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Cargo Owner Must Pay 100% Overage Court Rules

shipIn resolving a dispute in respect of a shipping contract, the Court of Appeal has ruled that, where a greater quantity of fuel oil was loaded onto a vessel than the minimum amount specified in the charter party, the ship’s owners were entitled to charge freight at the same rate on the entirety of the cargo in fact transported.

The cargo was stated in the charter party to be a minimum of 80,000 metric tons. However, the quantity transported between ports was almost 33,000 metric tons more than that. The ship’s owners argued that they were entitled to charge ‘overage’ on the excess at the same freight rate as the remainder of the cargo. However, the cargo owners submitted that, on a correct interpretation of the charter party, the ship owners were obliged to carry the excess cargo free of charge.

Ruling in favour of the ship owners, the court noted that it could not be supposed that the parties had intended that the excess cargo would be carried for nothing and the cargo owners’ interpretation of the charter party was therefore ‘impossible’. Despite the cargo owners’ plea that payment of 100% overage is unheard of in the shipping industry, the court ruled that freight should be paid at the same rate in respect of the excess as had been agreed in respect of the minimum cargo.