ports as they wished provided that the calls were within the trading limits and the route was not inconsistent with the contractual route.

Although the Judge (Hon. Sir Bernard Eder) was emphatic that the question for the Court was a narrow question of construction of the specific charter and that it was not the place to perform an exhaustive analysis of the differences between the various types of charter, the following observations were made:

  1. Time charters can be divided into two main categories: (1) term time charters where the charter period is agreed in advance, and (2) trip time charters where the charter period is defined by a trip within a geographical range. In both cases, the defining characteristic of the charter is that the vessel is under the directions and orders of the charterer as regards her employment for the charter period.
  2. From a charterer’s perspective one of the advantages which a time charter (including a time trip time charter) has over a voyage charter is that voyage orders under a time charter do not constitute an irrevocable election.
  3. The charterers’ entitlement to give orders may be restricted by agreement between the parties.   For example, the period, the trading limits, the geographical route and even possibly the number and designation of loading and discharging ports or ranges may be delimited. However, it is clear that any such restriction would have to be specifically agreed and would require clear words.  The words “one trip” or similar are not sufficient to restrain the number of load or discharge ports.
  4. Charterers are not permitted to give orders for the vessel to proceed outside any stipulated trading limits or to give orders which otherwise would be inconsistent with the contractual route (presumably this would include significant doubling back). Such trading limits and the defined contractual route prevent a time charter trip from being “open-ended”.
  5. In general terms, the concept of a “trip time charter” may embrace any number of possible permutations of load and discharge ports all of which can be described as a single “trip”.  It is therefore not possible to provide a single definition of what constitutes a “trip”.

Comment

In light of this judgement it is clear that when entering into a time charter trip owners and charterers must on every occasion carefully consider and expressly define the limits of the intended “trip”; not only the particular route or any geographical restrictions but also the number/permutation of permitted load or discharge ports and any intended restrictions on charterers’ entitlement to give orders.

Jackson Parton acted for the successful Charterers. 

Download full judgment of The “WEHR TRAVE”

 

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