London Arbitration 4/22

NYPE FORM – TIME CHARTER – PANDEMIC – COVID-19 PROTOCOLS – OFF HIRE – PUT BACK – DELAY – DEFAULT OF MASTER – BREACH OF CHARTER  

London Arbitration 4/22

A vessel was chartered on an amended NYPE for a time charter trip via Indonesia to South China. At 15:20 on 4 March 2020, the vessel arrived at China’s discharge port pilot station. Three pilots boarded. At owners’ instruction, the vessel’s third officer checked their temperatures with an infrared (non-medical) thermometer. 

All three pilots’ temperatures surpassed 37.5 ºC, the owners’ allowed maximum. The master directed the pilots’ temperatures be retaken with a mercury thermometer. The pilots refused and disembarked at 15:30 on 4 March, causing a standoff between the pilot company and the master. 

The pilot company refused to send new pilots until an apology was received, saying the temperature readings from their station were sufficient. Two days later, on 6 March, the owners apologized to the pilot company. New pilots boarded on 13 March at 10:48 and brought the vessel into berth. No further conflicts occurred.

The delay from 4 March to 13 March created a dispute between owners and charterers. The owners included US$50,901.92 on their final balance of account and the charterers counterclaimed for US$33,581.05.

The pertinent provisions of the charterparty were in relevant part:

   “8. The Captain shall prosecute his voyages with due despatch and shall render all customary assistance with the ship’s crew and boats. The Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency … 

   15. In the event of loss of time from deficiency and/or default of officers or crew … the payment of hire and overtime, if any, shall cease at the time thereby lost. … Should the vessel deviate or put back during a voyage, contrary to the orders or directions of the Charterers…the hire is to be suspended from the time of her deviating or putting back until she is again in the same or equidistant position from the destination and the voyage resumed therefrom … 

   25. Navigation

   The Owners shall remain responsible for the navigation of the vessel, acts of pilots and tug boats, insurance, crew, and all other similar matters, same as when trading for their own account. … 

   58. Deviation/Put Back

   Should the vessel put back whilst on voyage by reason of … the refusal of the Captain, Officers or crew to do their duties without any specific or valid ground for rejection, or any Owners’ matters… the payment of hire shall be suspended from the time of inefficiency in port or at sea until the vessel is again efficient in the same position or regains a point of progress equivalent to that the hire ceased hereunder …”

The charterers claimed the vessel was off-hire from 4 March to 13 March, per clauses 15 and 58. The master’s responsibility was to receive the pilots. His refusal caused “default” and constituted a “refusal by officers to perform all or part of their duties…” (The Saldanha [2011] 1 Lloyd’s Rep 187) Furthermore, his confrontational actions resulted in the vessel losing her berthing slot and delayed berthing for over a week. (Clause 15) 

The owners countered this, claiming the vessel was not off-hire, for the master’s actions were reasonable, and he could refuse orders which could endanger the safety of the ship, its crew, and cargo.

They also asserted the vessel was “put back” because the owners were obligated to berth on 4 March. Denying the pilots’ embarkment was a failure to meet this charterparty obligation. (Clause 58). In addition, the charterers were not responsible for paying hire from the “time of inefficiency in port” until the vessel was “again efficient in the same position” because the owners deliberately chose not to deliver the vessel. Finally, they cited clause 8, insisting the owners’ actions were in direct breach of the charterparty, for they violated the charterers’ orders regarding hire.

The owners countered this, claiming the vessel was not off-hire, for the master’s actions were reasonable, and he could refuse orders which could endanger the safety of the ship, its crew, and cargo. (The Hill Harmony [2001] 1 Lloyd’s Rep 147). They stated the master followed company policy and was not in “default” of duty to the owners.

The owners also insisted no put back had occurred and that the vessel remained in service during the delay. Since the vessel did not leave the geographic location outside of the original schedule, the charterers should not expect immediate compliance with their orders. (The Houda [1994] 2 Lloyd’s Rep 541). Moreover, clause 25 did not apply for this was not an act of navigation, but rather Covid-19 safety protocols.

The tribunal maintained their decision would be based on the provisions of the charterparty and the actions of the parties, without consideration of the Covid pandemic. They decided there was no “default of officers or crew” per definition from The Saldanha because the master and third mate were following owner Covid protocols. They also held clause 58 did not apply for the officers did not refuse to perform their duties.

The tribunal ruled the responsibility for the delay belonged to the owners. The charterers’ expectation that pilots be allowed to board and take the vessel into berth was within the scope of hire and, while unfortunate, the Covid pandemic did not allow the owners to implement new policies and protocols without adequate notice and agreement from the charterers. The delay to berth was a breach of clause 8 and a failure by the master and owners to “prosecute the voyage with due dispatch.”

The charterers were entitled to the sum of US$33,581.05, with interest and costs, to recover the value of hire and bunkers for lost time.