Ship Off-Hire Period

Charterer will be unable to rely on the off-hire clause unless he is deprived of the use of the vessel by the occurrence of one of the specified events. Thus, while an engine breakdown at sea might take the vessel off-hire, it would not have the same effect if it occurred while the vessel was discharging in port, provided that the vessel was otherwise efficient for carrying out that operation. Similarly, the installation of new equipment by the owner at the charterer’s request while the vessel was waiting for a berth, did not activate the off-hire clause since the charterer was not, in the circumstances, deprived of the use of the vessel. Everything depends, however, on the precise wording of the clause and the strict standards of interpretation adopted by the courts have resulted in superficially similarly drafted clauses producing radically different effects. The majority of standard off-hire clauses fall into one of two distinct categories: they are either ‘period’ or ‘net loss of time’ clauses. The ‘period clause’ is distinguished by the fact that it designates the start and end of any period for which hire is suspended by linking them to the occurrence of specified events. Thus, while any one of a selection of events (e.g. deficiency of men or stores, drydocking etc.) might activate the clause, it would normally only cease to operate when the vessel was restored to a fully efficient state, capable of providing the service immediately required of it. Restoration of partial efficiency of the vessel is generally insufficient to satisfy this requirement. Such a clause involves little difficulty in application, provided that the occurrence of the specified events is readily ascertainable. In a case where time was lost as the result of defective loading equipment, it was held that the operation of a ‘period clause’ was not limited to working hours, but that no hire was payable for the entire time the charterers were deprived of the use of the equipment and that it was immaterial that loading would not have taken place because of strikes, bad weather or unavailability of cargo. The ‘net loss of time clause’, on the other hand, merely provides that hire is not payable for time lost as the result of the occurrence of one of the specified events. In the words of clause 11A of the Baltime form, ‘no hire to be paid in respect of any time lost thereby during the period in which the vessel is unable to perform the service immediately required’. Prima facie such wording should mean that hire does not cease to be payable merely on the occurrence of one of the specified events but only if, and to the extent that, time is lost as a result. This is particularly important in the case of partial efficiency of a vessel as, for ex- ample, in the event of the breakdown of one of several loading cranes, or on the discovery of a speed deficiency. Under the ‘period’ type of off-hire clause, the obligation to pay hire will resume once the vessel becomes efficient and full use is restored to the charterer. Consequently, where a vessel has been compelled to deviate for repairs, the expense of making up lost ground once the repairs have been completed will fall on the charterer in the absence of provision to the contrary in the charterparty. A similar result apparently follows in English law in the case of the ‘net time lost’ type of clause, despite the fact that the time taken to make up lost ground would appear to fall within the concept of ‘any time lost’ as the result of the occurrence of the specified event. Indeed, recent cases would suggest the existence of a wider principle preventing the deduction of any time lost under such a clause, once the full operating efficiency of the vessel has been restored. Thus in The Marika M where a vessel went off-hire on running aground, it was held that the charterer could not deduct time lost waiting for a berth after she had been refloated, even though it was the direct consequence of the original grounding. Express provision for such contingencies can, of course, be made in the off-hire clause itself. So clause 20 of the Intertanktime 80 form provides that ‘hire shall cease to be payable from the commencement of such deviation [for repairs] until the time when the vessel is again ready to resume her service from a position not less favourable to charterers than that at which the deviation commenced’.