25/01/2023

High Court judgment concerning ‘anti-deduction’ clauses in time charters

Yesterday, Henshaw J handed down judgment in Fastfreight v Bulk Trident [2023] EWHC 105 (Comm), an appeal under s.69 of the Arbitration Act 1996 concerning the proper construction of an ‘anti-deduction’ clause under a time charter.

The appeal lay against the decision of an arbitral tribunal to make an award of hire in favour of the respondent shipowner on the ‘Kostas Melas’ basis. The Tribunal held that, by reason of an anti-deduction clause in the charterparty, the charterers were obliged to pay hire upfront irrespective of whether the Vessel might ultimately prove to have been off-hire. On appeal, Henshaw J upheld the Tribunal’s decision, holding that the effect of the clause in question was to require Owners to pay hire even if, by reason of the NYPE standard form off-hire clause, as interpreted by Bingham J in The Lutetian [1982] Lloyd’s Rep 140, the obligation to pay hire had otherwise ceased at a given instalment date.

The case is likely to be of interest to shipping practitioners and provides clarity as to the breadth of such (increasingly common) clauses, and their application to allegations of off-hire.

Patrick Dunn-Walsh appeared for the appellant charterer (instructed by MFB Solicitors) and Henry Byam-Cook KC appeared for the respondent shipowner (instructed by HFW).

Read the judgment.