London Arbitration 22/17 [(2017) 985 LMLN 4]
Posted on 19th March 2018 at 16:24
A recent London Arbitration Award once again considers time bars in the context of a demurrage claim.
Whether by rider clause, under its own heading in a standard form or perhaps built in to some other provision, time bars are a standard charterparty feature. Most have an overall limit for all matters, and voyage charters often set shorter ones for certain claims.
Such provisions typically say that charterers will not consider a claim unless it has been submitted in writing with supporting documents within (mostly) 30, 60 or 90 days of completion of discharge. Best known in respect of demurrage, they can apply to many other types of claim.
Some of these clauses are very specific, listing the actual documents to be provided, such as NOR, SOF, NOP and pumping logs. Some are less so, stipulating all material created by the vessel or otherwise which is relevant to whatever gave rise to the claim. Others are wholly, and maybe dangerously, general, simply calling for all documentation substantiating each and every constituent part of the claim. Sometimes, also, documents must be signed, perhaps by a particular person, such as a ship’s officer or terminal representative, or otherwise validated.
Their purpose is to achieve early finality and certainty in a worldwide industry where operational changes are as rapid as they are continual, by ensuring that charterers quickly get a package with which they can check the validity of the claim, without having to make any separate investigation.
Tribunals and Courts regularly say that such clauses must be complied with strictly and carefully, but the standards of strictness and care can vary. London Arbitration 22/17 [(2017) 985 LMLN 4] is probably another example of that ebb and flow, but it is also a reminder of the dangers for owners and of the need always to act swiftly and according to the requirements of the clause.
Under an amended Asbatankvoy form charterers were released from any claim unless (within 30 days of completion of discharge) it had been presented to them “in writing with supporting documents.” They argued that the documents needed to arrive simultaneously with the written claim. Two loadport NORs had not, though they had already been provided, and their relevant content was anyway plain from other documents that owners had sent with the claim.
Owners retorted that (unlike many) this clause did not stipulate “all” documents, or specify which were needed, and did not say that they must accompany the claim.
The Tribunal rejected charterers’ argument and ruled that the material supplied was sufficient for them to evaluate owners’ claim, which had thus been presented “with supporting documents.” The deadline was a cut-off for providing the material, but it did not have to come simultaneously with owners’ claim.
One view is that a ruling for charterers would have been very harsh on owners. Charterers did not dispute that they had previously received the merely two documents that owners had not later attached. It is hard here to see any rationale for documents having to appear hand in hand with the claim, and charterers certainly had the factual material they needed.
Certain general guidelines can be given, but all depends on the wording of the particular clause and the facts and circumstances. In one case it might, for example, be very unjust to allow charterers to pounce on the absence of material that they had already been given. But it might be different if owners presented a claim in many stages over a long period, with documents attached progressively and perhaps confusingly.
Moreover, the risk of defaulting under a barring clause like this falls squarely on owners, and it would be wrong to misinterpret this ruling as signalling greater flexibility. Where a clause specifies certain documents, those must be provided, and with any required signature or stamp. Owners must identify any vital document which is not self-evident, and should be aware that Tribunals and Courts remain largely unsympathetic to what is called the de minimis exception - the argument that an omission is so small that it does not matter. It usually does.
Post-voyage commercial analysts have wide experience, and routinely plan ahead and seek and collate the required materials in good time. This is essential, but tackling these issues starts at the pre-fixture stage. Owners should first consider if they could in fact obtain the proposed required materials, and how long it might take, depending perhaps on the relevant location and in some cases the time of year. They should also check that they are adequately back-to-back in any chain, with the deadline above always shorter than the one below, and preferably with enough overlap to ensure that all material can be passed along in good time.
Sensible drafting, careful reading and strict compliance must always be the rule.
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