NYPE off-hire clause: Court of Appeal reinstates conventional approach

The Athena was a dispute about the meaning of the familiar NYPE off-hire clause (clause 15).

The Commercial Court decision gave rise to a lot of controversy. It went against conventional principles for determining whether a vessel is off-hire. The talking point of the decision was the meaning given to the words ‘time thereby lost’, allowing owners to defeat an off-hire claim on the basis that there had been no loss of time on the ‘charter service overall’. This treated the claim akin to one for damages, whereas the off-hire regime is different from damages: it operates irrespective of fault or breach.

However, the Court of Appeal has rejected this approach, set aside the Commercial Court decision and restored the award of the arbitrators. The award follows the usual way of assessing loss of time, namely in terms of the ‘service immediately required of the vessel’, not ‘the charter service overall’. The Court of Appeal considered this to be the correct legal test. Applying this test, it allowed charterers to succeed on their off-hire claim…

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