Piracy and Off-hire clauses: Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd ('The Saldanha') [2010] EWHC 1340

• Author: Ashwin Nair
• Position: Student editor, A&NZ Mar LJ 2010
• Pages: 148-151

(2010) 24 A&NZ Mar LJ

PIRACY AND OFF-HIRE CLAUSES: COSCO BULK CARRIER CO LTD v

TEAM-UP OWNING CO LTD (‘THE SALDANHA’) [2010] EWHC 1340

Ashwin Na ir*

In The Saldanha, the UK High Court (Commercial Court) ruled that seizure by pirates would not entitle

charterers to put the seized vessel off-hire under clause 15 of the NYPE 46 form. This decision is important

in that it clarifies the interpretation of the wording of clause 15 in line with the traditional method of

construing such clause s narrowly and in favour of the owner where there is doubt. W hile there have been

many cases which have dealt with o ff-hire clauses, The Saldanha is the first English case which addresses

the effect of piracy on such clauses, and in particular, clause 15.

Essentially, this was an appeal of an arbitratio n tribunal’s decision. The appellants, the charterers, claimed

that the tribunal erred in finding that clause 15 exclud ed seizure by pirates. In the High Court, the matter

came before Gross J, who upheld the tribunal ’s decision. The charterers appealed the court’s decision but

leave for appeal was denied.

Fac ts

The parties had entered into a time charter on 25 June 2008 using an amended NYPE 46 form for a period

of 47 to 50 months at a hire rate of US$52 500 per day. The vessel, a Panamax bulk carrier, the Saldanha,

was delivered into charter on 5 July 2008.

On 22 February 2009, while travelling through the transit cor ridor in the Gulf of Aden laden with a cargo of

bulk coal and heading for Koper, Slovenia, from Indonesia, the vessel was seized by Somali pirates. It was

taken to waters off the town of Eyl, Somalia, where it remained under the control of the pirates until a

ransom was paid. Following the payment of the ransom, the vessel was released on 25 April 2009 and on 2

May it arrived at an equivalent position to which it was seized.

The charterers refused to pay hire from 22 February to 2 May, a period of about two and a half months

during which the ship was detained. The owners, on the other hand, claimed for hire during that period, as

well as the cost of bunkers, additional war risk premiums, and crew war risk bonuses.1

The dispute went to arbitration a nd the tribunal fou nd in favour of the o wners. The tribunal held tha t the

seizure had prevented the ‘full working’ of the ship and that time was lost as a result. However, the

charterers had not been able to show that the seizure was within any of the specified off-hire events in

clause 15 and therefore the vessel remained on-hire while it was detained by the pirates.2

The Appeal

The charterers appealed the decision to the High Court. The appeal concentrated solely on the issue of

whether detention by pirates entitled the charterers to rely on the off-hire clause to release them from

liability for hire.3

Clause 15 of the amended NYPE 46 form provided:

That in the event of the loss of time from default and/or deficiency of men including strike of Officers and/or

crew or deficiency of … stores, fire, breakdown or damages to hull, machinery or equipment, grounding,

* Student editor, A&NZ Mar LJ 2010.

1 It may be noted here that und er the terms of the charterparty, the ch arterers had agreed to reimburse the owners for additional war

risk premiums that arose as a result of making the voyage from Indonesia to Slovenia through the Suez Canal, which would entail

travelling along the Gulf of Aden: The Saldanha [2010] EWHC 1340, [7].

2 Ibid [6].

3 Ibid [5].

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