UK court rules ships remain on-hire while seized by pirates

THE Saldanha, a 38,000-ton Panamax bulker, taken by pirates in the Gulf of Aden, remained on-hire for its period of detention, said a London high court recently.

The court judgment addressed the charter party implications of piracy and provided guidance on an "issue of great relevance to owners and charterers alike," it said in a company statement.

On February 22, 2009, the Saldanha, on a standard New York Produce Exchange charter, was en route from Indonesia to Kope, Slovenia with a cargo of coal when seized by pirates. The ship was taken to a location close to Eyl, Somalia and released on April 25. The charterer did not pay hire during the detention, claiming the ship was off-hire since its seizure.

A London arbitration tribunal found the ship had remained on-hire throughout its detention. The charterer had argued that the ship was off-hire by referring to clause 15 of the NYPE charter:

"...in the event of the loss of time from default and/or deficiency of men including strike of officers and/or crew or deficiency of stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, dry-docking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost."

The charterer argued that the seizure by pirates amounted to a "default and/or deficiency of men" or "detention by average accident." He further claimed that the words "any other cause" as found in the clause could include an external event such as the actions of pirates.

The charterer appealed the tribunal's decision in the high court where Mr Justice Gross found that the appeal failed on all counts.

The judge concluded that if parties wished to treat seizure by pirates as an off-hire event under a time charter party, there should be specific wording to that effect. He suggested that if the off-hire clause had been amended to refer to "any other cause whatsoever" then this might have made a difference but this was not certain. The charterer has since been refused leave to appeal to the Court of Appeal.

Said UK Defence Club manager Daniel Evans: "The judgment is a very important one with wide ranging implications for the shipping industry, as pirate attacks remain prevalent. Unless there is clear wording to the contrary, this ruling means that a ship chartered on unamended NYPE terms will remain on-hire if seized by pirates. It is very much a landmark ruling."
(Source:www.schednet.com)