Commercial Court Upholds Anti-Technicality Clause

Owneast Shipping Ltd v Qatar Navigation QSC (Qatar Star) [2010] EWHC 1663 (Comm)

An anti-technicality clause is commonly found in time charters where the intention is to avoid a situation where owners may withdraw the vessel due to a late payment of hire that may be minimal or inconsequential. Mr Justice Mance in The North Sea [1997] 2 Lloyd's Rep 328 observed that since a withdrawal or cancellation clause is a forfeiture clause, the effect of which may be draconian, caution must always be exercised in any attempt to extend its application. The approach of giving effect to anti-technicality provisions as a means of providing time charterers with a measure of relief from what could be unjust forfeiture of a ship is reflected in the Commercial Court judgment in this case.

Background facts

The Qatar Star was chartered on an amended NYPE form with additional clauses dated 7 February 2005 for 48 months +/-2 months at charterers' option. The charter contained inter alia the following provisions:

"5. Payment of said hire to be made to Owners designated bank account in cash in United States Currency, 15 days in advance . . . otherwise failing the punctual and regular payment of the hire, or bank guarantee or deposit, or on any fundamental breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from the service of the Charterers, without prejudice to any claim they may have against the Charterers. . . ."

"15. That in the event of the loss of time from deficiency and/or default and/or strike of men or deficiency of stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, drydocking for the purposes 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 and all extra directly related expenses may be deducted from hire;..."

"62. Punctual Payment

Referring to lines 60 and 61, where there is any failure to make "punctual and regular payment" due to errors or omission of Charterers' employees, bankers or Agents or otherwise for any reason where there is absence of intention to fail to make payment as set out, Charterers shall be given by owners 3 banking days notice to rectify the failure and where so rectified the payment shall stand as punctual and regular payment."

The charterers were not punctual in their semi-monthly hire payments, many of which were...