What's in a name? Time Charter Trips explored

The time charter trip or "TCT" is a common hybrid, with attributes of both time and voyage charters.

The charter is typically for a certain trip or voyage, as with a voyage charter, but hire is payable (not freight), as with a time charter. However, the freedom of the TCT charterer to direct the Vessel has long been a matter of dispute [FN1].

In The "WEHR TRAVE" [FN2], the English Commercial Court examined the limits to the TCT charterers' powers, and in particular whether TCT charterers could load a fresh cargo once the initial cargo loaded on board the vessel had been fully discharged.

Background

SBT Star Bulk & Tankers as Owners chartered their Vessel, the "WEHR TRAVE" to Cosmotrade as Charterers for a time charter trip. The charterparty was on an amended NYPE 1946 form and provided (inter alia):

"… That the said Owners agree to let, and the said Charterers agree to hire the said vessel, from the time of delivery, for one Time Charter trip via good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo, suitable for carriage in a cellular container vessel as described. No bulk cargo is allowed. Duration minimum 40 days without guarantee within below mentioned trading limits."

The Vessel loaded cargoes at three ports and discharged at five ports, the last of which was Dammam.

Disputes arose when Charterers gave an order for the (empty) vessel to load another cargo at Sohar in Oman for discharge in India. 

Owners refused to comply, on the basis they had contracted for a "one Time Charter trip" only.  Owners argued that Charterers' order was illegitimate, and that after discharge at Dammam the Vessel could only legitimately proceed to the redelivery range under the Charterparty.

The parties proceeded to arbitration, where the Tribunal held (as a preliminary issue) that Charterers' order to load a further cargo was permitted under the Charterparty.  Consequently, Owners were in breach of Charterparty for failure to comply with the order.

Owners appealed under s.69 of the Arbitration Act 1996 to the High Court.

High Court Judgment

The Court restated the position that the basic "underlying notion" of a TCT is that the vessel will generally be under the orders and directions of the charterer, in accordance with clause 8 of the NYPE form.

The parties were free to deviate from this basic principle, but to do so would require agreement and clear wording [FN3].The Court held that, on the facts:

• The port calls were within the trading limits and contractual route agreed under the Charterparty; and 
• None of the wording (such as "always via Gulf of Aden" or "one Time Charter trip") was sufficiently clear to change the position.

 Owners' appeal was dismissed and the findings of the arbitration Tribunal were upheld.

 Comments

This Judgment is a helpful reminder that the scope of a charter depends upon the specific charterparty terms agreed by the parties, rather than the label given to it.

If Owners had wished to restrict the TCT to one voyage, or one cargo only (making it more akin to a voyage charter), the Charterparty should have made this clear. 

The bottom line is that although a TCT may be a hybrid form of charter, the fundamental nature of the rights and obligations underlying the contractual relationship are still those of a time charter. 

[FN1]: See for instance The "ARAGON" [1975] 1 Lloyd's Rep 628, in which the Court held that a TCT charterer was not bound to proceed to the initially nominated loadport

[FN2]: [2016] EWHC 583 (Comm) 

[FN3]: See paragraph 13 of the Judgment