The owners’ obligation to commence the approach voyage under a voyage charter

In CSSA Chartering and Shipping Services SA v Mitsui OSK Limited Ltd  (The “PACIFIC VOYAGER”) [2018] EWCA Civ 2413 the Court of Appeal considered this area, a matter of continued importance to owners and charterers alike.  Since 1935 it has been well established law that when a charterparty contains express provisions that the ship will proceed with utmost despatch to the loadport and couples this with a date or range of dates when the ship is expected ready to load, this places an absolute obligation on the owners.  The ship must set off on its voyage to the loadport - the approach voyage - so as to get there on or around the agreed date.

This is often referred to as the Monroe obligation after the Court of Appeal decision on which it is founded.  The Court of Appeal had also held in Monroe Brothers & Ryan  [1935] 51 Lloyds Law Rep. 179 that whilst the protection of a general exceptions clause in a charterparty would apply to the approach voyage, it would not apply to the period before the start of the approach voyage.  Thus the Monroe obligation is regarded as an absolute obligation.

The principle has been extended in subsequent cases to cover charterparties containing ETA provisions rather than expected ready to load dates.

The PACIFIC VOYAGER decision extends this further.  The charterparty terms in dispute contained an “utmost despatch” provision but there was no expected ready to load or ETA date.  However, it did contain an itinerary for the vessel, setting out the timetable for its port calls on the voyage prior to the fixture in question. There was also a cancelling date.

Whilst on this prior voyage the ship, a VLCC, hit a submerged object in the Suez Canal and suffered serious damage.  Repairs were going to take “months” and so the vessel would not make it to the loadport by the cancelling date under the next fixture.  There was, of course, no fault on the owners’ part.  The delay was caused by an unavoidable accident.

The charterers cancelled the charterparty.  They also said that the owners were in breach of their absolute obligation to commence the approach voyage in time and claimed damages.

At first instance in the Commercial Court Mr Justice Popplewell found in the charterers’ favour.  Had the accident happened during the approach voyage, owners would have had the protection of the exceptions clause, but it had not so they could not escape the absolute nature of the obligation.  The Court of Appeal, where Lord Justice Longmore gave the sole judgment, has now upheld the judgment against owners.

Longmore L J accepted that each charterparty must be construed on its own terms – “so far, so uncontroversial” as he puts it.  Nonetheless, there has to be a more general approach against which those individual provisions are interpreted.  Again in his own words:

“in a business world…previous decisions on the same or similar clauses must be treated as authoritative in the interests of business certainty…previous cases should be regarded as helpful guides in situations similar to situations that have arisen before.”.

For Longmore L J it was “self-evident” that the itinerary was the provision that gave the answer.  This set the date at which the vessel was required to leave the discharge port under the previous fixture once a reasonable time for discharging had elapsed.

With that in mind the central issue in this case was how the express obligation to proceed with utmost dispatch to the loadport should operate.  For Longmore L J it was “self-evident” that the itinerary was the provision that gave the answer.  This set the date at which the vessel was required to leave the discharge port under the previous fixture once a reasonable time for discharging had elapsed.  Since the vessel failed to do so, the owners were in breach. Interestingly, and unlike Popplewell J, the Court of Appeal was not persuaded that the cancelling date in the charterparty necessarily provided a reference point for the operation of owners’ obligation. So this leaves open the question whether a voyage charterparty which contains an obligation to proceed with utmost despatch to the loadport but which only has a cancelling date by way of indication of the date at which the vessel is expected to be at the loadport should be looked at in the same way.

Permission to appeal to the Supreme Court is being sought.   Lurking in the background is a further interesting point.  The Court of Appeal was bound by previous authority that the exceptions clause does not cover the approach voyage.  The Supreme Court would not be.

...in a business world…previous decisions on the same or similar clauses must be treated as authoritative in the interests of business certainty…previous cases should be regarded as helpful guides in situations similar to situations that have arisen before.

Lord Justice Longmore

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