The Global Santosh

Parties negotiating time charters have long grappled with how to deal with the problem of ship arrest: for whose account is time wasted while the vessel is under arrest, the owner’s, with the ship being off-hire; or the charterer’s, hire being earned throughout the arrest? Various methods have been tried clearly to allocate this risk, from the simple insertion of “whatsoever” into cl.15 of the New York Produce Exchange charterparty to more sophisticated formulations. One increasingly common term (reflecting in part the standard NYPE, cl.18) was that involved in The Global Santosh,1 reading (with corrections):

This clause was thought to draw (roughly but fairly) the line between the “owners’ side” and the “charterer’s side”, as described by Rix LJ in The Doric Pride:2 if the vessel is arrested, then prima facie she is off-hire until, this being a “period” off-hire provision, the arrest is lifted. Moreover, the vessel is off hire for this period even if the charterers make use of her during that period. However, the owners can reverse that default off-hire position and claim hire by bringing the case within the proviso at the end of the clause and showing that the arrest was occasioned “by any personal act or omission or default of the charterers or their agents”. The word “personal” might have been thought to narrow the availability of the proviso, but any such constriction was avoided by the inclusion of acts or omissions of the charterers’ agents. Broadly speaking, there was a notional line: if the arrest results from something done (or not done) on the charterers’ side of the line, then the vessel remains on hire. That was the general perception at least.