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The Stena Primorsk [2022] EWHC 2147 (Comm) - When can Owners disregard Charterers' voyage instructions on safety grounds?

The High Court’s recent decision in The Stena Primorsk [2022] EWHC 2147 (Comm) provides a useful illustration of the circumstances in which an owner may be entitled to disregard a voyage charterers’ instructions on safety grounds, and how this might interact with the applicable laytime and demurrage regime.

Facts

  • The owners of the vessel, a tanker, chartered her out for a single voyage pursuant to the terms of an amended Shellvoy 6 form.
  • The vessel loaded cargo at Bilbao and it was common ground that 68 hours and 54 minutes of laytime were used.
  • The water depth at the intended discharge berth was 12.19m. The vessel draft was 12.15m but the tide was expected to vary by 1.6m.
  • Accordingly the Master submitted a risk assessment and sought a waiver from the technical operators of the under keel clearance policy. The policy was set out in the vessel’s Q88, which also identified the technical operators. The Q88 was “an integral part of this charter” under the charter terms.
  • The technical operators granted the waiver for the transit from the anchorage and for the berthing. The waiver was given on the assumption that the vessel’s draft was equal to or less than the draft of the river / berth at high water. The Master was also asked to ensure that prompt commencement of discharge was discussed with the terminal officials.
  • Following the vessel’s arrival at the discharge berth, on 31 March, the terminal informed the Master that unloading would, at least initially, need to be conducted at a reduced rate. According to the Master’s calculations the discharge rate was less than the rate which was necessary to maintain a safe under keel clearance. The Master took the decision to leave the berth and return to the anchorage.
  • A berth became available on 1 April which allowed a higher discharging rate, and the charterers requested the vessel to discharge the cargo there.
  • The Master prepared a further under keel clearance calculation, and risk assessment, and sought another waiver from the technical operators. The technical operators refused to give the waiver on this occasion, on the basis that the margin for safety was too small and that there were not sufficient controls in place to mitigate the risk of the vessel touching bottom. The Master decided not to go to the berth.
  • To allow the vessel to berth and discharge a portion of the cargo was lightered. The remainder of the cargo was then discharged at the berth.
  • A further 154.63 hours were used at Paulsboro, bringing the total time used to 226.63 hours.


Dispute / Evidence

The key issue for the Court was the Master’s decision not to go to the berth on 1 April (it was common ground that the Master’s decision to leave the berth on 31 March was correct) and whether the decision put the owner in breach of charter because the vessel could in fact safely reach the discharging berth and discharge the cargo there always safely afloat.

  • It was common ground that:
  • The technical operators’ under keel policy would have been breached for 1 hour had the vessel gone to the berth on 1 April, regardless of the discharge rate or the time spent waiting for discharge to begin.
  • The vessel could have waited for up to 3 hours without this causing a further breach of the policy.
  • A lower discharge rate could have caused further breaches of the policy.
  • The witness evidence from the technical operator was that further delays prior to the commencement of discharge were likely, and that the terminal would probably be unable to discharge at the stated rate. The Court accepted these concerns as “entirely justifiable”.

In their discussion of the legal position the Court noted that:

  • The terms of the charterparty emphasised the importance of operating the vessel safely, and of decisions made by the Master. For example, the vessel was to proceed with utmost despatch to the place for discharge once loaded, but this obligation was tempered by the need to remain “always safely afloat”. The charterers were also expressly required to exercise “due diligence” in ordering the vessel to safe ports and berths.
  • The charterparty required the owner to comply with the charterers’ voyage instructions but this obligation “is not absolute” and “An instruction not considered safe by the Master can be disregarded”.
  • As per The Fontevivo [1975] 1 Lloyd’s Rep. 339 the charterer needed to establish some fault on the owner’s part, or on the part of those for whom they are responsible, if the running of time for demurrage purposes is to be suspended. This “fault” does not need to be an actionable breach.
  • It is unlikely that the owner will be at fault where they act in ways permitted by the charter since this basically lays out the principles the Master is to follow in making their decision.
  • In this case the terms of the charter, together with the facts of the daily operation of the vessel / shipping practice generally, made it clear that the under keel clearance policy was considered by the parties to be binding and was not to be breached without consent.
  • Whether a waiver of the policy was granted was, in this case, a matter for the owner. In practice the decision was for the Master and the owners’ agents to make after consultation. The power to grant or refuse a waiver of the policy was not obviously limited in any way.
  • A “capricious refusal” might amount to a “fault” preventing time running for demurrage purposes, but that was not relevant here. Instead, the terms on which the Master asked for the waiver were realistic and based on a “trouble free” discharge operation. The response of the technical operators was also “appropriate” – they took on board the points raised by the Master and took the view that no waiver should be granted.


Conclusion

The Court held that the owners were entitled to rely on the under keel clearance policy, and were entitled to refuse to comply with the charterers’ orders where this involved breaching the policy. The technical operators were reasonable in refusing the second waiver request, and the Master was correct to decide not to proceed to the berth on 1 April. This meant the Owner was entitled to disregard the charterers’ instructions. There was also no interruption of time for demurrage purposes.

The general points we can take away from the above, bearing in mind that the outcome in any case will turn on the specific facts and the specific contractual terms, are that:

  • An owner will not be obliged to follow a charterers’ voyage instructions where it is not safe to do so.
  • The risk to the vessel in any given case should be assessed reasonably in consultation with others as may be necessary. In practice the risk will be assessed primarily by the Master and / or the owners’ agents.
  • The running of time for the purposes of demurrage will not be interrupted, all other things being equal, unless there is a “fault” on the owners’ part in refusing to follow the instructions in question.


This article was prepared by Adam Sewell. Adam regularly advises on a range of Charterparty issues, including the interpretation of laytime and demurrage provisions.

Article prepared by:

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Adam Sewell

Solicitor

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