Shellvoy 6 - Intertanko

Patrick Shaw, Ince & Co
14 April 2005
- “Intention of the update is to
capture all current additions and
amendments to SHELLVOY 5 in
one new document whilst taking
the opportunity to clarify standard
interpretations and practice.”
- Effective 4 April 05
Part 1(A) Description of Vessel
“Owners warrant that at the date hereof, and from
the time when the obligation to proceed to the
loadport(s) attaches, the vessel…
(vii) can discharge a full cargo … either within 24
hours or can maintain a tank pressure of 100
PSI at vessel’s manifold and owners warrant
such minimum performance provided receiving
facilities permit and … subject always to the
obligation of utmost despatch…”
Part 1(B) Position/Readiness
Now [
] Expected ready to load [
“In addition to the above details … owners will
advise charterers of known programme, including
any contractual options available to the charterers in
Part I(A)(viii) above between current position up to
expected ready to load date … Owners will not,
unless with charterers’ prior consent, negotiate or
enter into any business or give current charterers
any further options that may affect or alter the
programme of the vessel as given in this clause …”
Part 1(B) Position/Readiness
What if?
Current C/P
Next Fixture
Third Fixture
Reminder – Damages for Missing
PART II Cl 11 – Chrs right to cancel. Cancelling.
Owners must inform charterers of inability to load by
noon on cancelling as soon as “become aware” (as
opposed to “reasonably conclude”) and now if
charterers fail to reply to owners’ notice there is no
automatic extension.
So what happens if charterers fail to reply within 4
No damages unless some other breach of C/P
Reminder – Damages for Missing
“Expected ready to load”.
[The Mihalis Angelos [1971] 19B 164]. “…It is an assurance
by the owner that he honestly expects the vessel will be
ready to load on that date and that his expectation is based
on reasonable grounds… (the owner) is binding himself to its
truth…” But, “…in light of the facts known to the owner at the
time of making the Contract…”. Also, “…the owner is not
undertaking that there will be no unexpected delay…”. The
Charterer needs to prove that the ERL was not “…his honest
Utmost Despatch
“The vessel shall perform the
ballast passage with utmost
Combined ERL/Utmost Despatch
The obligation to proceed with utmost despatch
coupled with the expected ready to load means
vessel must commence her approach voyage to
loadport at such time as it is reasonably certain that
proceeding normally she can arrive at the loadport
by the stipulated date. If the vessel fails to
commence the approach voyage in time to arrive by
the stipulated date the owners liable for damages for
breach of charter
[Monroe Bros. –v- Ryan (1935) 51 Ll.L Rep.179]
ERL/Utmost Despatch
the Exceptions do not assist owners if
the delay occurs before commencement
of the approach voyage e.g. terminal
delays at previous disport.
Combined ERL/Utmost Despatch How can you avoid the problem?
Amend Part I(L) to read
“The vessel shall, after completion of discharge at and sailing
from the last discharge port on the voyage preceding this
fixture, perform the ..”
Better still
add a new clause making it crystal clear that owner’s
performance and obligations under the C/P shall be subject
always to completion of the vessel’s present engagement
(and insert the details).
Part II – Clause 1 – Due Diligence
“Owners shall exercise due diligence to ensure that
from the time when the obligation to proceed to the
loading port(s) attaches and throughout the charter
service –
(a) the vessel and her hull, machinery (etc) are in
good order and condition and in every way
equipped and fit for the service required; and
(b) [crew full and efficient]
and to ensure that before and at the commencement
of any laden voyage the vessel is in all respects fit to
carry the cargo specified…”
Part II – Clause 1 – Due Diligence
Questions Arising
When must due diligence be exercised?
Does Clause 1 impose a continuing obligation
to exercise dd to ensure that the vessel is
seaworthy throughout the C/P service? Look
at peculiar dichotomy between
(i) seaworthiness – and (ii) cargoworthiness.
Clause doesn’t say “Owners shall exercise
due diligence throughout the charter service to
ensure …”
Impact of Cl 1 of SHELLVOY 6
London arbitration decided?
Why does it matter?
Example:- on laden voyage vsl breaks down due to
c/eng neg. If Cl.1 imposes continuing obligation
then c/eng neg causes breach because in my view
Cl.1 imposes a non-delegable duty on the owner.
[Clear wording is needed to limit obligation to
exercise dd to owner’s personally – e.g. Cl.2 of
Impact of Cl 1 of SHELLVOY 6
But Cl. 32 (Exceptions) protects owners from crew
“...The vessel, her master and owners shall not,
unless otherwise in this charter expressly provided,
be liable for any loss (etc)… arising from any act,
neglect or default of the master… provided however
that… Part II Clauses 1… shall be unaffected by the
So what – because Cl.32(c) provides that “ any claim
…arising out of any loss of or damage to or in
connection with the cargo …shall be subject to the
[HVR or HR or Ham R].
Impact of Cl 1 of SHELLVOY 6
So Art. IV r(2)(i) provides a defence for crew
But, what of claims which do not relate to the
cargo? e.g. sub C/P and vessel delayed due
to breakdown and sub-charterer fixes in at
higher market rate?
Be warned!
Other Amendments – Be Aware
Cl.15(2) Demurrage. Both demurrage and
laytime is subject to half rate in circumstances
covered by the sub-clause. Remember Cl.15(3)
60/90 day timebar and “fully and correctly
Cl.26(1). If charterer varies load/disports after
nomination then loss of right to claim beyond
demurrage/bunkers. But, breach of Cl.3(1) also
linked to more limited recovery under Cl.26(1).
Clause 10. Charterer fails to nominate
load/disports and the vessel delayed – owners
compensation restricted to demurrage alone –
no damages at large.
Other Amendments
Clause 38 - General comment in relation to
back loading clauses – be careful as some
bespoke clauses may impose the obligation to
load a complete new cargo with questionable
freight ramifications.
Clause 54 - Arbitration -