【Key words: Time charter, obligation to supply, deviation, safe port】
This Firm defended on half of Charterers before the London Maritime Arbitrators Association (LMAA) for a claim under a Time Charter for Trip commenced by Owners for the alleged loss of hire and fuel arisen from Owners’ deviation for freshwater replenishment for the purpose of crew safety. We obtained support from the tribunal that it was Owners’ duty of supplying sufficient freshwater for the intended voyage.
【Fact】
As per the Charterparty of February 2017, Charterers let in the Vessel to perform a voyage from Adang Bay in Indonesi to port of Mongla in Bangladesh. Charterers instructed the Vessel to the port of Mongla for discharge. The Vessel arrived at the outer anchorage of Mongla port in middle March 2017 and scheduled to enter the inner anchorage after unloading part of cargo into barges at the outer anchorage.
Due to bad weather, the barges were unable to reach the Vessel as planned. Until early April, Owners for the first time informed Charterers’ agent that the freshwater was insufficient, and required the agent to arrange barges and simultaneously to carry 60 boxes of mineral water for replenishment. The agent subsequently tried to contact the barges, but due to rough sea condition, the barges could not confirm their availability. Subsequently, the agent tried the local fishing boat for water supply, but it turned out impossible due to the bad weather. At the same time, the local authority issued a weather warning to the vessels in port of bad weather. Afterward Owners sought help from the local authority and requested for fresh water replenish through warship but failed again. Consequently, Owners decided to sail to Chittagong for freshwater replenishment and until middle April the Vessel returned to the outer anchorage of Mongla.
【Charterparty clauses】
6. Owners to Provide
The Owners shall provide and pay for the insurance of the Vessel, except as otherwise provided, and for all provisions, cabin, deck, engine-room and other necessary stores, including boiler water...
17. Off Hire
......
Should the Vessel deviate or put back during a voyage, contrary to the orders or directions of the Charterers, for any reason other than accident to the cargo or where permitted in lines 257 to 258[1] hereunder, 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. All bunkers used by the Vessel while off hire shall be for the Owners' account.
22. Liberties
The Vessel shall have the liberty to sail with or without pilots, to tow and to be towed, to assist vessels in distress, and to deviate for the purpose of saving life and property.
[Claims and Reasons]
Based on the above facts, Owners claimed against Charterers for the loss of hire and fuel incurred between early April and middle April for the main reasons as follows, that:
1. Owners followed Charterers’ instruction to stay idle for a long time at the anchorage outside Mongla, which led the Vessel to sail to Chittagong for replenishing freshwater;
2. Charterers did not raise objection to the Vessel’s sail to Chittagong;
3. The Vessel deviated to Chittagong was for the purpose of saving life and property;
4. The anchorage outside Mongla was unsafe and short of facilities to supply fresh water.
[Main defenses]
Charterers filed persuasive defense to the claim as follows:
1. Under Charterparty, it is Owners’ rather than Charterers’ obligation to supply fresh water. The exact reason why shipowner deviated for replenishing fresh water was because it failed to supply the Vessel and to reasonably predict and manage freshwater reserves.
2. It was Charterers’ option under Charterparty to unload at the outer anchorage. Although the bad weather delayed the anchorage operation, Charterers made punctual payment during the waiting period. Meanwhile, Charterers actively assisted Owners through the agent in seeking fresh water supply.
3. The excuse Owners averred for deviation of protecting the safety of the crew was to disguise the failure of reasonably maintaining supply.
4. Owners’ treatment of Mongla (the outer Anchorage) as an unsafe port/anchorage was untenable. By reference to the classic definition of safe port in The Eastern City [1958] 2 Lloyd’s Rep 127, it is clear in this instance that the bad weather and sea condition in the area of port which affected the replenishment of fresh water did not render the port/anchorage itself unsafe.
[Arbitration tribunal’s opinion]
On balance of the submissions of the both sides, the tribunal were of the opinion that:
1. Prima facie, Owners must be responsible for the fact that the Vessel ran out of fresh water at Mongla and for the consequent need to divert her to Chittagong to replenish her supplies, given that fresh water could not be supplied to her at the outer anchorage at Mongla.
2. Charterers were entitled under the Charterparty to keep the Vessel at the outer anchorage at Mongla for the period in question. That the Vessel’s stay there led to a shortage of fresh water arose from the fact that the Vessel arrived at Mongla needing to replenish her fresh water supplies, having sufficient on board for only 24 days’ operations. In other words, Owners simply underestimated the fresh water requirements for discharge at Mongla and must therefore bear the consequences. Those consequences are that the time and cost of the diversion to Chittagong are for Owners’ account.
3. Owners cannot rely on a Liberty clause to excuse them from the consequences of their own failure to manage the Vessel’s fresh water supply effectively.
4. [The tribunal] see no merit in Owners’ argument that the port of Mongla – or its outer anchorage – was unsafe as they are not satisfied that the absence of fresh water supply from one part of a port renders it unsafe. If it did, it would be expected that the danger to be avoided by the “good navigation and seamanship” of which the judgment in The Eastern City [1958] 2 Lloyd’s Rep 127 speaks – at least in the sense of prudent management of a vessel’s fresh water supplies.
[Conclusion]
The arbitral award illuminates that under time charter, the obligation of fresh water supply usually rests on the shipowners. Namely they shall well manage and prepare sufficient supply. On the other hand, it may not be taken for granted that shipowners can simply require charterers to bear losses of hire and fuel with the simple allegation of deviation for the safety of the crew or the ship. The party which should bear this part of loss shall be decided by finding out the primary cause of the said unsafety. If deviation is caused by the shipowners’ failure to perform their basic obligations under the charterparties and if shipowner cannot prove that it is charterers’ acts preventing them from performing their obligations, the shipowners will hardly shift the losses of hire and fuel on the charterers.