Claimant vessel operator AV chartered offshore floating production and storage vessel Voyageur Spirit to defendant sub-charterer P, an oil exploration company, on a sub-bareboat charterparty. AV claimed hire in excess of US$12 million. P denied hire was due and counterclaimed US$3.8 million in overpaid hire. Article 17 of the charterparty provided for adjustment to hire upwards or downwards in the event of an increase or decrease in the vessel’s operational capacity in accordance with Appendix M to the charter.2 The Appendix included a narrative formula for this calculation followed by worked examples. The worked examples contained two additional steps for the calculation, not in the narrative formula, which lowered the point at which an upwards adjustment to hire became payable. AV argued that the adjustment was to be calculated by reference to the worked examples; P argued that the worked examples departed from the “target availability” the parties had expressly agreed was the basis of adjustments in Art.17 and so should not be followed, because the parties had agreed that the articles of the charterparty should prevail over any appendix to the extent that there was a conflict between the two.

Decision: Judgment for claimant vessel operator AV.

Held: (1) The parties’ agreement included the worked examples in Appendix M. They were an integral part of the contract terms which explained how the adjustment to hire was to be made.

(2) The whole point of the worked examples was to overcome the possibility that the consequences of the formula were not clear to the parties by demonstrating their application. Their inclusion, twice, with additional steps suggested this was the deliberate choice of the parties.