Demurrage, deadlines and documents - the “Ocean Neptune”
Posted on 24th March 2018 at 13:18
In a rare appeal from an Arbitration Award, Lukoil Asia Pacific Pte Limited v Ocean Tankers (Pte) Limited  EWHC 163 (Comm) (the “OCEAN NEPTUNE”) is an example of a dispute over the exact nature of a claim, and highlights other issues around time bars.
As discussed in previous commentaries, voyage charterparties routinely bar Owners’ claims unless they have been presented, together with specified documents, within a set time (often 90 or 120 days) after completion of final discharge.
These requirements are to quicken post-fixture accounting and so that any contested matters can be investigated while memories are fresh. They sometimes give rise to disputes over what documents were needed or produced, and occasionally as to whether the exact nature of a claim means that it is caught by the wording of the clause. In a rare appeal from an Arbitration Award, Lukoil Asia Pacific Pte Limited v Ocean Tankers (Pte) Limited  EWHC 163 (Comm) (the “OCEAN NEPTUNE”) is one of those.
Under a 2013 fixture on the standard ExxonMobil VOY2005 form, incorporating widely-used LITASCO Exxonvoy 2005 terms, all as amended by the recap, Charterers could load in Taiwan and discharge at between one and three Australian ports. They could renominate before tender of NOR, paying for any additional bunkers and for all extra time “at the Deviation Rate”, and subject to some familiar exceptions demurrage was payable, under standard clause 13 (d):
“ … for all time by which ... laytime ... is exceeded by the time taken for the loading and discharging and for all other Charterer's purposes and which, under this Charter, counts as laytime or as time on demurrage."
If under LITASCO clause 4 the vessel was required to wait for orders, the time was:
“to be for Charterers’ account and [to] count as laytime or demurrage, if [the] vessel [was] on demurrage.”
By LITASCO clause 2 the commonplace barring provision released Charterers from any claim (such as, but not limited to, deadfreight, demurrage and shifting or port expenses) unless it had been:
“presented in writing … with supporting documentation within ninety (90) days for demurrage and 120 days for other claims from completion of discharge … .”
Following several periods of delay, Owners submitted a large claim for demurrage.
The Tribunal ruled that this was mostly barred because, though presented in time, it lacked some of the required documents. But this did not apply to the part that Owners had redesignated as a claim for time spent waiting for orders. This was neither a claim for demurrage nor subject to the related documentary requirements of clause 2 - awaiting orders was a passive thing which would not ordinarily involve creating documents - so that part of the claim was in time.
On appeal Charterers urged that a claim for time waiting for orders under LITASCO clause 4 was one for demurrage, so clause 2 straightforwardly applied and it was barred.
Owners sought to contrast claims for (a) demurrage due to operational delays at loadports and disports and (b) time spent waiting for orders. Demurrage is pre-set damages for breach of charterparty by exceeding allowed laytime. LITASCO clause 4 however gave Charterers an allowance and did not involve any breach. Also, saying that a claim was to "count as" demurrage did not make it a demurrage claim.
The Judge rejected Owners’ attempted distinction and agreed with Charterers.
A provision that time was "to count” as laytime or demurrage and thus within a demurrage claim was a common drafting technique, and moreover the plain wording here did not just say that a claim for time awaiting orders was to be computed in the same way as a demurrage claim - it said that it was a demurrage claim.
Under LITASCO clause 4, such time counted “as laytime or demurrage”, precisely reflecting the key clause 13 (d) wording, under which demurrage was payable “for all time by which [laytime was exceeded] … and which …. [counted] as laytime or as time on demurrage.” The claim had been contractually described as a demurrage claim as defined.
Time spent under clause 4 would use up laytime, or count as demurrage if in aggregate that state had been reached. It was thus part and parcel of a clause 13(d) demurrage claim. Furthermore, looking at the fixture as a whole, where the parties wanted to distinguish between demurrage claims and those for other types of delay they did so in clear language.
As well as clarity on the nature of a claim under a familiar structure, this decision is a reminder that:
1. It is vital to comply with barring clauses, and ingenious retrospective argument will not readily deflect the courts from giving effect to plain words;
2. While, as the Judge observed, Owners who have met their documentary requirements can usually validly change the legal description of their claim, non compliance will bar them and attempted relabelling will not avoid that.
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