THE HIGH COURT OF JUSTICE, [2012] EWHC 3468 (Comm), December 5, 2012

“GREATSHIP DHRITI”

Judge: MRS JUSTICE GLOSTER, DBE

Greatship (India) Limited v Oceanografia SA de CV

This case concerns an appeal by Greatship (India) Limited (“Owners’) against a Third Partial Final Award dated 13 April 2012 of Mr. Simon Rainey QC and Dr Aleka Sheppard (“the Award” and “the Arbitrators’ respectively). The appeal concerned the construction of the following (amended) clause from the Supplytime 89:

QUOTE
“10(e) Payments – [1] Payments of Hire, bunker invoices and disbursements for Charterers’ account shall be received within the number of days stated in Box 23 from the date of receipt of the invoice. Payment shall be made in the contract currency in full without discount to the account stated in Box 22. However any advances for disbursements made on behalf of and approved by Owners may be deducted from Hire due.

[2] If payment is not received by Owners within 5 banking days following the due date Owners are entitled to charge interest at the rate stated in Box 24 on the amount outstanding from and including the due date until payment is received. Where an invoice is disputed, Charterers shall in any event pay the undisputed portion of the invoice but shall be entitled to withhold payment of the disputed portion provided that such portion is reasonably disputed and Charterers specify such reason. Interest will be chargeable at the rate stated in Box 24 on such disputed amounts where resolved in favour of Owners. Should Owners prove the validity of the disputed portion of the invoice, balance payment shall be received by Owners within 5 banking days after the dispute is resolved. Should Charterers’ claim be valid, a corrected invoice shall be issued by Owners.

 [3] In default of payment as herein specified, Owners may require Charterers to make payment of the amount due within 5 banking days of receipt of notification from Owners; failing which Owners shall have the right to withdraw the Vessel without prejudice to any claim Owners may have against Charterers under this Charter party.

 [4] While payment remains due Owners shall be entitled to suspend the performance of any and all of their obligations hereunder and shall have no responsibility whatsoever for any consequences thereof, in respect of which Charterers hereby indemnify Owners, and Hire shall continue to accrue and any extra expenses resulting from such suspension shall be for Charterers’ account”
UNQUOTE

The question was whether, in the event of late payment by Charterers, Owners had to give five banking days notice before being entitled to suspend operations under Clause 10.e.[4]. The Arbitrators had decided in the Award that Owners were indeed obliged to give five days notice before suspending operations under Clause 10.e.[4]. One of the reasons given for that decision was that Clause 10.e.[4] could not be read independently from Clauses 10.e.[2] and 10.e.[3].

On Appeal, the High Court judge, Mrs Justice Gloster said:

QUOTE
(…) I hold that, on the proper construction of Clause 10(e) of the BIMCO  Supplytime  89 form, in order for owners’ right “to suspend performance of any and all of their obligations’ to be validly exercised, owners are not required to give charterers five banking days notice of the suspension. (…).
UNQUOTE

Comment
In the Supplytime 2005 clause 12.f. replaces clause 10.e. of the Supplytime 89. Clause 12.f. Supplytime 2005 says:

QUOTE
(f) (i) Where there is a failure to pay Hire by the due date, the Owners shall notify the Charterers in writing of such failure and further may also suspend the performance of any or all of their obligations under this Charter Party until such time as all the Hire due to the Owners under the Charter Party has been received by the Owners. Throughout any period of suspended performance under this Clause, the Vessel is to be and shall remain on Hire. The Owners’ right to suspend performance under this Clause shall be without prejudice to any other rights they may have under this Charter Party.

(ii) If after 5 days of the written notification referred to in Clause 12(f)(i) the Hire has still not been received the Owners may at any time while Hire  remains outstanding withdraw the Vessel from the Charter Party. The right to withdraw is to be exercised promptly and in writing and is not dependent upon the Owners first exercising the right to suspend performance of their obligations under the Charter Party pursuant to Clause 12(f)(i) above. The receipt by the Owners of a payment from the Charterers after the five day period referred to above has expired but prior to the notice of withdrawal shall not be deemed a waiver of the Owners’ right to cancel the Charter Party.

(…)”

These clauses from the Supplytime 2005 clearly grant Owners the right to suspend operations directly when they have notified Charterers that there is  a failure to pay Hire on time. It is my view that Mrs Justice Gloster’s decision in the GREATSHIP DHRITI makes clear that clause 10.e.[4] Supplytime 1989 should be interpreted in the same way as Clause 12.f.i. in the Supplytime 2005.

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