GAS NATURAL APROVISIONAMIENTOS SDG SA V METHANE SERVICES LTD (THE "KHANNUR")

[2009] EWHC 2298 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Walker, 25 September 2009

Charterparty (time) - Substitution of vessel - Valid substitution - Location where substitute vessel may be made available in the absence of nomination of loadport by charterers - Charterers' orders for the employment of the vessel

Under a time charterparty but per a substitution agreement, the LNG Gimi had been substituted for Khannur when the latter went to drydock. When Gimi in turn needed drydocking, owners sought to re-substitute Khannur. Gimi was still unloading at Barcelona and charterers had not yet given orders for her next voyage. Under those circumstances, there was nothing in the charterparty or otherwise indicating or limiting where the substitute vessel could be delivered. Khannur had been made available at Algeciras. Charterers argued that the default location would be where the substituted vessel was withdrawn and contended that owners had no right to substitute Khannur, seeking repayment of the hire paid under protest. An arbitration appeal held that the vessel had been correctly substituted and that charterers were not owed any return of hire. The judge dismissed charterers' appeal against the award. A legal requirement that the substitute vessel be positioned in the place where the substituted vessel was withdrawn could well lead to a pointless waste of time, effort and money. Commercial parties would not have intended their agreement to have been interpreted in a way which required this.