Better to be compliant than reliant - London Arbitration 10/19
Posted on 13th May 2019 at 10:43
Tender of a valid NOR is usually vital in order to trigger the start of laytime, and those who fail often resort to notions of estoppel and ostensible agency, matters which also arose in “Who Is Whose Broker?”, posted on 14th December 2018.
Though concerning a sale contract rather than a charterparty, London Arbitration 10/19 again suggests that such arguments seldom succeed, and highlights the importance of meeting all prerequisites to valid tender.
A coal contract contained provisions on laytime and demurrage.
By Clause 18.1 each side could “by Notice in Writing ...” appoint an agent, and under Special Condition 3 the sellers had to provide the buyers with a loadport analysis before the vessel tendered NOR:
“failing which [it was] deemed not to have been tendered until [the analysis was] received by [the buyers]”.
The B/L was based on wording provided by the buyers, and named port agents X as the notify party.
The vessel anchored at the disport on 17 March but the only berth was occupied, and the master emailed X to say that the vessel had arrived and was ready for discharge.
However, it could only do so on 29 March, after the prior vessel had sailed. The buyers then pointed out that the sellers had not provided the loadport analysis - which had been available from 13 March - and the sellers immediately did so.
Sum in dispute
More than $273,000 was at stake.
The sellers said laytime had started on 17 March, and claimed over $264,000 in demurrage.
Relying on Special Condition 3, the buyers countered that laytime did not begin until 29 March, and sought over $9,000 as despatch.
The sellers argued that:
1. the buyers’ request that X was inserted as the B/L notify party was a notice in writing under Clause 18.1 that X was appointed as their agent; thus
2. X had actual (i.e. in fact) or at least ostensible (i.e. they had been held out) authority to receive the emailed NOR; and
3. in that capacity X did so and unconditionally accepted it on behalf of the buyers and laytime started; and also
4. as the buyers had said nothing about the lack of the loadport analysis for over 12 days, they were estopped from relying on that - it was unfair for them to cite a requirement that they had not raised at the time.
The buyers replied that there had been no appointment under Clause 18.1, X was not their agent on any basis and had not received the NOR - which anyway they never saw - on their behalf.
The Tribunal rejected the sellers’ demurrage claim and awarded the buyers $9,160.07 as despatch.
There had been no appointment under Clause 18.1. Rather, X was acting as port agent on behalf of the vessel’s disponent owners. As between the buyers and sellers, X as notify party was just an intermediary through whom messaging flowed, and was not the agent of either.
Much as noted in “Who Is Whose Broker?”, as referred to above, the Tribunal likened the situation to the common chartering broker chain, where there can be different types of intermediary - one an agent and the other just a route for communications.
X was the latter here. Being the B/L notify party did not change that, the buyers had never held out X as their agent and nothing sent to X had been received on their behalf.
The sellers’ estoppel argument also failed.
The buyers had said nothing, but (the Tribunal said) one party could not be blamed for not pointing out the other’s failure.
Estoppel by silence could only arise where the silent party was under a duty to respond or, at the very least, was specifically asked to and misled the other party by not doing.
Here, though, any duty to speak that the buyers had only arose on 29 March, when in actual fact they had received the NOR, and they had pointed out the lack of loadport analysis at that time. They had neither done, nor omitted, anything that now made it unfair to rely on what the contract said.
This Award is another example of the need to comply with all contractual requirements, especially those that activate time-sensitive laytime and demurrage, and of the likely difficulties in seeking to establish agency and estoppel.
The report does not say whether NOR was re-tendered after provision of the loadport analysis. Probably it was, or further issues, like those in the “HAPPY DAY” ( EWCA Civ 1068) might have arisen.
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