Loss of time after completion of repairs, Cl. 16-13

Time may often be lost also after the repairs have been completed, for example, where the vessel is normally engaged in a particular limited geographical area or in a strictly local trade.  In such cases, time will obviously be lost when the vessel proceeds from the repair yard to its normal place of operation.  It is reasonable that the assured can recover this loss of time under his insurance policy.

Under the main calculation rule in Cl. 16-3, the insurer would, subject to the apportionment rules in Cl. 16-13, sub-clause 2, cf. Cl. 16-10, be liable in full for the loss of time after completion of repairs to the extent that such loss of time resulted from the casualty.  In the absence of special rules, the insurer would have to cover time lost until the vessel was again able to earn freight, as well as any loss of income lost due to a cancellation of the charter party. 

However, the loss of hire insurer's liability that would follow from Cl. 16-3 in respect of time lost after repairs have been completed, has been limited in Cl. 16-13, which reads:

After repairs have been completed, the insurer shall only be liable for loss of time:

  1. until the ship can resume the voyage or activity that it was engaged in under the contract of affreightment that was in force at the time of the casualty,

  2. until ships which are employed in liner trade or in another way follow a fixed route or operate in a defined geographical area can resume their activity,

  3. while the ship sails to the first port of loading under a contract of affreightment that was entered into with binding effect prior to the casualty.

  4. until passenger ships can resume their activity, but for a period not exceeding fourteen days.
Cl. 16-10 shall apply correspondingly to loss of time after completion of repairs.

Letter (b) was edited in 2013 by replacing the word “limited” with “defined”.

Letter (d) and sub-clause 2 was added in 2003, but the provision in sub-clause 2 was not new but merely an editorial change, as the, in reality, same provision previously was found in Cl. 16-10, sub-clause 1, second sentence, see also on this point footnote 11.

According to Cl. 16-13, the insurer is not liable for time lost after the repairs have been completed except in the cases specifically mentioned in letters (a) – (d).

If the insurer is liable according to Cl. 16-13, the apportionment rule in Cl. 16-10 regarding time lost during removal to the repair yard shall be applied correspondingly to time lost after the completion of repairs, see 7.3 above.

This means that time lost after completion of repairs shall be attributed to the category of repairs that necessitated the removal to the repair yard. If removal to the repair yard was necessary for the repair of more than one category of work, the time lost after completion of repairs shall be apportioned in accordance with the time that each class of work would have required if carried out separately.

Cl. 16-13, letter (a), is based on the assumption that the ship was under a contract of affreightment in force at the time of the casualty and that the ship, after completion of the repairs, continues to trade under the same contract.  In such cases, the insurer is liable until the vessel is again able to resume its voyage or the activity it was engaged in at the time of the casualty.  The provision applies regardless of the type of contract of affreightment. Furthermore, the Commentary to Cl. 16-13, states that contractual obligations which are not contained in a contract of affreightment "must be regarded as equivalent to such contract". The provision could thus also apply to oral agreements. 

If the contract in force at the time of the casualty is cancelled as a result of the casualty, the insurer will only be liable for the time lost up to the completion of the repairs.

Letter (b), deals with loss of time for vessels in liner trade or similar. In such cases the loss of hire insurer covers the time lost until the vessel is again able to earn income by resuming its normal activities.

Letter (c), is based on the assumption that a binding contract has been entered into prior to the casualty, but that the vessel had not yet started to operate under the contract at the time of the casualty.  If the contract is cancelled because of the delay caused by the casualty, the insurer is only liable for the time lost up to the completion of the repairs.  If the contract is not cancelled, the insurer is liable for the extra time needed to sail to the first port of loading. Letter (c) presupposes that the vessel is not earning freight until she commences to operate under the contract by arriving at the first port of loading. Letter (c) does not apply to a vessel already operating under e.g a voyage charter with cargo on board, see under above.

Letter (d), was added in 2003 because it was felt that passenger vessels did not fit squarely into the categories in letters (a) to (c), but should be entitled to the same cover for loss of hire after completion of repairs if they were operated in a regular scheduled service or route or similar trading pattern where the passengers book in advance for specific tours leaving at certain pre fixed dates. In this kind of operation, the owner will not easily be able to fill up the vessel with passengers on short notice immediately after the vessel is back on the terminal ready for departure, but will have to wait at the terminal until the next scheduled departure. However, the cover pursuant to letter (d) is limited to 14 days after the completion of the repair because only in few instances would a passenger vessel perform longer round trips than 14 days. It is conceivable that some operators offer longer round trips, such as round the globe service or other longer tours, but if so the assured must arrange for necessary mitigation to secure income for a longer period than 14 days after completion of repairs on his own account. Passenger vessels comprises also cruise vessels and ferries carrying both passengers and cars and/or other roll/on roll off cargo. There are hardly any left of the old type of combined general cargo and passenger vessels, where the carrying capacity was first and foremost designed for the cargo and the passenger facilities were limited to a few passengers. To the extent such vessels are still in operation, they may be covered for loss of time pursuant to letter (b) if they are operated in a liner trade.

Time is sometimes lost after repairs have been completed due to the vessel being unable to find employment immediately thereafter.  Such loss of time will not be covered by the insurance, even if the loss can be seen as a consequence of the stay at the repair yard and therefore of the damage to the ship.