The Eugenia, Ocean Tramp Tankers Corporation v V/O Sovfracht

The Eugenia, Ocean Tramp Tankers Corporation v V/O Sovfracht [1964] 2 QB 226; [1964] 1 All ER 161; [1964] 2 WLR 114; [1963] 2 Lloyd's Rep 381; 107 Sol Jo 931

CONTRACT, CHARTERPARTY, FRUSTRATION, WAR CLAUSE, CLOSURE OF ROUTE DUE TO MILITARY OPERATIONS, WAR ZONE, CUSTOMARY ROUTE, BREACH OF CONTRACT, REPUDIATION

Facts

The vessel Eugenia was let to the charterers for “a trip out to India via Black Sea” from the time Eugenia was delivered to them in Genoa. Under Clause 21 in the contract between the two parties, the vessel was not to be brought within any zone which is dangerous as a result of any actual or threatened act of war, war hostilities or war-like operations, unless the consent of the owners was first obtained. After the charterparty was negotiated, the agents of the two parties realised that the Suez Canal might be closed, but there were no terms in the charter to meet this eventuality. The vessel was delivered in Genoa on 20 September 1956 and sailed off from Odessa to India on 25 October 1956. The customary route to India at the time was via the Suez Canal. The vessel arrived in Port Said on 30 October 1956. At the time, the Egyptian anti-aircraft guns were in action and the zone was regarded as “dangerous” under Clause 21 of the charterparty. The vessel entered the Suez Canal on 31 October. The canal was blocked by the Egyptian government and the vessel was trapped. The passage was cleared northwards at the beginning of 1957 and the vessel arrived in Alexandria on 12 January 1957. The charterers claimed that the charterparty had been frustrated by the blocking of the canal. The owners of Eugenia denied frustration and regarded the charterers conduct as repudiation, for which they claimed damages.

Issues

(1) Were the charterers in breach of Clause 21 of the charterparty when they decided to pass through the Suez Canal?

(2) Did the blocking of the Suez Canal amount to a circumstance capable of frustrating the charterparty?

Decision/Outcome

The decision was in favour of the owners of Eugenia.

(1) The essence of the charterparty was that the vessel was placed at the disposal of the charterers and therefore, it was under the charterers’ orders. The charterers were in breach of Clause 27 of the charterparty, when they ordered the vessel to enter the Suez Canal knowing that it was a war zone.

(2) Applying Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696, the blocking of the Suez Canal did not bring about so fundamentally different a situation as to frustrate the contract.