HFW autonomous vessel collision scenario: Offhire, Frustration & Damages for breach of the charterparty

In the fourth of HFW’s six-part series on a fictional collision between an autonomous cargo ship and a container ship in Felixstowe harbour, Richard Strub, partner in the HFW Dubai office, introduced by Daniel Martin, partner, London, discussed the possible solutions to the hypothetical scenario in which an autonomous cargo carrier collided with a handymax container vessel in the Harwich Channel outside Felixstowe Harbour. Subsequent to the collision the cargo on the autonomous vessel was taken to its original destination of Southampton, while the MASS was towed to Hull for repair.

Citing the relevant paragraphs from NYPE 1946 and Supplytime 2005, Strube observed that in this particular instance there was little doubt that the vehicle was offhire. However, he noted that if the original destination of the cargo was, say, Dundee, and the cargo remained on the MASS while it was being towed to Hull, then the situation was less clear-cut. Some discussion of case law ensued, with TS Lines v Delphis NV (the “TS Singapore” case) taking front position. Strub said that in this case to win an onhire argument one would need to grapple with the authority of the TS Singapore Case and, effectively, say that Justice Burton was wrong on at least one point  – the fundamental issue being “taking you to your destination” rather than taking you in the direction of your destination.

On the matter of Frustration, Strub said that he was not normally a fan of the line because of its narrow window of opportunity. In this particular instance the argument for frustration was that the MASS had an inherent susceptibility to cyber-attack, but Strub could not see that this constituted a supervening event that caused a radical change in circumstances under which the contract is to be performed. Had there been a hack which caused the vessel to sink, after the charterparty was signed but before it came into effect, then there would be a case, but even if the vessel were a constructive total loss there might be difficulties.

On the case of damages for breach, Strub noted that the hypothetical situation, where the owner sold the vessel after its return and made a profit, referred almost directly to the New Flamenco Case, which went all the way to the Supreme Court in London. The ruling was that the owners could take the benefit of the gain because they could not have deducted the suffering of a loss, and therefore the sale was not caused by the end of the charter, merely occasioned by it.