In Osmium Shipping Corp v Cargill International SA [2012] EWHC 571 (Comm), the Commercial Court considered the grammatical structure and syntax of an off-hire clause in the context of whether seizure of the vessel by pirates constituted an off-hire event.

The charterparty was on an amended NYPE 1946 form, and the off-hire clause in question provided that if the vessel should “be put back whilst on voyage by reason of any accident or breakdown, … or capture/seizure, or detention or threatened detention by any authority including arrest, the hire shall be suspended”. Whilst on charter, the vessel had been hijacked by pirates and held for 45 days, after which it was released on payment of a ransom by Owners.

Charterers argued that a proper interpretation of the off-hire clause resulted in the seizure being an off-hire event. Owners, on the other hand, argued that the words “capture/seizure” were qualified by the words “by any authority”, and that the pirates did not constitute such an authority. They further argued that the clause had to be read in the context of the charterparty as a whole, which incorporated the Conwartime 2004 clause. As such, on Owners’ case, Charterers bore the risk of piracy.

The Court held that, where a charterparty provided for off-hire in some provisions and remedies for breach in others, the focus must be on the off-hire clause in determining an off-hire event. The particular words used, and the grammatical structure and syntax of the clause, must be considered. In this case, on a close reading of the off-hire clause, it was only “detention or threatened detention” that was qualified by the words “by any authority”. This was clear from the use of the word “or”, the linking of “capture” and “seizure” by the use of an oblique stroke, and the positioning of the commas.

As regards the effect of the Conwartime clause, this related to performance of the charterparty and to breach. It dealt with war risks and piracy in that specific context. It would not be taken as “an all-embracing allocation of risk of piracy to Charterers so as to affect the construction of the off-hire clause”.

The Court’s findings make it clear that charterparty clauses must be read closely in order to establish their true meaning. The structure of the clause cannot be disregarded as insignificant: in this case the Court considered the language and construction of the clause, including its punctuation. This should be borne in mind when drafting clauses as well as when interpreting them. In addition, the Court has made it clear that off-hire is a separate regime from the performance and breach of other charterparty obligations, and consideration therefore needs to be given to the off-hire clause in determining an off-hire event.