The Court of Appeal has, in its judgment in Scindia Steamship Navigation Co. Ltd v. Nippon Yusen Kaisha Ltd.(The Jalagouri) ,1 upheld the decision of Rix, J. (as he then was) at first instance2 concerning the scope of an unusual NYPE off-hire clause3 and financial security clause, as well as an amended NYPE “employment” clause. Tuckey, L.J.,4 accepted counsel’s argument that the issues on appeal raised questions of general importance in view of the extensive use still made of the NYPE (1946) form by charterers and shipowners.5 More generally, these are important issues in the context of time charters in view of the established rule that the time charterer must pay hire continuously throughout the hire period as well as bear the risk of any financial loss should the vessel be idle during the hire period.6

Scindia Steam Navigation Co. Ltd,7 the owners of the m.v. Jalagouri , entered into a time charter on an amended NYPE 1946 form with Nippon Yusen Kaisha Ltd. Following the loading of a final cargo at Shibushi, Japan, the Jalagouri collided with a breakwater. This caused an ingress of water into her No. 3 hold,8 damaging cased car components stored there. At the discharge port, Kandla in India, cargo which had not been affected by water was off-loaded first. Subsequently, when the damaged cargo was discovered, the port authorities at Kandla ordered the vessel off her berth to the port’s outer anchorage. They refused permission to discharge the damaged cargo without a financial guarantee for the costs of storing the damaged parts or of clearing them from the port area.9 The charterers provided such a guarantee and then purported to deduct US$67,872.87 from hire, on the basis that the vessel was off-hire under the charterparty. The owners disputed this deduction.

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