In November 2011, judgment was delivered in Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The “Triton Lark”) which considered the true construction and implementation of the CONWARTIME 1993 clause. This case was considered in a previous post.

In a further judgment between the same parties dated 25 January 2012, Mr Justice Teare has sought to clarify what is meant by the phrase “exposed to war risk”.

The Judge has done so by reference to clause (2) of CONWARTIME itself. The clause refers to exposure to war risk and then to a situation where the Vessel is already within “any such place as aforesaid, which only becomes dangerous, or is likely to be or to become dangerous after her entry into it”. Mr Justice Teare has read this as meaning that “dangerous” is thereby used to describe a situation where the Vessel, cargo or crew are likely to be “exposed to war risk”. He has therefore construed the phrase “exposed to war risk” as meaning a situation which is “dangerous”.

This has the effect that the question to be addressed by the Owners or Master is “whether there is a real likelihood that the Vessel will be exposed to acts of piracy in the sense that the place will be dangerous on account of acts of piracy”.

The Judge accepts that what is dangerous will depend upon the facts of a particular case and this will include (1) the degree of likelihood that a particular peril might occur, i.e. piracy, and (2) the gravity or other consequence should that peril occur.

The Judge has therefore remitted the matter back to the Tribunal. The Tribunal is to consider the evidence and determine whether there was a real likelihood that the Vessel would be exposed to acts of piracy in the Gulf of Aden, the degree of such likelihood and the gravity of the consequences to the Vessel, cargo and crew. In addition, it must consider whether these were such as to render the Gulf of Aden dangerous for the Vessel.

Where does this leave us? In any given case, the Master and Owners have to consider whether there is a likelihood of the Vessel being exposed to danger. This will be determined on the basis of the facts at the time. Essentially, therefore, the Judge has simply shifted the uncertainty to the meaning of “dangerous”. We envisage that there will now be a number of judicial decisions on whether, in any given circumstance, the Vessel was in such danger. This is likely to include consideration of the balance between the degree of likelihood that a particular peril might occur and the gravity or other consequence should it do so, i.e. where the likelihood is remote but the consequences (for example torture by pirates) will be severe.