JTJB Legal Update October 2014
This case concerned a dispute involving the charter of vessels.
The Defendant approached the Plaintiff to obtain a vessel to ship certain cargo from the port of Nanwei, China to Singapore. The Plaintiff was able to procure a suitable vessel (the “1st Vessel”) and the parties entered into a fixture (the “1st Fixture”). The 1st Vessel was in turn chartered by the Plaintiff from a 3rd party.
However, it transpired that the 1st Vessel would only be able to arrive at Nanwei after the laycan period provided under the 1st Fixture. The Plaintiff requested for an extension of the laycan which was rejected by the Defendant.
The Plaintiff offered the Defendant several alternative vessels to ship the cargo. Subsequently, the Plaintiff informed the Defendant that they had found a passing vessel (the “2nd Vessel”) that could carry out the shipment but the fixture had to be confirmed urgently. The parties then entered into a second fixture (“the 2nd Fixture”).
The 2nd Vessel reached Nanwei within the time stipulated in the 2nd Fixture but was unable to secure berth as the shipping documents, which were required to procure a berth booking, were held by the Defendant’s agents who refused to release them. The Defendant then proceeded to load the cargo on-board another vessel.
The Plaintiff brought a claim for damages and an indemnity for any damages it would have to pay the 3rd party as the disponent owner of the 2nd Vessel. The Defendant brought a counterclaim for loss and expense arising out of the Plaintiff’s breach of the 1st Fixture.
It was the Plaintiff’s case that the 1st Fixture was validly terminated pursuant to a cancellation clause therein and parties had subsequently and separately entered into the 2nd Fixture for the 2nd Vessel. The Defendant argued that the Plaintiff was in breach of the 1st Fixture, for failing to provide the 1st Vessel within the laycan, and that the Defendant had not entered into a contract with the Plaintiff for the 2nd Vessel. In the alternative, the Defendant claimed that the 2nd Fixture was void as its terms were uncertain.
A number of other legal and factual issues arose for consideration including:
a) Interpretation and operation of clause 9 of the Gencon which was incorporated into the 1st Fixture ;
b) Effect of a laycan clause and the meaning of the term “shipment date”;
c) Whether the 2nd Vessel was an arrived ship for the purposes of issuing a Notice of Readiness; and
d) The difference between a port and berth charterparty.
The High Court found in favour of the Plaintiff.
The case is of interest because the High Court was of the view that while the Plaintiff was in breach of the 1st Fixture, the Defendant was nevertheless not entitled to the loss and expenses claimed.
The Court found that the Defendant chose to accept the Plaintiff’s breach and terminate the 1st Fixture. The Court also found that the Defendant had entered into a 2nd Fixture with the Plaintiff. The loss and expense claimed by the Defendant arose as a result of the Defendant’s repudiation of the 2nd Fixture, and not as a result of the Plaintiff’s breach of the 1st Fixture. [Note: The Defendant has since appealed to the Court of Appeal.]
The Plaintiff was represented by K. Murali Pany and Edward Koh of JTJB.
This update is for general information only and is it not intended to constitute legal advice. JTJB has made all reasonable efforts to ensure the information provided is accurate at the time of publication.
K. Murali Pany
JTJB Singapore Office