London Arbitration 25/19

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NYPE – VESSEL FAILED INSPECTION – OFF HIRE

After Charterers file a claim against shipowners for overpaid hire and damages due to broken cranes during an in-port inspection, the Panel was left to determine if the claim was unreasonable or if the shipowners had failed to follow accords made in the charter party. 

[dropcap]U[/dropcap]nder a NYPE time charter, the vessel in question had arrived at a port on the West Coast of the US on 23 October, to offload a cargo of steel goods. Stemming from this time a US$121,826.68 claim was made by the charterers contending overpaid hire and damages. 

The following clauses of the charter party were pertinent to the claims. 

  • Line 22 of the preamble, which stated that the ship must be “throughout the duration of this Charter Party … in every way fitted for the service.”
  • Clause 1, which stated that the shipowners were able to:“throughout the duration of this Charter Party … maintain her class and keep the vessel in a thoroughly efficient state in hull, machinery, cargo spaces and equipment … for and during the service.”
  • Clause 22“Owners shall maintain the gear of the ship as fitted, providing gear (for all derricks) capable of lifts as described in Clause 29 up to three tons …”
  • Clause 29 “Cargo Handling Cranes 4×30 mt electro hydraulic deck cranes, maximum radius 30 m”
  • Clause 42 “(e) is suitable for discharging by mechanical grabs.”
  •  Clause 101

Health and Safety

“The Vessel will comply with any and all safety regulations and/or requirements applicable during the currency of this Charter Party, including those in effect at any port of loading and/or discharge. If the Vessel does not comply with said safety regulations or requirements, the Vessel will be off-hire until the Vessel is compliant with said safety regulations or requirements, the Owners will take immediate corrective steps and any stevedores standby time and any other expenses involved are to be for Owners’ account.” 

The day after arriving,  an email was sent to the master reporting that the charterers had become aware by the vessel’s agent that Vessel had been unable to pass gear inspection based on the need to repair all cranes on board. These repairs were set to cost US$230,000.  

The inspection was performed by the International Longshore and Warehouse Union (ILWU) who represented the stevedores that were hired to load and unload the vessel’s steel shipment. The stevedores refused to offload cargo until the vessel’s cranes had been repaired. Because of this, the shipowners made arrangements and paid for the work to be done, even though they had previously claimed that the cranes did not need repairs as they had been inspected and were in working order three months prior. The stevedores only agreed to work after the owners agreed to have repairs done. 

The charterers stood by their statement that the ship was out of service from the failed inspection to the time when she passed inspection and started work again. Since the charterers paid hire for that period, they sought it back in arbitration. Their main argument was that the vessel was out of service while getting repairs done due to the health and safety clause as well as previously mentioned clauses; 1, 22, 42, and line 22 of the preamble. 

The owners continued to deny that anything was wrong with their cranes and that the stevedores’ refusal to unload their cargo was unreasonable. However, there was no uncertainty that the vessel violated the Pacific Coast Marine Safety Code, a contract that covered the work done by stevedores and the ILWU. This contract made for safe working conditions for laborers. Because the owners did not meet the requirements of the Code and the fact that extensive work was done on the cranes, there was no evidence that the laborer’s refusal to work was unreasonable. 

The Panel ruled  that the charterers would be granted the overpaid hire that was initially claimed. The charterers claimed an additional $3200 for fees paid to surveyors, arguing that these were expenses the owner needed to pay under clause 101. It was decided that a balance of US$2700 would be awarded to them.