Commercial Court Clarifies Owners' Obligations Under The Conwartime 1993

Pacific Basin IHX Limited v. Bulkhandling Handymax AS (Triton Lark) [2012] EWHC 70 (Comm)

Pacific Basin IHX Limited v. Bulkhandling Handymax AS (Triton Lark) [2011] EWHC 2862 (Comm)

In a significant decision for owners whose vessels have in recent years been, and continue to be, at risk of vessel hijacking in the Gulf of Aden, Mr Justice Teare of the Commercial Court has recently ruled on the meaning and application of the Conwartime 1993 clause. In particular, he has clarified the meaning of "exposed to War Risks" in sub-clause 2 of that clause.

Referring to the terms of sub-clause 2 of the Conwartime 1993 itself, he stated that an owner or master may have to address both "likelihood and dangerousness" when ordered to sail to a place, in the sense that he has to consider whether, in his reasonable judgment, there is "a "real likelihood", in the sense of a real danger" that the vessel will be "exposed to acts of piracy". "Exposed to acts piracy" means that the place in question will be, or will subsequently become, dangerous on account of acts of piracy.

Mr Justice Teare's ruling on the meaning of "exposed to War Risks" is set out in the later of the two judgments, which supplements his initial decision, of November 2011, in relation to the construction of the Conwartime 1993. We summarise below the background to this litigation and highlight the primary issues of interest which arose.

The background facts

The claimant ("Pacific"), on 29 August 2008, chartered the vessel Triton Lark from the defendant ("Bulkhandling") and, in early November 2008, ordered her to sail from Hamburg to China via Suez (and therefore through the Gulf of Aden). Owing to the threat of piracy, Bulkhandling refused to sail through the Gulf of Aden and instead sailed around the Cape of Good Hope. The dispute arose in relation to which party should pay for the time and the extra costs associated with travelling around the Cape.

The charterparty incorporated the Conwartime 1993 clause, the relevant sections of which are set out below (emphasis added):

"BIMCO Standard War Risk Clause for Time Charters, 1993

Code Name: 'CONWARTIME 1993'

(1) For the purpose of this Clause, the words:

(a) "Owners" shall include the shipowners, bareboat charterers, disponent owners, managers or other operators who are charged with the management of the Vessel, and the Master; and

(b) 'War Risks' shall include any war (whether actual or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion, warlike operations, the laying of mines (whether actual or reported), acts of piracy, acts of terrorists, acts of hostility or malicious damage, blockades (whether imposed against all vessels or imposed selectively against vessels of...