We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
21 June 2017
In March 2015 a towage and salvage company (B) entered into a charter agreement with a Danish charterer (N), under which B undertook to perform a heavy lift operation using a floating crane in Halden, Norway.
N was delayed and on December 2 2015 forwarded an email on the basis of discussions between the parties, which stated as follows:
"We hereby cancel our lift on 15 December 2015.
Pursuant to agreement we will pay a cancelling compensation of EUR 67,000.
In consideration we may have a lift performed on 20 January 2016 at the ordinary rate (i.e. without payment for mobilization / demobilization) if you get the order from BP.
We have learned that there will probably be lifting operations for BP on 11 December 2015 and on 22 January 2016."
On December 7 2015 B and N signed a new charter agreement for the use of the floating crane. It was stipulated in the charter as follows:
"5. HIRE PRICES
5.1 Hire Prices, including prices for Mobilisation and Demobilisation of CRAFT to/from Place of Operation, Day rates, Overtime Rates and Standby Rates as agreed are listed in Exhibit C hereto. …
1.1 Lump Sum Price for Mobilising/demobilising the CRAFT to/from the Place of Operation 90.000,00 Euro. If B has a lift in Halden on the 22. January 2016 there will be no Mobilisation/demobilization price."
On January 7 2016 B advised N that no lift was to be performed on January 22 2016 for BP. As a result, B claimed that N should pay mobilisation and demobilisation costs (ie, transport costs for positioning the floating crane in Halden and its return). B did not inform N that the lift for BP had not been cancelled, but merely postponed. The floating crane and a tug departed on February 9 2016 from the port of Aarhus, Denmark to Halden where it arrived on January 12 2016. On January 20 2016 the floating crane was on standby in the port of Halden and on January 21 2016 the lift was performed for N.
Subsequently, on February 5 2016, B performed a lift for another charterer and on February 10 2016 it performed the lift for BP in Halden.
N refused to pay the mobilisation and demobilisation cost for the floating crane, as B had also performed a lift for BP in Halden on February 10 2016. N submitted that the fact that its lift had been performed on February 10 2016 and not January 22 2016 was irrelevant. Further, it referred to the fact that B had received mobilisation and demobilisation costs from BP.
The Maritime and Commercial Court ordered N to pay €90,000 in mobilisation and demobilisation costs. It reasoned as follows:
"The court does not find that it – contrary to what was expressly stipulated in the charter agreement – had been agreed between the parties that N should not pay mob/demob if another lift was performed in Halden... The court has attached importance to the fact that N did not in the e-mail of 2 December 2015 state such an interpretation of the agreement… The court further refers to the fact that N did no object when B on 7 January 2016, before the floating crane left departed to Halden, advised that the lift for BP has not materialized and that the mob/demob consequently, pursuant to the agreement, was on N's account. On this basis it does not detract from this that the floating crane instead was utilized by BP on 10 February 2016 and that BP in connection herewith paid for mob/demob."(1)
After the floating crane had been shipped to Halden and the lift had been performed for N on January 21 2016, B performed two further lifts in Halden. As a result, B's mobilisation and demobilisation costs were covered twice. The decisive question for the court was whether, under the December 7 2015 charter agreement, N was liable to pay mobilisation and demobilisation costs only if the floating crane had performed a lift on January 22 2016 in Halden. The fact that the lift was performed for BP on February 10 2016 could not be given any effect. The charter agreement could not be interpreted to the effect that N's liability to pay mobilisation and demobilisation costs should be unenforceable if these costs were covered by another charterer.
For further information on this topic please contact Jesper Windahl at Windahl Sandroos & Co by telephone (+45 3525 3800) or email (email@example.com). The Windahl Sandroos & Co website can be accessed at www.wsco.dk.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.