It’s a complex case dealing with owners’ refusal of charters’ orders and piracy risks, but Maritime Journal talked with Rebecca Warder of HFW to understand the implications of the recent Conwartime 2004 Clause judgment.
“The Paiwan Wisdom dispute started when the charterer at the bottom of the chain wanted the vessel to go from Taiwan to Mombasa, Kenya, while the owners felt this would expose the vessel to piracy”, said Ms Warder. The charterparty in this case was for worldwide trading subject to certain exclusions, although Kenya wasn’t on the list.
It had been thought that owners could only refuse orders under the Conwartime 2004 Clause if they could show that the risk of piracy had increased since the charterparty agreement was signed, based on an older case concerning the Product Star No 2.
The problem with the Product Star approach is that the chain of charter parties may well have contract dates months or even years apart, certainly enough time for an area’s character to change dramatically. “Evaluating whether there has been a material increase in risk since a particular date in the past could be time consuming, whereas the decision on whether to refuse a voyage needs to be taken reasonably fast”, explained Ms Warder.
The charterers of the Paiwan Wisdom had also tried to argue that since there were specific exclusions in respect of Eritrea and Somalia, this meant that the owners had evaluated the risks of calls in East Africa, and so if a particular call wasn’t on the list of specific exclusions, by implication it was allowed.
Happily much of this has now been resolved with the court deciding that the Product Star case applied just to those particular circumstances, and owners generally didn’t have to prove a material increase. The argument about the exclusions in respect of Eritrea and Somalia was also rejected, with the court deciding this did not mean owners must accept an order to call at Mombasa.
The case closed with a decision that the ship’s owners could refuse to proceed through the Indian Ocean to Mombasa if there was a “real likelihood” of the vessel being exposed to piracy on this route. “Owners did not have to show the risk of piracy had materially increased since the date of the charterparty”, she explained.
However, practically, there are some things that owners and charterers should look at, says Ms Warder. For example, any sensible owner will exclude any country at the outset that they see as being particularly dangerous, but if a charterer knows it wants to run to a specific place, it is worthwhile expressly including it as a permitted call. “Express wording is always better than relying on implication”, she concluded.
Source: Maritime Connector