London Arbitration 12/26: Swift Victory on VEGOILVOY Liberty Clauses with Partial Final Award 8 Days After the Constitution of the Tribunal

In a recent LMAA arbitration, MFB successfully represented Owners in obtaining a Partial Final Award only 8 days after the constitution of the Tribunal, securing urgent declaratory relief in circumstances where a Vessel had been stuck off a North African port for more than 5 weeks.

The decision provides important guidance on the operation of liberty clauses in the VEGOILVOY form and demonstrates the effectiveness of the LMAA in dealing with urgent live matters.

Factual Background

The dispute arose under a voyage charterparty on the VEGOILVOY form for the carriage of a cargo of crude sunflower oil from the Black Sea to North Africa.

Following arrival at the discharge port, the Vessel remained waiting offshore for over 5 weeks as Charterers failed to instruct the Vessel to discharge due to an alleged repudiation of the purchase contract, and further difficulties in finding a buyer.

The delay caused significant operational and commercial difficulties. Fresh water and other provisions were running low, bunkers were nearly depleted, two possible follow-on fixtures had been lost, and most significantly, its class certificates were due to expire. An extension had already been obtained to enable the Vessel to reach a scheduled shipyard appointment, but there was no expectation that a further extension would be granted.

Had the class certificates expired, the Vessel would in immediate breach of flag requirement, being considering unseaworthy and unsafe, likely to be detained by port state control, with insurance cover in jeopardy.

In light of these circumstances, MFB made an urgent application on 28 May 2026 seeking declaratory relief that Owners were entitled to proceed to an alternative safe port and discharge the cargo into shore storage pending delivery to the party entitled to receive it.

The Arbitration Proceedings

Recognising the urgency of the matter, the Tribunal adopted an expedited timetable and listed a hearing shortly after its constitution.

Owners advanced two independent grounds in support of the relief sought.

First, Owners relied on common-law principles, submitting that a shipowner is not required to wait indefinitely for cargo interests to take delivery and may, in appropriate circumstances, proceed to another safe port to discharge the cargo where delivery is not accepted within a reasonable time.

Secondly, Owners relied upon the liberty clause contained within the VEGOILVOY charterparty, which entitled the Vessel, in circumstances giving rise to risks of delay, detention, difficulty or other disadvantage, to proceed to another safe port and discharge the cargo there, such discharge constituting complete delivery and performance under the charterparty.

Despite being afforded an opportunity to do so, Charterers did not engage with or respond to the legal arguments advanced by Owners. Charterers' lawyers nevertheless advised that payment for the cargo had now been made and that instructions had been issued for discharge at the North African port.

In response, Owners served further witness evidence confirming that the Vessel would need to depart on the day of the hearing in order to meet the class deadline and that it remained uncertain when a berth would become available at the discharge port. Even if a berth became available, discharge operations were expected to take 5 days.

The Award

The Tribunal held that the VEGOILVOY liberty clause was clear and unambiguous in its terms. It found that the clause entitled Owners to proceed to an alternative port and discharge the cargo there, including at a port in another country if considered safe and appropriate in the circumstances. Such discharge would constitute full contractual performance and would not place Owners in breach of the charterparty.

Owners were therefore granted the declaratory relief sought, with Charterers ordered to pay Owners’ recoverable costs.

The Tribunal further held that Charterers were liable for losses, damages, costs, expenses and remuneration arising from their failure to take delivery of the cargo, with quantum to be determined in a later award.

Comment

The award provides rare guidance on the scope of VEGOILVOY liberty clauses and confirms their effectiveness in protecting owners where a charterers’ delays effectively leave vessels operating as floating warehouses, with the Tribunal further clarifying that this liberty extends to proceeding to a alternative port, even in another country.

The case also demonstrates the speed and effectiveness of LMAA arbitration in urgent disputes, with a Partial Final Award being obtained just 8 days after the Tribunal's constitution.

The LMLN arbitration digest can be accessed at the following link: London Arbitration 12/26 - Lloyd's Maritime Law Newsletter.

MFB (Baris Oztoprak and Samuel Hacking) together with Alexander Yean of Twenty Essex acted for the successful Owners.