[091112.EN.SEA] Owners, Not Charterers, Take Hit When Pirates Strike: UK Commercial Court

LONDON's Commercial Court has ruled in favour of charterers against shipowners who claim that both parties should share in losses incurred when pirates seize ships, reports New York's Maritime Advocate.

The judge held that a clause inserted into a charter-owner contract should be construed in accordance with its "plain and obvious meaning" that piracy was an "off-hire event" and therefore on the owner's account but not the charterer's.

At issue was the exact wording of the clause, which said:

"Should the vessel put back whilst on voyage by reason of any accident or breakdown, or in the event of loss of time either in port or at sea or deviation upon the course of the voyage caused by sickness of or accident to the crew or any person onboard the vessel or by reason of the refusal of the master or crew to perform their duties, or oil pollution, even if alleged, or capture/seizure, or detention or threatened detention by any authority including arrest, the hire shall be suspended from the time of the inefficiency until the vessel is again efficient in the same or equidistant position in charterers' option, and voyage resumed there from. All extra directly related expenses incurred including bunker consumed during period of suspended hire shall be for owners' account."

The phrase, "capture/seizure, or detention or threatened detention by any authority" was the point of contention.

Owners said that any "capture/seizure" had to be by an "authority" before it was an "off-hire" event, whereas charterers successfully argued that capture/seizure was an "off-hire" event distinct from "detention or threatened detention by any authority", and that acts of piracy clearly fell within the meaning of "capture/seizure".

The finding was in contrast to the earlier and differently worded clause in the case of Cosco Bulk Carrier Co Ltd vs Team-Up Owning Co Ltd in the matter of the ship Saldanha in 2009 in which the court ruled the clause in that earlier case was similar, but sufficiently different, to warrant a ruling that the vessel was "on-hire" for the duration of its detention by pirates.

Said the Maritime Advocate: "The case serves to underline the importance of using clear words to allocate the risk in piratical events, to avoid the risk of subsequent disputes."

Source : HKSG.