No time to waste on demurrage claims

English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well as applying stringently the stated requirements for the bringing of claims by one party against another.

A particular area where this approach is seen most often, is in relation to provisions for demurrage claims in charterparties.

It is not unusual, especially in the tanker trade, to see short time bars of 90 days, plus detailed lists of necessary documentation that must accompany the filing of a claim.

Where these are not complied with in an exacting manner, it can often lead to the claim failing. Recent English case law reaffirms this orthodox position.

Members that contract on the basis of terms including laytime and demurrage provisions (such as under a voyage charter or similar terms) should pay careful attention to said provisions and ensure that the full requirements are understood in advance or risk serious disappointment later on.

In the recent case of the Adventure [2015] EWHC 318 (Comm), Mr Justice Hamblen interpreted an amended BPVoy4 charter party and applied a 90 days timebar provision for the owner’s demurrage claim.

On appeal

The case was an appeal to the High Court of England from the owner, of an arbitration award from Mr Simon Gault and Mr John Schofield. The arbitration tribunal had held that the owner’s demurrage claim failed since the owner had not fulfilled the documentary requirements under the charterparty, and that the claim was consequently time barred.

Mr Justice Hamblen upheld the tribunal’s award and dismissed the appeal.

The relevant CP clause reads:

“19.7 No claim by Owners in respect of additional time used in the cargo operations carried out under this Clause 19 shall be considered by Charterers unless it is accompanied by the following supporting documentation:-

19.7.1 the Vessel’s Pumping Log signed by a senior officer of the Vessel and a Terminal representative showing at hourly intervals the pressure maintained at the Vessel’s manifold throughout the cargo operations; and

19.7.2 copies of all NOPs issued, or received, by the Master in connection with the cargo operations; and

19.7.3 copies of all other documentation maintained by those on board the Vessel or by the Terminal in connection with the cargo operations

20 Claims time bar

20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which Owners may have under this Charter unless a claim in writing has been presented to Charterers, together with all supporting documentation substantiating each and every constituent part of the claim, within ninety (90) days of the completion of discharge of the cargo carried hereunder.”

Demurrage claim

The owner brought a claim for demurrage for the amount of US$364,847.78 as a result of delays at both the load port, Sitra, and the discharge port, Port Sudan. The following documents were provided by the owner by email:

(a) An invoice for US$364,847.78 dated August 5, 2011;

(b) A laytime/demurrage calculation for Sitra and Port Sudan;

(c) A Notice of Readiness for Sitra;

(d) A statement of facts for Sitra;

(e) Four Letters of Protest for Sitra;

(f) A Notice of Readiness for Port Sudan;

(g) A pumping record for Port Sudan;

(h) A statement of facts for Port Sudan;

(i) Four Letters of Protest for Port Sudan;

(j) An Empty Tank Certificate for Port Sudan

The charterer disagreed with the demurrage calculation, and argued that since the owner had not presented copies of the port log and time sheets from both the load and discharge port together with their original demurrage claim, the owner had not provided the charterer with “all supporting documentation substantiating each and every constituent part of the claim” as required by clause 20.1.

Since the owner had not corrected its claim by submitting the further documents within 90 days after completion of discharge, the charterer argued that the owner’s claim was time barred under clause 20.1.

The owner submitted that the proper construction of clause 20.1 only requires presentation of “essential” supporting documentation, which generally means the NOR and Statement of Facts, and that such documents were presented. The owner cited The Pera, The Oltenia and The Abqaiq cases in support of its position.

Mr Justice Hamblen agreed with the charterer.

Supporting act

The judge first considered which documents are covered by clause 19.7.3 where he found that the wording “connotes contemporaneous records kept by the vessel relating to the cargo operation. The pumping log is the most obvious example of such a document but some vessels may keep similar but different records.”

Further Mr Justice Hamblen held that the port log and time sheets are clearly supporting documentation for the claim made. Mr Hamblen considered the documents to be “primary documents containing factual material which should be made available to the charterers so that they may satisfy themselves that the claim is well founded, consistent with the purpose of the clause”.

Based on the above, Mr Justice Hamblen held that “Clause 20.1 is not limited to a requirement to provide ‘essential’ supporting documentation only and that it is to be construed in the manner outlined above. I also conclude that the tribunal was correct to find that all supporting documentation was not provided as required by the clause with the consequence that the claim for demurrage is time barred.”

The appeal was dismissed.

The interpretation of BPVoy4 as applied by Mr Justice Hamblen is strict on owners. The case shows that owners have to be very careful to fulfil all requirements of the charterparty when presenting a demurrage claim to charterers. Failure to do so may result in the demurrage claim being time barred. The same care must be observed by charterers who act as disponent owners in a chain of charterparties.

Øystein Djuv-Stiansen is vice President, head of claims at Skuld in Oslo. He can be contacted on +47 22 00 23 52 or oystein.djuv.stiansen@skuld.com.