Professor Martin Davies
Director, Tulane Maritime Law Center, New Orleans
Intertanko Tanker Chartering Seminar
Tokyo, 12 May 2009
Outline
 Overlap/underlap – how long is the charter period?
 Late redelivery
 Legitimate last voyage
 Contractual extensi0ns of charterer’s right
 Early redelivery
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Overlap/underlap
 A reasonable overlap/underlap is implied in charters for a
fixed period (now unusual)
 Charter may provide for overlap/underlap
 “about 12 months”
 “12 months, 15 days more or less”
 “11 months minimum, 13 months maximum”
 If overlap/underlap is specifically stated, no additional
“reasonable” tolerance
 The Dione [1975] 1 Lloyd’s Rep. 115
 Prebensens Damps A/S v. Munson Line, 258 F. 227 (2d Cir.
1919)
 But….
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Overlap/underlap
 An implied additional tolerance will be added to the
stated overlap/underlap if the charter so provides
 The Peonia [1991] 1 Lloyd’s Rep. 100
 “about minimum 10 months, maximum 12 months”
 Word “about” added “an additional margin or tolerance”
 (Practice tip: Don’t repeat yourself; don’t say things
twice when you only mean it once.)
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Overlap/underlap
 Renewal of a charter term – one or two overlaps?
 The Aspa Maria [1976] 2 Lloyd’s Rep. 643
 “6 months, 30 days more or less”
 Option to renew “for a further six months, 30 days”
 12 months, 60 days or 12 months, 30 days?
 CA held: 12 months, 30 days
 Overlap period does not extend charter period, merely
creates a period of tolerance for redelivery
 But…
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Overlap/underlap
 Other clauses may extend the charter period
 Overlap is then added to the end of the extended period
 The Kriti Akti [2004] 1 Lloyd’s Rep. 712
 “11 months, 15 days more or less”
 Off-hire clause gave charterer the option to add off-hire
periods to the charter period
 Charterer added 36 days of off-hire to the charter period;
wanted 15 days overlap as well
 CA held: 11 months, 51 days
 36 days extended charter period, 15 days tolerance in
redelivery
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Late redelivery
 When the market rate is higher than the contract rate
 “Final terminal date” (FTD)
 The Peonia, per Bingham LJ
 The end of the overlap period, stated and/or implied
 Legitimate last voyage
 There is a reasonable expectation when the order is
given that the voyage will be completed before the FTD
 (Unless charter gives charterer more extensive right –
more on that later)
 LLV is completed at the contract rate, not the market
rate
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Illegitimate last voyage
 The order itself is probably a breach of contract by the
charterer
 Whether or not the order is a breach of contract,
owner/master is entitled to refuse to accept it
 Demand an alternative, legitimate last voyage order
 If charterer insists on the order despite the owner’s
request, that is definitely a repudiatory breach
 Owner entitled to bring the contract to an end at that
time
 The Gregos [1994] 1 Lloyd’s Rep 1, 10 per Lord Mustill
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Legitimate becomes illegitimate
 What happens when a legitimate order becomes
illegitimate?
 Last voyage order is legitimate when the order is given
 Reasonable expectation at that time of completion before
FTD
 Illegitimate when the time for performance comes
 No longer any reasonable expectation of completion before
FTD
 (Therefore, some unexpected delay between giving of order
and time for performance)
 Can charterer insist on completion of the voyage at the
contract rate because the order was legitimate when given?
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Legitimate becomes illegitimate
 The Gregos [1994] 1 Lloyd’s Rep. 1
 Charterer obliged to give a new order, replacing the
original one with an order for a voyage reasonably likely
to be completed before FTD
 If charterer refused, owner can treat charter as at an end
at that moment and perform no further voyage at all
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Accepting the illegitimate
 Owner accepts illegitimate last voyage order but
reserves right to claim damages
 Charterer must pay market rate from…
 FTD?
 Date when redelivery would actually have taken place if
illegitimate last voyage had not been performed?

Usually earlier than FTD
 The Black Falcon [1991] 1 Lloyd’s Rep. 77: from FTD –
charterer gets ship at contract rate until FTD
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Delayed LLV
 What happens if an LLV is not completed by the FTD?
 Some unexpected delay on the last voyage
 Charterer still in breach, even if neither party is responsible
for the delay
 The Peonia
 Owner cannot complain if it is responsible for the delay
 Charter continues until redelivery but charterer must pay
damages
 Market minus contract from FTD until redelivery
 If contract is above market, charterer must pay contract rate
until redelivery because contract continues until then (The
London Explorer [1972] AC 1)
 Unless the charter gives charterer a more far-reaching right
re last voyage orders…
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Shelltime 3
 Clause 3: period and trading limits
 Clause 18: “Notwithstanding the provisions of clause 3
hereof, should the vessel be upon a voyage at the
expiry of the period of this charter, charterers shall
have the use of the vessel at the same rate and
conditions for such extended time as may be necessary
for the completion of the round voyage on which she is
engaged and her return to a port of redelivery as
provided by this charter…”
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The Kriti Akti (2004)
 Remember that CA held that “the period of the
charter” was 11 months, 36 days
 11 months plus 36 days’ worth of off-hire time added at
charterer’s option
 FTD was 11 months plus 51 days
 11 months + 36 days off-hire + 15 days overlap
 Charterer ordered Kriti Akti on voyage that would not
be completed until well after FTD
 Order given after basic 11 months had expired
 Did “the period of this charter” mean 11 months, 11
months + 36 days, or 11 months + 51 days?
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The Kriti Akti (2004)
 “The period of this charter” meant 11 months + 51 days
 As a general principle, charterer is entitled to give
orders during the overlap period for an LLV
 In Shelltime 3, cl. 18 extended the charterer’s right to
give orders to include orders for what would otherwise
be an ILV
 “Owners are thereby exposed to a final round voyage of
no fixed length, which it is clear from the outset will
extend very considerably beyond the final terminal
date.”
 Mance LJ, [2004] 1 Lloyd’s Rep. 712, 718
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Similar results in New York
 In re Sun Overseas Transport Ltd and Amerada Hess
Shipping Corp. (The Pacific Sun), 1983 AMC 830 (N.Y.
Arb. 1982)
 In re Gotco N.V. and Texaco Panama, Inc. (The Narnian
Sea), 1991 AMC 274 (N.Y. Arb. 1990)
 Similar results re similar clause in Texacotime 2 (cl. 11)
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Shelltime 4
 Clause 19: “If at the time this charter would otherwise
terminate in accordance with Clause 4 the vessel is on
a ballast voyage to a port of redelivery or is upon a
laden voyage, charterers shall continue to have the use
of the vessel at the same rate and conditions as stated
herein for as long as necessary to complete such ballast
voyage, or to complete such laden voyage and return to
a port of redelivery as provided by this charter as the
case may be.”
 Narrower than Shelltime 3, cl. 18
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The Ambor/The Once
 Marimpex v. Compagnie de Gestion et d’Exploitation Ltd [2001] 1
All E.R. (Comm.) 182
 Charter period 12 months +/- 20 days, with an additional option
of 6 months
 FTD was 17 February 1989
 On 16 December 1988 (during basic 12-month period), charterers
gave voyage orders that contemplated redelivery on about 7
March 1989
 Owners ordered master not to comply
 Charterers redelivered on 14 January 1989, within
overlap/underlap
 Was this order legitimate under Shelltime 4, cl. 19?
 Same result as Shelltime 3, cl. 18, or different?
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The Ambor/The Once
 Clause 19 not clear enough or specific enough to
protect charterer from consequences of ordering what
would otherwise be an ILV
 Shelltime 4, cl. 19 was unlike Shelltime 3, cl. 18
 Did not begin with the words “Notwithstanding the
provisions of clause 3 hereof…”
 Only applies when vessel is on a voyage (laden or
ballast to redelivery) at FTD
 Does not extend charterer’s right to order vessel on last
voyage beyond FTD
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Similar results in New York
 In re Addison Shipping & Trading S.A. and Bayoil
Supply and Trading Ltd (The Sea World), S.M.A. Arb.
3791 (June 10, 2003)
 In re U.S. Titan, Inc. and Iino Kaiun Kaisha Ltd (The
Seto Bride), S.M.A. Arb. 3149 (Feb. 15, 1995)
 Shelltime 4, cl. 19 interpreted in same way as in The
Ambor/The Once
 “Clause 19 is not intended to legitimize an illegitimate
last voyage, but to cover what happens due to an
unforeseeable delay once a last voyage has already
begun.” (The Seto Bride)
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Practice tip
 If you are an owner, use Shelltime 4 (or at least cl. 19)
 If you are a charterer, use Shelltime 3 (or at least cl. 18)
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Early redelivery
 When the contract rate is higher than the market rate
 Underlap – earliest possible redelivery
 Redelivery before underlap is a repudiatory breach of
charter
 Owner does not want to accept that repudiation as
bringing contract to an end
 Owner only entitled to affirm contract after
repudiatory breach if it has a “legitimate interest” in
keeping the contract alive
 Is the owner’s interest in continuing to receive contract
hire a “legitimate interest”?
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Early redelivery
 The Dynamic [2003] 2 Lloyd’s Rep. 693
 Principles governing exception to general rule that owner has an
option whether to accept repudatiory breach as terminating
 Burden is on charterer to show that owner has no legitimate interest
in performing contract rather than claiming damages
 Burden not discharged merely by showing that the benefit to the
owner is small compared to the loss to the charterer
 Owner can only be forced to accept repudiatory redelivery in
“extreme cases” – where damages would be an adequate remedy and
where an election to keep the contract alive would be unreasonable
 Whether charterer entitled to redeliver early under trip time
charter when vessel arrested (by charterer) before reaching
redelivery point
 Remitted to arbitrators
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