Piracy and Off-hire.pptVIP

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Piracy and Off-hire

Piracy and Off-hire Recent Developments Leslie Shen, Associate, Clyde Co LLP Introduction When is a vessel off-hire if hijacked? Latest developments Cosco Bulk Carrier Co. Ltd v Team-Up Owning Co. Ltd. (the “Saldahna”) [2010] EWHC 1340 What can we learn from this case? Background Significant rise in the levels of piracy activity over the past few years 243 attacks on vessels with 26 ships successfully hijacked between 1 January and 13 June 2011 Perceived failure of international community to tackle the problem Increasing numbers of armed guards stationed on board ships to protect crew and cargo Off-hire Does detention by pirates place the vessel off hire? The “Saldanha” Key Facts Bulk carrier, time chartered on NYPE form Charter period of 47 to 50 months a USD$52,500 / day Delivered in July 2008 22 February 2009 seized by pirates in the Gulf of Aden Detained until 25 April 2009 Charterers refused to pay hire for the period between 22 February and 2 May. Owners claimed for hire, costs of bunkers additional war risk premium and crew war risk bonuses Off-hire Clause 15 NYPE “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, detention by average accidents to ship or cargo, dry-docking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost….” Off-hire Issue 1 – “Detention by average accidents to ship or cargo” Charterers argued that an “accident to the ship” was a natural way to describe a seizure by pirates Gross J held that damage to the ship was an essential ingredient for this to be an “accident to the ship” Off-hire Issue 2 – “Default and/or deficiency of men” Charterers argued that the Master / Crew had failed and not taken ant-piracy measures Charterers argued that th

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