SHELLVOY 6 Patrick Shaw, Ince & Co 14 April 2005 INTERTANKO Athens

Introduction -“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 1Laycan14/17April Next Fixture 2Laycan25/28 April Third Fixture 3Laycan3/5May

Reminder – Damages for Missing Cancelling 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 days? No damages unless some other breach of C/P

Reminder – Damages for Missing Cancelling? Remember PART I(B) “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 expectation…”.

Utmost Despatch PART I(L) “The vessel shall perform the ballast passage with utmost despatch”

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 Note 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 GENCON.]

Impact of Cl 1 of SHELLVOY 6 But Cl. 32 (Exceptions) protects owners from crew neg? “...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 foregoing…” 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 neg. 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 (a)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 documented” (b)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). (c)Clause 10. Charterer fails to nominate load/disports and the vessel delayed – owners compensation restricted to demurrage alone – no damages at large.

Other Amendments (d)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. (e)Clause 54 - Arbitration -