The much-debated case of the “Eternal Bliss” [2022] 1 Lloyd’s Rep 22 has settled ahead of an appeal hearing in the Supreme Court this month. As such the 2022 Court of Appeal decision stands.
The first instance court hearing was back in 2021 and so it's worth reminding ourselves of the facts of the case, which concerned a voyage charter of 70,133MT of soybeans on Norgrain terms and loaded in Brazil for discharge in China. After the vessel arrived in China, she waited at the anchorage for 31 days due to congestion and lack of storage ashore. Upon discharge it was found that some of the cargo was damaged with mould and caking. Owners settled the cargo interests claim and sought to recover those losses from charterers in arbitration, however, a preliminary point of law was referred to the Commercial Court.
In particular, the court was asked to determine, in circumstances where there was a breach by charterers to discharge within the time specified in the charterparty, whether it was sufficient for owners to simply identify a different type of loss beyond that of the loss of use of the vessel as freight earning unit, or, whether owners needed to demonstrate a separate breach by charterers beyond failure to complete cargo operations within the agreed laytime. In other words, without a separate breach being identified, was demurrage Owners’ only remedy. It was held that Owners were entitled to recover those losses which were different in type to the loss of use of the vessel and without needing to identify a separate breach.
That decision was appealed by the Charterers and the Court of Appeal agreed with them that demurrage liquidated all of Owner’ damages which arise from Charterers failure to conduct cargo operations within the time agreed in the charterparty. If Owners wish to claim other damages, different to the loss of use of the vessel, then a separate breach of the charterparty will need to be identified.
As the matter has now settled without further intervention from the Court, the Court of Appeal has had the final say on the matter.
For Owners’ who wish to recover damages beyond the economic use of the vessel then a carefully drafted clause to reflect those wishes will need to be agreed and expressly incorporated in the charterparty.
Time will tell whether the Courts will again get to look at this question in a different case but for the time being the decision in the “Eternal Bliss” [2022] 1 Lloyd’s Rep 22, stands.