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AMERICAN TRADING & PROD. CORP. v. SHELL INTL. MARI

July 22, 1971

AMERICAN TRADING AND PRODUCTION CORPORATION, Plaintiff, Cross Defendant,
v.
SHELL INTERNATIONAL MARINE, LIMITED, Defendant, Cross Plaintiff


Tyler, District Judge.


The opinion of the court was delivered by: TYLER

TYLER, District Judge.

This case adds another chapter to the continuing saga of Suez Canal closings and resultant litigations. Plaintiff, American Trading and Production Corporation ("owner"), sues for extra monies expended by Cape of Good Hope passage after closure of the canal in June, 1967. Defendant charterer, Shell International Marine, Limited ("Shell") denies liability for such extra charges and also asserts a cross claim for damages attributable to unused Suez Canal tolls. The case was tried on submitted facts, and for reasons to be hereinafter indicated, it is concluded that neither the owner nor Shell is entitled to recover on their respective claims. See, generally, Transatlantic Financing Corporation v. United States, 124 U.S. App. D.C. 183, 363 F.2d 312 (1966).

 From the submitted facts, the following summary can be conveniently and relevantly made. The owner is a corporation organized under Maryland law and maintaining a principal office and place of business within this judicial district. Shell is and was a corporation duly organized under United Kingdom law. On March 23, 1967, in New York City, owner and Shell executed a contract voyage charter, by the terms of which Shell hired owner's tank vessel WASHINGTON TRADER ("TRADER") for a voyage with a full cargo of lube oil from "Maximum three safe ports, at Charterer's option, U.S. Gulf" to Bombay, India. It was further provided in the charter party that the freight rate stipulated by the parties was "[in] accordance with (the) American Tanker Rate Schedule (ATRS) plus Seventy-Five Percent (%)."

 On or about May 15, 1967, the TRADER departed Beaumont with a cargo of 16,183.32 long tons of lube loaded there and at Smith's Bluff bound for Bombay. On the following day, owner submitted to Shell its invoice of charges covering the voyage in the amount of $417,327.36. Shell responded rather promptly to this invoice by sending its check for the full amount which was duly received by the owner on May 26, 1967.

 The TRADER arrived at, bunkered and departed Freeport, Bahamas on May 19, 1967. It then proceeded to cross the Atlantic with no untoward events until May 29th, when the master received a radio message from the owner advising him to "take additional bunkers at Ceuta due to possible diversion because of Suez Canal crisis". Thus, when the TRADER arrived at Ceuta at 2300 hours (GMT) on May 30th, it bunkered and left the following morning, May 31, at 0740 hours (GMT).

 On June 2, the master of the TRADER advised the owner by radio that his estimated time of arrival at the Suez Canal entrance was 2300 hours on June 5, 1967. At 0840 hours on June 5th, the owner received another radio message from the TRADER indicating an estimated time of arrival at Port Said at 1600 hours (EDT) on June 5th. Several hours later on the same day, the owner sent the following radio message to the master of the TRADER:

 
"Immediately radio American Consul Port Said cable address AMCONSUL Port Said current position and ETA Canal Stop Keep him and this office closely informed your movements until you safely transit Canal."

 Still later that day of June 5th, the owner sent another cable to the master advising him of various reports of trouble in the canal area and suggesting, subject to the master's discretion, that he delay entering the canal "pending clarification situation". At some time on the same day of June 5th, as a consequence of the state of war between Israel and Egypt, the Suez Canal was closed to all traffic.

 On the morning of June 5th, the owner had telephoned a Mr. Tourelle of Dietze, Inc., the broker which had negotiated the charter party in question, requesting that because of the outbreak of war in the Middle East, he communicate with Shell to obtain Shell's approval for diversion of the TRADER. Immediately after that call, Mr. Tourelle got back to the owner with the word that he had spoken to a Mr. Hennessy of Asiatic Petroleum, Inc. Hennessy, acting as Shell's agent, reported that it was Shell's position that the owner had to decide what to do with the TRADER and her cargo. On that day, June 5th, it is relevant to note that the TRADER had proceeded to a point about 84 miles northwest of Port Said and had dropped anchor there. In other words, the TRADER then was about 84 miles away from the northern entrance of the Suez Canal.

 The following day, June 6, the owner received through Tourelle the following message from Shell:

 
"WASHINGTON TRADER understand Suez Canal closed all traffic. We assume vessel is waiting outside Canal. In these circumstances, it is for owner to decide whether to continue to wait or make the alternative passage via the Cape since charter party obliges them to deliver cargo without qualification. Please let us know what Owners decide."

 Approximately one hour later, the owner ordered the master of the TRADER to proceed to Bombay via the Cape of Good Hope. At or shortly after that direction to the master, the owner sent the following message to Shell:

 
"In view of Suez Canal closed WASHINGTON TRADER proceeding Bombay via Cape Good Hope. We reserving all ...

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