Opening something up, at the start of lockdown
Posted on 30th April 2020 at 09:47
A recent case may be of great significance for fixtures that stipulate pro rata demurrage amid simultaneous handling of different parcels.
Just a few hours before the UK government’s announcement on 23 March, there was a ruling in Tricon Energy Ltd v MTM Trading LLC  EWHC 700 (Comm), a rare appeal from an Award, and one given by “an experienced arbitral tribunal.”
The core issue was:
"Where a CP requires demurrage to be calculated by reference to B/L quantities, and the time bar clause requires all supporting documents, will a demurrage claim be time-barred if the owner fails to provide copy Bs/L?"
The Judge said yes, “but only on the basis of an interpretation of the particular clauses here, and without suggesting a requirement for Bs/L where these are not available in a particular case."
Though confined to the actual terms, and with some slight qualification, this decision will allow charterers often to argue that, by the given deadline, the relevant two (or more) Bs/L must be included with this sort of demurrage claim, or it is time-barred.
It is submitted that it is not clear why Bs/L are needed, and that (i) the ruling takes insufficient account of at least one recent decision - the “AMALIE ESSBERGER”, which we discussed on 14 January - and (ii) may mean time bar for unwary owners who simultaneously load and/or discharge on terms that prorate laytime and demurrage when that happens.
(The Judge said that if a B/L was not available, an explanation would have to be given. But this could mean difficulty under common wordings, which do not reliably allow this exception, and perhaps also controversy based on culpability where owners no longer have even a copy of what they would generally have issued.)
Facts and terms
Under a CP on an amended Asbatankvoy form dated 13 February 2017 the “MTM HONG KONG” loaded at Antwerp, and at Houston discharged the relevant fixture cargo and another parcel carried under a second B/L.
Owners’ demurrage claim for US$55,841.16 included disport delays, and the key provisions were:
(e) If load or discharge is done simultaneously with other parcels then laytime to be applied prorated between the parcels;
(g) If the Vessel is delayed in berthing and has to load and/or discharge for the account of others, such delay and/or demurrage, if incurred, to be prorated according to the Bill of Lading quantities.
Any Owner claim is barred unless a claim … in writing and all supporting documents have been received ... within 90 days.”
The Bs/L were not produced, and the Tribunal had said that:
the SOF was all that was necessary to check correct apportionment of waiting and discharging time;
the Bs/L were not needed to verify that the quantities had been calculated on the same basis, as the SOF could be relied on for that; and
in matters like this, parties have "only ever adduced the SOFs and never any Bs/L".
The Judge briefly mentions many of the authorities examined in the "AMALIE ESSBERGER”, but not the case itself, or the clear opinion there on "all supporting documents". This required owners:
“to submit documents relied on in support of their claim or documents which taken at face value established the validity of the claim”.
Thus owners could provide the material that objectively set out their claim, and charterers could assess its apparent validity or investigate the circumstances and formulate any defence.
Provision of NOR, timesheets and SOF etc will achieve that, here. If charterers identify a possible inconsistency or other challenge, they can seek any relevant Bs/L. Under the above formulation, it is not necessary for these to be produced to meet a point that might not arise. And as the Tribunal said, to date invariable practice has not included the Bs/L, and moreover commercial confidentiality issues could arise (i.e. with owners giving B/L B to charterer A), which might not always be solvable by redaction, as the Judge suggested.
This decision could cause difficulty for owners chartering out on these prorating terms.
If, pre-fixture, they somehow know for sure that they will be able to produce the Bs/L, and without any problems, they can simply include them in any claim.
Otherwise, owners may need to carefully exclude provision of the Bs/L, or (more subtly) omit them from specific listing of all that is needed.
There may be uncertainties here, and owners may wish to seek advice before fixing on these particular terms.
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