Time Charters


Off-hire Clause

Off-hire Clause

“97. 15. That in the event of the loss of time from deficiency of men or stores, fire, breakdown or damages to hull, machinery or equipment,
98. grounding, detention by average accidents to ship or cargo, drydocking for the purpose of examination or painting bottom, or by any other cause
99. preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost; and if upon the voyage the speed be reduced by
100. defect in or breakdown of any part of her hull, machinery or equipment, the time so lost, and the cost of any extra fuel consumed in consequence
101. thereof, and all extra expenses shall be deducted from the hire.”
25.1 Clause 15 of the New York Produce form contains two provisions qualifying the charterers’ obligation to pay hire throughout the charter period. The first of these, in Lines 97 to 99, is an off-hire provision dealing with interruptions to the charter service. The second, in Lines 99 to 101, is a provision allowing deduction from hire in the event that the ship’s speed at sea is reduced by mechanical problems. This chapter deals with each of these in turn.

Interruptions to the charter service: general principles

25.2 Most, if not all, time charters contain an off-hire clause, excusing the charterers from having to pay hire while the ship is prevented from performing the charter service. Commenting on Clause 15 of the New York Produce form, Kerr, J., said in The Mareva A.S. , at page 381: “[T]he object is clear. The owners provide the ship and the crew to work her. So long as these are fully efficient and able to render to the charterers the service then required, hire is payable continuously. But if the ship is for any reason not in full working order to render the service then required from her, and the charterers suffer loss of time in consequence, then hire is not payable for the time so lost.” 25.3 Two general principles apply to such clauses. 25.4 First, the burden is on the charterers to show that the off-hire clause operates in the relevant circumstances. Bucknill, L.J., said in Royal Greek Government v. Minister of Transport (1948) 82 Ll.L.Rep. 196, at page 199: “the cardinal rule… in interpreting such a charter-party as this, is that the charterer will pay hire for the use of the ship unless he can bring himself within the exceptions. I think he must bring himself clearly within the exceptions. If there is a doubt as to what the words mean, then I think those words must be read in favour of the owners because the charterer is attempting to cut down the owners’ right to hire.” Similarly, Rix, L.J., in The Doric Pride , at page 179, said, “under a time charter the risk of delay is fundamentally on a time charterer, who remains liable to pay hire in all circumstances unless the charterer can bring himself within the plain words of an off-hire provision”. 25.5 Second, the off-hire clause does not depend on any breach of contract by the owners. In the words of Staughton, J., in The Ioanna , at page 167: “Off-hire events are not necessarily a breach of contract at all. So one should not be too surprised if one finds that [the off-hire clause] leads to a different answer than would ensue in the case of a claim for damages for breach of contract.”

The components of off-hire

25.6 Under Lines 97 to 99 of Clause 15 of the New York Produce form, dealing with interruption to service, there are three matters that the charterers must establish in order to put the ship off-hire: first, the full working of the ship must have been prevented; second, it must have been prevented by one of the causes or events listed in the clause; and third, there must have been a loss of time from that cause or event. These matters are discussed in turn below.

Preventing the full working of the ship

The first question to be addressed

25.7 In every case, the charterers have to show that the full working of the ship has been prevented. The phrase “preventing the full working of the vessel” qualifies not only the immediately preceding words “any other cause” but all of the other causes listed in Lines 97 and 98 of the New York Produce form, i.e. “deficiency of men” and so on. Kerr, J., said in The Mareva A.S. , at page 382: “The word ‘other’ in the phrase ‘or by any other cause preventing the full working of the vessel’ in my view shows that the various events referred to in the foregoing provisions were also only intended to take effect if the full working of the vessel… was thereby prevented.” 25.8 So one must start by asking whether the full working of the ship has been prevented. In The Aquacharm , Lord Denning, M.R., said at page 9: “We are to inquire first whether the ‘full working of the vessel’ has been prevented. Only if it has, do we consider the ‘cause’.” See also Rix, J., in The Laconian Confidence , at page 141: “It has therefore been said that the first question to be answered in any dispute under the clause is whether the full working of the vessel has been prevented; for if it has not, there is no need to go on to ask whether the vessel has suffered from the operation of any named cause. …”

Preventing the working of the ship

25.9 A ship is prevented from working when she is prevented from performing the next operation that the charter service requires of her: see The Berge Sund (C.A.), per Staughton, L.J., at page 459 and The TS Singapore , at page 57 rhc, per Burton, J. So if the next operation that the ship needs to undertake is to sail to the discharge port, but she is unable to do so, then the ship is being prevented from working. On the other hand, if the situation is that the ship is unable to sail, but the next operation required of her is to remain at berth and discharge, the full working of the ship has not been prevented.

The Westfalia was time chartered for trading between West African and European ports. The charter contained an off-hire clause which read, “In the event of loss of time from deficiency of men or stores, break-down of machinery, want of repairs, or damage, whereby the working of the ship is stopped for more than forty-eight consecutive hours, the payment of hire shall cease until she be again in an efficient state to resume her service”. The ship had a compound steam engine, with a high-pressure cylinder and a low-pressure cylinder. In the course of a voyage from West Africa to Harburg, on the Elbe, the high-pressure cylinder broke down and she was obliged to put into Las Palmas. Repairs could not be effected there. She was towed to Harburg by a tug, although some assistance was given by the ship’s low-pressure cylinder. Once at Harburg, she was discharged normally, although her engine remained unrepaired. The charterers claimed the ship was off hire both during the voyage to Harburg and during discharge.

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