In the recent case of ED&F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH (The "LADYTRAMP") [2013], the Court of Appeal took a narrow approach to interpreting provisions of a clause that provided for interruptions to laytime in the event of certain force majeure circumstances.

Clause 28 of the Sugar Charter Party 1999 provided "In the event that whilst at or off the loading place ... the loading ... of the vessel is prevented or delayed by ... mechanical breakdowns at mechanical loading plants, government interferences ... time so lost shall not count as laytime".

Shortly before the arrival of the vessel, the terminal to which the vessel had been ordered was damaged by fire, and in particular, the conveyor belt system linking the terminal to the warehouse was destroyed. Charterers alleged that this amounted to mechanical breakdown pursuant to Clause 28, since the conveyor belt no longer operated. In doing so, charterers relied on the earlier Court of Appeal decision in The "AFRAPEARL"1, in which it was held that "breakdown of machinery" covered any situation in which the machinery no longer fulfilled its purpose.

The Court of Appeal however chose to focus on the narrower wording of Clause 28, which required "mechanical breakdown", as opposed to "breakdown". The Court considered that to fall within clause 28, the breakdown had to be mechanical in nature, and so destruction by outside elements such as fire did not fit within the wording of the clause. Destruction by fire was not therefore sufficient to interrupt laytime, and charterers were liable for demurrage.

There have been several incidents recently in which ports were damaged in similar ways, such as by fire in Santos, and by weather, in the Pacific, as a result of Typhoon Haiyan. These disasters have given rise to disputes over whether or not laytime/demurrage was interrupted by damage to the port, and this decision will be decisive for some of those disputes where the laytime clause may be interpreted narrowly. Where the clause is wider, decisions such as that in The "AFRAPEARL" should still apply and provide protection for charterers.

It is also worth remembering that, following the 2012 case of Carboex SA v Louis Dreyfus Commodities Suisse SA, where an event does fall within a force majeure or interruption to laytime clause, the aftermath of that event is also likely to be covered. In that case, the vessel arrived after a strike in the port, but was caught in the congestion caused by that strike. The court held that this was sufficient to interrupt laytime, provided it could be shown that the delay was caused by the strike.

Footnote

1 Portolana Compañía Naviera Ltd v Vitol SA Inc. (The "AFRAPEARL") [2004]

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