This case is a clear reminder to Owners and Sellers of the risks of failing to adequately support their demurrage claims within the stipulated time limits. The effect of non-compliance could have serious consequences on Owners and prevent them from recovering substantial amounts."
Owners chartered the MT ADVENTURE (the Vessel) to Charterers on an amended BPVoy4 form. Owners claimed demurrage as a result of delays incurred at both the load and discharge port. Charterers disputed the claim, arguing that it was time barred because Owners failed to provide the supporting documents that were required under the terms of the charter within the contractual time frame.
The Charterparty contained the following key provisions:
19.7 No claim by Owners in respect of additional time used in the cargo operations carried out under this Clause 19 shall be considered by Charterers unless it is accompanied by the following supporting documentation:
...
19.7.3 copies of all other documentation maintained by those on board the Vessel or by the terminal in connection with the cargo operations...
...
20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage... unless a claim has been presented to Charterers, together with all supporting documentation substantiating each and every part of the claim, within ninety (90) days of the completion of discharge...
At arbitration, the Tribunal held that Owners' claim was time barred as they had failed to provide the Charterers with the documents required under clauses 19.7.3 and 20.1. Owners submitted the claim by email attaching (i) invoice; (ii) laytime/demurrage calculations for both ports; (iii) NORs and SOFs for both ports; (iv) Letters of protest at both ports; (v) pumping record for discharge port; and (vi) an empty tank certificate for the discharge port. However, Owners did not provide the port log and time sheets (referred to in Letters of Protest) and a manuscript note made on email referring to free pratique being granted at the discharge port. The Tribunal held that they had not provided all of the relevant documents and so the claim was time-barred. Owners appealed to the English High Court.
The Court considered whether clause 19.7.3 required Owners to submit with their demurrage claim copies of all documents which they would be required to disclose in arbitration. The Court disagreed with the Tribunal on this point and said that the answer to this question was no. The Judge considered that the obligation of disclosure is likely to go far wider than merely "supporting documentation" and would require a much more rigorous search than that contemplated by the clause. The Court concluded that the clause could not have intended to impose such a far reaching and potentially unworkable obligation on the Owners. The Court also considered whether clause 20.1 required Owners to provide all relevant supporting documentation or only essential supporting documentation. Owners submitted that the clause only required them to submit essential documents i.e. the NOR and SOF.
The Court referred to the case of The Abqaiq for guidance. In that case, Lord Tomlinson considered the documents that were required to comply with clause 20.1. He said that Owners should provide "documents which objectively [the charterers] would or could have appreciated substantiated each and every part of the claim" and which meant that they "were thereby put in possession of the factual material which they required in order to satisfy themselves that the claim was well founded."
Which documents will meet those requirements will depend on the facts of the case. Here, the Court held that the port logs and time sheets were primary documents containing factual material which should have been made available to charterers so that they could satisfy themselves that the claim was well founded. With regard to the free pratique email, in most cases this would be considered a secondary documentation and would not be required. However, in this instance, as there was no record in the documentation as to when free pratique was granted, it was probably to be regarded as a relevant supporting document.
Accordingly, the Court held that Owners' claim was time barred and the appeal was dismissed.
Comment
This case is a clear reminder to Owners and Sellers of the risks of failing to adequately support their demurrage claims within the stipulated time limits. The effect of non-compliance could have serious consequences on Owners and prevent them from recovering substantial amounts. There is no hard and fast rule as to what documents an Owner or Seller will have to produce and demurrage clauses should be checked carefully. Where a clause requires "all supporting documentation" to be provided, Owners should not just assume that submitting "essential" documents will be sufficient.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
