" . . . or any cause whatsoever . . ."

THOSE conversant with charter party forms will recognise the phrase, "…or any cause whatsoever….", as being part of an exceptions clause. Those unfamiliar with shipping and chartering terms may wonder why anyone in their right mind would agree or accept such a condition.

If this is so obvious, why are there provisions such as Clause 4 in the AMWELSH Form, which states in part, 'Any time lost at any time by reason of or as a consequence of riots, strikes, lockouts, or any dispute between masters and men, occasioning a stoppage or pitmen, trimmers or other hands connected with the working or delivery of the coal for which the vessel is stemmed, or by reason of accidents to mines or machinery, obstructions, embargo or delay on the railway or in the dock; or by reason of fire, floods, frosts, fogs, storms or any cause whatsoever beyond the control of the charterer affecting mining, transportation, delivery and/or loading of the coal, not to be computed as part of the loading time . . . . No deduction of time shall be allowed for stoppage, unless due notice be given at the time to the master or owner.'

The simple answer is because the parties agreed to the clause. But what is the point of agreeing to a deal when one partner can withhold performance for any cause over which it claims it has no control. There are a number of reasons. One is quite obvious, while the others are more subtle and intangible.

The obvious reason is economics. If the shipowner needs the cargo or contract, its focus will be on getting the business to ensure continued cashflow. The not-so-apparent reasons are that probably more than 95 per cent of all fixtures are performed without disputes leading to arbitration and, therefore, owners rely on nothing going wrong, or hope that it won't. There are also those who maintain that a great number of principals and/or brokers don't bother to read the printed text because the form had been used previously without complication and little, if anything, can be changed with respect to standard clauses.

The clause refers to "beyond the control of the charterer," but does not give any further specifications. If an event is beyond the control of a charterer, does this imply that at one time it may have been within the control of the charterer? If, on the other hand, the event was at no time under the control of the charterer, where then is the justification to incorporate it into a contract?

These six words are there by virtue of the parties' agreeing to them. However, the concept explicit in the wording of this clause, in the normal course of business, could not stand up to the test of foreseeability in most maritime cases. Damages or the entitlement thereof are usually viewed in the context of Hadley v Baxendale, pursuant to which losses may be recovered which were reasonably within the contemplation of the parties or foreseeable at the time the charter party was concluded. Issues causing demurrage are foreseeable and provided for in most charter parties.

If indeed this clause, as interpreted by some, means that any and all events occurring and which are beyond the control of a charterer, suspend the running of laytime, then you have to question the purpose of certain other clauses in the contract. Unless owned or managed by the charterer, the availability of a loading or discharging berth/facility would be beyond its control. Under application of the above clause, laytime would not count. But how could this be reconciled when contracts also include a "whether in berth or not" or "whether in port or not" provision for the commencement of laytime?

Would it not be a reasonable interpretation that the exceptions clause refers to those events which are beyond those which occur and are to be expected in the normal course of business? A coalmine explosion is an extraordinary event and readily qualifies for an exception. But how about fog? While its formation is beyond the control of all parties, prudent planning for this eventuality is not. For example, in ocean transportation, fog is a risk assumed by the shipowner. If an Atlantic crossing is prolonged by two days due to fog, the owner's voyage results are adversely affected. Therefore, when making their calculation, reasonable shipowners include a contingency factor to protect against such events. Would it be unreasonable to expect that similar parameters should apply to barge traffic?

What about the application of frost? When coal is shipped in the winter months, it is likely that freezing conditions exist somewhere along the route from the mines to the loading facilities. With the knowledge that coal freezes in barges and/or railcars, would it not be logical for the shippers/charterers to make certain allowances for this seasonal event? At the present time, with the specific enumeration of the climatic exceptions in the exception clause, there is little chance that logic can prevail.

In an ordinary contract, certain events are beyond the control of either side, such as force majeure. If, however, one party contracts with a third party to provide the commodity, and that party fails to respond/comply, this failure may be beyond the control of the contracting party. However, someone should bear responsibility with respect to the innocent party. If "whatsoever" is the saving grace for all of the charterers' problems and is accepted as such, it raises the question of whether good faith played any role when negotiating this contract.

I recently received an unsolicited comment on the "whatsoever" question, "As I recall, there are two aspects of contract law that militate against such language. The first point is the policy or doctrine to read or interpret vague or undefined wording against the author. Where no specific author can be identified, the writing is read against the beneficial author, i.e. the industry sourcing the document. Exxon Mobil against charterers, BALTIME contrary to owners, GENCON vs god.

A word like "whatsoever" is repugnant to the clear purpose of a contract; an agreement concerning a specific set of clear terms and conditions consented to between the parties. Hidden or undefinable meanings are counter to contract doctrine. The contract is supposed to define the parameters of the agreement, not create areas of question and ambiguity.

Loose wording also operates counter to one of the most basic of contract principles: the principle of good faith. It does that by granting the benefactors of "whatsoever" no need to act in such a manner because, the instant something goes awry, they are excused from the consequences. Good faith actions vanish in the face of unlimited excuses."

This comment is not an unexpected reaction, and clearly shows the real danger of "whatsoever." Unfortunately, the presence of the clause in negotiated contracts makes this observation a mere footnote of a dissenting view. It has been argued that, for the exceptions to apply, they must occur in reasonable proximity. This, however, is not a sustainable argument. In fact, the reference to mines as a specific location makes it quite clear that the result would be the same if the accident at the mine occurred at a distance of 25 miles or at a facility 1,000 miles away. Commercially, this does not make good sense, but then again, the clause says what it says.

The only limitation included in the clause is the phrase, "unless due notice be given at the time to the master or owner," but the language is such that it probably gives rise to further arguments. What is the meaning of "due notice?" 'Due' has been defined inter alia. as "owed, rightful, proper, adequate, sufficient," while Black's Law Dictionary defines it as, "A sufficient, legally prescribed notice. A notice reasonably intended, and with the likelihood of, reaching the particular person or public. No fixed rule can be established as to what shall constitute 'due notice.' 'Due' is a relative term, and must be applied to each case in the exercise of the discretion of the court in view of the particular circumstances."

Assume a vessel is proceeding to its loadport and gives contractually required ETA notices of 10 days, 7 days, 5 days, 3 days, 2 days, and 1 day, and arrives at 20.30 hours on a given day. Also assume that approximately eight hours prior to the vessel's arrival the charterers had given notice to the owners (it reached them on the following day) invoking the application of Clause 4 of the AMWELSH FORM. Add in the assumption that the charterers also knew of this potential problem two days prior to giving their notice. Was the charterers' notice a "due notice?" An argument can be made as to whether or not the timeliness of the notice would have had a commercial effect on the financial voyage results. But that is not really the issue. Why should the breaching party benefit from its own action?

The answer to the dilemma of the exception clause is quite simple - review the clause and bring it into compliance with today's business practices. Realistically, there is little hope that charterers will give up the blanket coverage they enjoy. We, therefore, will happily (or not so happily) live thereafter afflicted by the motto quieta non movere.