CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd

Factual and Procedural Background

This case concerns the obligations of an owner under a voyage charterparty to get a vessel to the loading port, specifically the timing of the commencement of the approach voyage. The dispute arose under a charterparty on the Shellvoy 5 form dated 5 January 2015 between the Defendant as disponent owner of the vessel "PACIFIC VOYAGER" and the Plaintiff as charterers. The vessel was engaged in a previous charter and, while transiting the Suez Canal on 12 January 2015, suffered damage due to contact with a submerged object, causing water ingress and a list. The vessel required drydocking for repairs, delaying performance of the chartered voyage.

The charterparty included a laycan range with a cancelling date of 4 February 2015, after which the charterers had the option to terminate if the vessel was not ready to load. The charterers terminated the charterparty on 6 February 2015 and claimed damages of US$1,202,812.50. The owners disputed an absolute obligation to commence the approach voyage by a date ensuring arrival by the cancelling date, asserting instead an obligation of due diligence.

Legal Issues Presented

1. Whether the owner under the voyage charterparty had an absolute obligation to commence the approach voyage by a date reasonably certain to ensure arrival at the loading port by the cancelling date (the "Monroe obligation").
2. Whether the cancelling date in the charterparty functions as an estimated time of arrival (ETA) for the purposes of the Monroe obligation.
3. Whether, alternatively, the owner's obligation was only to exercise due diligence to commence the approach voyage by such a date.
4. Whether the owners renounced the charterparty by declaring inability to perform within the contractual timeframe, and whether the charterers' termination notice accepted any such renunciation.

Arguments of the Parties

Appellant's (Charterers') Arguments

• The laycan window and cancelling date represent the parties' expectation of the vessel's arrival at the loading port and thus serve as an equivalent to an ETA for the Monroe obligation.
• There was an absolute obligation on the owners to commence the approach voyage so as to arrive by the cancelling date.
• Alternatively, the owners renounced the charterparty by communicating their inability to perform within the contractual period, and the charterers accepted this renunciation by terminating the charterparty.

Appellee's (Owners') Arguments

• If the charter had included an ETA at the loading port, the Monroe obligation would arise, but no such ETA was given here.
• The cancelling date is not equivalent to an ETA but is merely a contractual option for termination by the charterers if the vessel does not arrive in time.
• The owners' obligation was to use due diligence to commence the approach voyage to enable arrival by the cancelling date, not an absolute obligation.
• The termination notice was an exercise of a contractual right to terminate, not acceptance of a common law renunciation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Monroe Brothers Limited v Ryan [1935] 2 KB 28	Established the absolute obligation on owners to commence the approach voyage by a date reasonably certain to ensure arrival by the expected readiness to load date under a voyage charter.	Formed the foundational principle (the "Monroe obligation") guiding the court's analysis of the timing of the owners' duty to commence the approach voyage.
Louis Dreyfus & Co v Lauro (1938) 60 Lloyd's Rep. 94	Implied obligation to proceed to the loading port with all convenient speed even when no express reference to speed or despatch exists.	Supported the view that the owners' duty to proceed is absolute and arises at a particular time.
Mitsui O.S.K Lines Ltd v Garnac Grain Co. Inc. (The Myrtos) [1984] 2 Lloyd's Rep. 449	Application of Monroe obligation where an ETA is given as an estimated time of arrival rather than expected readiness to load.	Reinforced the principle that the Monroe obligation applies by reference to an estimated arrival date.
Evera S.A. Commercial v North Shipping Company Ltd (The North Anglia) [1956] 2 Lloyd's Rep 367	Clarified that the Monroe obligation does not apply prior to commencement of the approach voyage and that risk of delay in prior employment remains with owners.	Supported the court's conclusion that the absolute obligation to proceed arises only at the start of the approach voyage, not before.
Marbienes Compania Naviera S.A. v Ferrostaal A.G. (The Democritos) [1975] 1 Lloyd's Rep 386; [1976] 2 Lloyd's Rep 149 (CA)	Implied term that owners must exercise due diligence to ensure arrival at the loading port by a cancelling date under a time charter.	Distinguished as a time charter case with no express duty to proceed with utmost despatch; court held it does not support a due diligence obligation as to commencement of the approach voyage under a voyage charter.
Tarrabochia v Hickie (1856) 1 H & N 183	Reasonable time for commencement of performance where no fixed date is agreed.	Applied in determining that the obligation to proceed arises within a reasonable period from the date of the charter.
Geogas S.A. v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd's Rep 215	Rejected the argument that the duty to proceed attaches only after completion of prior employment.	Supported rejection of extreme positions on timing of obligation attachment.
Samuel Sanday & Co v Keighley Maxted & Co. (1922) 27 Comm. Cas. 296	Owners must honestly and reasonably give ETAs.	Applied to intermediate port ETAs, supporting their contractual significance equivalent to an ETA at the loading port for Monroe purposes.
Marks & Spencer PLC v BNP Paribas Security Services [2016] AC 742 at [15]	Principles governing implication of terms into contracts.	Referenced to clarify that the implication of the timing obligation is an implication of law and/or construction, not requiring rigorous tests.
Shell Egypt West Manzala GmbH v Dana Gas Egypt Ltd [2010] EWHC 465 (Comm) at [32]	Principles for acceptance of renunciation by conduct or notice.	Applied to hold the termination notice was sufficient acceptance of renunciation, had it occurred.

Court's Reasoning and Analysis

The court began by outlining the conflicting commercial interests of owners and charterers regarding timing obligations under voyage charters. It emphasized that the precise allocation of risk depends on the specific terms of the charterparty, interpreted in light of established case law including Monroe and The North Anglia.

The court reaffirmed the "Monroe obligation" as an absolute duty on owners to commence the approach voyage by a date reasonably certain to ensure arrival at the loading port by the expected readiness or arrival date, not merely an obligation of due diligence. This obligation arises at a particular identifiable time because it marks the commencement of the chartered service and triggers other owners' obligations such as seaworthiness.

The court distinguished the cited case The Democritos, which involved a time charter and an implied due diligence obligation to arrive by a cancelling date, holding it does not support implying a due diligence obligation to commence the approach voyage under a voyage charter with an express absolute obligation to proceed with utmost despatch.

The court rejected the owners' argument that the timing of the duty to proceed is governed by due diligence, reasoning that such an approach would create unacceptable commercial uncertainty and undermine the certainty required by charterers for cargo arrangements.

The court found that the cancelling date alone does not constitute an ETA or promise by owners to arrive by that date, as it merely triggers the charterers' termination option without liability for damages. Instead, the court held that intermediate port ETAs given under the charterparty, although qualified by "If All Goes Well/Weather Permitting," serve the same contractual function as an ETA at the loading port for determining the reasonable time to commence the approach voyage.

Accordingly, the owners' absolute obligation to commence the approach voyage arose at the end of a reasonable discharge period following the vessel's estimated arrival at the final intermediate port (Antifer) on 25 January 2015. The court noted this was an alternative to the argument based on the cancelling date and that both formulations lead to the same outcome on the facts.

On the alternative argument of renunciation, the court held that the owners did not renounce the charterparty, as their communications indicated willingness to perform after drydock rather than unwillingness. The termination notice was an exercise of a contractual right to terminate and would have sufficed to accept renunciation had it occurred.

Holding and Implications

The court found in favour of the Plaintiff and awarded judgment for damages of US$1,202,812.50.

The holding confirms that under a voyage charterparty containing an express obligation to proceed with utmost despatch, the owner's duty to commence the approach voyage is absolute and arises at a reasonably identifiable time, typically determined by ETAs given or, absent those, by reference to the cancelling date. The court rejected the notion that this duty is governed by due diligence, emphasizing the commercial need for certainty in timing obligations.

The ruling clarifies the allocation of risk between owners and charterers in respect of delays occurring prior to commencement of the chartered service and confirms that cancelling clauses provide termination rights but do not create absolute timing promises. No new precedent was established beyond applying and confirming established principles from Monroe and related authorities.