Destruction By Fire Not A Mechanical Breakdown Under A Laytime Exclusion Clause: Court Of Appeal Confirms Commercial Court Decision

E.D.& F.Man Sugar Ltd. v. Unicargo Transportgesellschaft GmbH (Ladytramp) [2013] EWCA Civ 1449

This was a dispute as to whether destruction by fire was a "mechanical breakdown" under Clause 28 (laytime exclusion clause) of the charter. The Tribunal and the Commercial Court applied a narrow construction of the laytime exclusion clause and concluded that fire was not "mechanical breakdown". The Court of Appeal upheld both the Tribunal's award and the Commercial Court's decision and, once again, ruled in favour of the Owners and found that they were entitled to demurrage.

The background facts

The Ladytramp was chartered on the Sugar Charter Party 1999 form for the carriage of bulk sugar from "1-2 safe berth(s), 1 safe port (intention Santos) but not south of Paranagua to the Black Sea (intention Odessa)". On 9 June 2010, the day of the fixture, the Charterers declared Paranagua as the loading port. On 14 June 2010, a week before the vessel arrived at the load port, the parties were informed that a fire had occurred at the terminal where they had initially scheduled the vessel to load the cargo. The fire had destroyed the conveyor belt system linking the terminal to the warehouse.

On 20 June, the vessel arrived at Paranagua and tendered notice of readiness. In the absence of an available berth, the vessel remained off the port until 14 July, when she entered the inner roads of the port awaiting berthing instructions. Loading commenced on 18 July and was completed at 1300 hours on 20 July. The vessel subsequently sailed for the discharge port in the Black Sea.

The Owners claimed demurrage and contended that time began to count at 1400 hours on 21 June 2010 and that laytime expired at 2353 hours on 25 June. Thereafter, the vessel was on demurrage continuously up to the time of completion at 1300 hours on 20 July. The Charterers disputed the claim, relying upon the laytime exclusion clause (Clause 28) of the charterparty, which provided:

"In the event that whilst at or off the loading place ... the loading ....of the vessel is prevented or delayed by ... mechanical breakdowns at mechanical loading plants, government interferences ... time so lost shall not count as laytime"

The Charterers sought to rely upon Clause 28 on the basis that the loading of the vessel was prevented by "mechanical breakdown" (caused by the destruction of the conveyor belt system by fire) and also by "government interference" (resulting from the local port authority's...