Casablanca, and back - London Arbitration 14/19
Posted on 28th November 2019 at 10:19
London Arbitration 14/19 [(2019) 1032 LMLN] involved a vessel fixed under an amended Norgrain form to carry soybean meal from Savannah to Huelva, Casablanca and Oran.
Casablanca, and back
Wrangles about loaded quantities and delays in releasing the Bs/L meant altered disport rotation, claims exceeding $86,000 and owners’ demurrage counterclaim for over $40,000.
The recap provided that:
“21. Laytime to commence at load port … as per Gencon 94 …
Owns warrant that vsl’s holds are grain clean - if vsl fails to pass inspection a new NOR will be tender upon vsl’s pass the new survey.
24. Freight will be paid 100% within 3 banking days after … releasing non-negotiable copy of B/L … and original B/L will be released when owns bank confirms payment received.
31. If the original [Bs/L] cannot be presented at discharge port(s), owners … agree to allow [discharge] … against [charterers’ LOI] ... “
Clause 9 of the amended Norgrain form said:
“Once … Charterers call for surrender of Original [Bs/L] against freight payment … Owners … [must] comply immediately … during office hours, Monday to Fridays … .”
Loading completed on 11th March, but owners did not release the non-negotiable Bs/L until 19th. As the Tribunal later found, charterers paid the freight under Clause 24, but there was further delay in releasing (presumably, the original) Bs/L, and discharge at Huelva was against charterers’ LOI.
The necessary original Bs/L were still unavailable when the vessel arrived at Casablanca, so charterers urged discharge first at Oran and return to Casablanca later. Owners wanted additional freight for that, and later agreed to reverse the remaining discharge order for a further US$35,700.
Amid claims for shortage, security charges and survey fees, charterers sought return of this extra freight, and owners counterclaimed for demurrage.
(a) the additional freight
Charterers claimed this as damages for owners’ failure to release the Bs/L promptly.
The Tribunal said that charterers might have argued that time waiting for the Casablanca Bs/L should not count because of owners’ (here, assumed) breach. Instead, though, they had freely agreed to pay the US$35,700 in return for changing the disport rotation, so this claim failed.
Nevertheless, in rejecting owners’ argument that charterers were anyway in breach in failing to provide another LOI, the Tribunal gave an important reminder that such a (very common) provision does not generally compel charterers to provide an LOI. Rather, it obliges owners to accept one if charterers offer it.
All will depend on precise wording, but where (due to their breach) lack of original Bs/L yields delay, owners might not readily be able to argue that charterers are in breach in not providing an LOI.
There were two main issues.
Firstly, just as in “Mississippi Mixture”, posted on 4 November, Clause 18 (e) of the Norgrain form said that:
“Unless ... Clause 18(b) [applies, NOR] ... shall be accompanied by [a] National Cargo Bureau ... certificate of vessel’s readiness … .”
Charterers argued that as that requirement was not met, a new NOR had been needed.
However, the Tribunal agreed with owners that the governing provision was Clause 21 of the recap. Thus:
(i) owners had warranted that the holds were grain clean, and a new NOR was only needed if they failed inspection, and they had passed; so
(ii) loadport laytime started as per Gencon 94 - in this particular case under Clause 6 (c).
Secondly, charterers challenged the time for the vessel’s first call at Casablanca, arguing that no discharge was due to owners’ failure to release the Bs/L promptly.
The Tribunal agreed.
The parties had freely agreed to change the disport rotation, but time at Casablanca beforehand did not count, as lack of the Bs/L was due (the Tribunal this time found) to owners’ breach in delaying release. So time there only counted during the second call.
As well as highlighting that care is always needed when amending a printed form, and/or reading bespoke clauses alongside standard text, this part of the Award shows that an ad hoc agreement might be conclusive for one aspect - here, the additional freight - but still leave others open to argument.
Thus, while owners retained the extra freight, as in effect the agreed consequence of their own breach, such nevertheless meant a countervailing loss of demurrage. It is important, and might be vital, to consider all aspects together, as a seeming attractive immediate solution may prove costly later.
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