London Arbitration 3/15

A vessel was chartered for one voyage from “1-2 load berth chop always afloat Santander” to a port in the UK. Charterers ordered the vessel to load bulk bauxite at a berth adjacent to one where cars were waiting to be loaded. Although all reasonable preventative measures were taken, the loading of bauxite caused dust. When the wind direction changed, the dust was blown over the cars at the adjacent berth. To prevent the dust from getting on and inside the cars, the port authority ordered the loading of the bauxite cargo to be suspended.

Owners claimed demurrage for the resulting delay. Charterers argued that they were entitled to rely on the force majeure clause in the charterparty. The Tribunal held that Charterers had failed to bring themselves within the force majeure clause, and so Owners’ demurrage claim succeeded.

Charterers were responsible for the choice of berths at the loadport. A change in the wind direction such that it would blow dust over the adjacent berth was possible. Charterers could reasonably have foreseen this, and also that if the change in wind direction occurred, it would affect the performance expected of them. Further, it was not unexpected that the port authorities would give priority to a high-value and sensitive cargo such as cars. The bulk bauxite could have been loaded at an alternative berth, although moving the vessel and cargo would have incurred additional cost.

Performance by Charterers in this case was not prevented; rather it was hindered or rendered more onerous (i.e., they had to bear the expense either of demurrage or of shifting the vessel and cargo). This is insufficient to support reliance on a force majeure clause.

Key to the Tribunal’s analysis was Moore-Bick J’s statement in The Kriti Rex that “the expression force majeure is likely to be restricted to supervening events which arise without the fault of either party and for which neither of them has undertaken responsibility.” In this case, Charterers were responsible for the choice of berth, and so there was no supervening event for which neither party had undertaken responsibility.

This decision is in line with the strict interpretation of force majeure clauses in English law. Where parties have agreed on an allocation of risk and responsibility in the contract terms, they must bear the consequences of that agreement. The burden is on the party seeking to rely on a force majeure clause that (a) non-performance was the result of circumstances beyond his control and (b) he could have taken no reasonable steps to avoid or mitigate the event in question or its consequences.

Voyage charters contain demurrage provisions for the very purpose of compensating Owners for delay. If Charterers wish to avoid liability for demurrage on the basis of force majeure, they will need to prove that the alleged force majeure event was entirely fortuitous and that it prevented performance, rather than rendered performance more onerous or expensive. This requires a detailed factual analysis and, in many cases, may be difficult to prove.