A Deadfreight dispute
This case study highlights a case involving ‘deadfreight’ as negotiated in an amended Asbatankvoy form for the carriage of gas oil or unleaded mogas for eight voyages. The facts of the case and judgements are as follows:
- The charterer had agreed to load at least 90,000 tonnes of gas oil and/or mogas for each voyage. If the charterer short-loaded, deadfreight was payable to the ship owner.
- A Lightering clause provided for the charterer to load or discharge cargo by lightering or ship-to-ship transfer.
- The nominated vessel for the sixth voyage arrived at the load port to load the cargo. Bad weather had silted the dredged entry channel into the port when the vessel arrived. This resulted in draft restrictions for port entry.
- Because of vessel draft restrictions, the Master informed the charterer that the vessel could load only 67,000 tons of cargo. The charterer offered to load 93,000 tonnes. In the end the vessel loaded 67,058 tons. The amount loaded was therefore less than the agreed amount for a voyage under the contract.
- The owner demanded deadfreight on cargo shortfall, as the Lightering clause required the charterer to load the cargo shortfall at lighterage. The charterer disagreed and did not pay deadfreight. The owners took the case to an arbitration panel. The arbitration panel ruled in favour of the ship owner.
- The owner appealed to the English High Court. The High Court agreed with the decision of the arbitration panel. In giving their judgement the English High Court noted that the charterer had fulfilled their contractual obligations by offering to load 93,000 tons of cargo
- The vessel’s owners then appealed successfully to the England and Wales Court of Appeal. The Court of Appeal ruled that the charterer took the ‘least unattractive’ option which was to load the amount of cargo as confirmed by the Master so that the vessel could sail without delay. The court in giving judgement observed that loading costs (these are to the charterer’s account) would have increased if the vessel had waited for the channel to be dredged or used the ship-to-ship transfer option for loading the shortfall.
The Final JudgementThe Court of Appeal judge ruled that the ship owner was entitled to deadfreight on the cargo shortfall. This is because under the Asbatankvoy charter party the charterer’s obligation was simply to pay deadfreight on cargo where less than the minimum was supplied.