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Charterers Must Pay $186,000 Cost of Suez Canal Transit

Published: 28 December 2014, in categories: Legal Updates | Commercial Litigation Updates | News and Updates

Charterers Must Pay $186,000 Cost of Suez Canal Transit

Maritime trading in the horn of Africa can be a tricky business, as a ship charterer found out to its cost when its attempt to deliver a cargo to Djibouti was for months frustrated.

Following a Court of Appeal ruling, the charterer is now also facing a $186,000 bill to cover the cost of transiting the Suez Canal.

The ship’s owners had engaged the charterer to deliver a consignment of wheat to the East African port. However, on arrival, there was no one to receive the cargo and the vessel lay idle off shore for three months. Eventually, the charter was amended and the discharge port was changed to Damietta, in Egypt. The change in destination required a costly transit of the canal.

An arbitration panel ruled that the owners should bear the majority of the cost of using the canal on the basis that they had been obliged to deliver the vessel to its home port and that would have involved a trip through Suez in any event. They had incurred little ‘additional’ expense as a result of the change of destination.

In allowing the owners’ appeal, however, the Court found that the panel had erred in law. Transit of the canal was required to complete the amended voyage and the expense had arisen from the charterer’s failure to discharge the cargo at Djibouti. In awarding the owners $186,905, the Court rejected arguments that that represented ‘a windfall’. The result accorded with the ‘clear and unambiguous’ language of the charter.

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