A London Arbitration 3/21 award is a useful reminder to shipowners and demise charterers to ensure an addendum to vary a voyage charter, by adding a further port or ports of discharge, expressly covers all anticipated additional time and expense involved in performance to avoid being left out of pocket.
As happens from time to time, a cargo is shipped under a voyage charter in anticipation that it will be discharged at an agreed sole port, although circumstances thereafter arise which necessitate discharging the cargo at one or more alternative ports in other countries.
In such a scenario, unlike under a time charter which is often inherently more flexible, the voyage charter can no longer be performed as envisaged based on what was expressly agreed. The parties then commonly need to agree to a new contract or, alternatively, to vary the existing one.
In this case, the local authorities would not allow the corn cargo to be discharged, as it did not meet local import specification. The parties in the event arranged and performed the remainder of the contract on the basis that discharge of the cargo would be undertaken at two different ports.
The need for two different ports of discharge arose because some of the cargo was also rejected as deficient at the second port, with the result that the remaining cargo inevitably had to be discharged elsewhere, involving a further period of steaming and time in port for the vessel at the final port.
Long after arrangements were made and performance began, the parties drew up an addendum to address how to treat the demurrage accrued at the first and the second ports of discharge and the compensation to be paid for the time and expense involved for the further performance thereafter.
There was no express inclusion of a right to be paid for the addition bunkers consumed between the second and the third new ports of discharge. When a dispute broke out between the parties, this left the shipowner having to rely upon the implication of a term to claim any further compensation.
As it happened, owners and charterers also failed to agree expressly to a freight supplement, or otherwise, as compensation for the voyage between the first and the second ports of discharge, and the demurrage agreed for those two ports did not encompass the voyage between the two.
The tribunal was not minded to help the shipowner, who had agreed various figures in the addendum as compensation, to recover additional compensation for the deviation bunkers consumed. This, they reasoned, was because having agreed the addendum, there was no further scope to imply a term.
Accordingly, the take away from this case is to be mindful to avoid any gap existing in an addendum agreed, given the further performance contemplated, to ensure adequate express rights to compensation for both the time and the expense of further sea voyages and port calls.
https://www.nepia.com/articles/voyage-charter-variation-mind-the-gap/