Koninklijke Vereniging - Société Royale




Approach voyage obligation comes before the Court

An owner’s obligation to commence approach voyage in a voyage charter - whether the obligation is absolute or due diligence - was the subject of a legal case last year.

Capt Siddarth Mahajan of Tipco Maritime analysed this case - CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd (the ‘Pacific Voyager’) (2017) EWHC 2579 (comm).

The background concerned the VLCC ‘Pacific Voyager’, which was chartered on a SHELLVOY 5 for a voyage from Rotterdam to the Far East. The cancellation date under the charterparty was 23.59 on 4th February, 2015.

During an intermediate voyage before beginning this charter, on 12th January, 2015, she suffered water ingress in No 1 starboard ballast tank and developed a seaboard list while transiting the Suez Canal. The cause of the damage was contact with a submerged object connected with dredging operations underway nearby.

There was no suggestion that the vessel or owner were at fault or could reasonably have prevented what transpired. Charterers were informed by the owner that the vessel was due to drydock on 8th February, 2015 for repairs and that the repairs would take months. A day later, the charterers exercised their right to terminate the charterparty and then brought a claim of $1.2 mill.

The owners did not give an estimated time of arrival (ETA) at the loading port and no date of expected readiness to load (ERTL) to the charterers. However, the charterparty stipulated a laycan range.

Details of the anticipated timetable for completion of the previous charter were given in the following terms;
‘Position: ETA Ain Sukhna 9th January, 2015 (port of discharge).
ETA Suez Canal 10th January (transit).
ETA Sidi Kerir 12th January (reloading).
ETA Antifer 25th January (discharge) All above BSS IAGW/WP’.

The issue here is that if the charterparty contains only a cancelling date/laycan range but no ETA or ERTL date, are the owners under an absolute obligation to commence the approach voyage or do they only have to exercise due diligence?

Monroe obligation

The English Court of Appeal in Monroe Brothers Ltd v Ryan (1935) 2 KB 28 held that where a charterparty contains an obligation on an owner to proceed with all convenient speed to the loading port and gives a date when the vessel is expected to load, there is an absolute obligation on the owner to commence the approach voyage by a date when it was reasonably certain that the vessel will arrive at the loading port on or around the expected readiness to load date - known as the Monroe obligation.

This obligation was held to arise where -
(i) The owners obligation is simply to proceed to the lading port without any reference to speed or despatch., it being implied that such obligation is to do so with all convenient speed or utmost despatch (Louis Dreyfus & Co v Lauro (1938) 60 LI L Rep 94).

(ii)What is given is an estimated time of arrival at the loading port rather than of expected readiness to load (The Myrtos (1984) 2 Lloyd’s Rep 449).

(iii)Where the vessel is at the time of charter still performing her previous service (Louis Dreyfus v Lauro) to the knowledge of the parties (The North Anglia (1956) 2 Lloyd’s Rep 367).

The ‘Pacific Voyager’s’ owners contended that a cancelling date was not equivalent to an estimate by owners of an arrival date at the loading port, but was merely a contractual option afforded to the charterers if the vessel should not arrive by that date.

Owners were only obliged to exercise due diligence to get the vessel to the loading port by the cancelling date.

The charterers contended that the laycan window was equivalent to an ETA for the purposes of the Monroe obligation.

The decision

The Court held that the owners were under an absolute obligation to commence the approach voyage by a certain date, which is to be decided basis other charterparty terms. Since the owners had given the ETAs for intermediate ports, which the vessel will be calling in the current charter service, they were obliged to commence the approach voyage at the end of a reasonable discharging period, were the vessel to arrive at Antifer on 25th January, 2015. The charterers were entitled to judgment in the agreed amount of $1.202,812.50.

The Court also considered the hypothetical situation where no ETAs for intermediate ports under the previous charter were given. In such a case, the owners would be under an absolute obligation also to commence the approach voyage by a date when it was reasonably certain that the vessel would arrive at the loading port by the cancelling date.

For the purpose of the Monroe obligation, there is therefore no difference between a cancelling date and an ETA/ERTL date.

In conclusion, it must be noted that permission to appeal this case was granted. We will have to wait and see whether the extension of the Monroe obligation is upheld. Meanwhile, owners and charterers are advised to ensure that they draft their charterparties with clarity and make explicit reference to ETA, Capt Mahajan said.





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