Heads you win, tails you lose
The importance of ensuring that necessary supporting documents are submitted when dealing with a time bar clause has been highlighted by two recent decisions of the Commercial Court, one being a claim under a time charter and the other, a demurrage claim under a voyage charter.
“TIGER SHANGHAI” – MUR Shipping BV v Louis Dreyfus Company Suisse S.A –EWHC 3240
The charterparty provided:
“Owners shall be released and discharged from all liability in respect of any claim or claims which (charterers) may have under the charterparty and such claim should be totally extinguished unless such claims have been notified in detail to (owners) in writing, accompanied by all available supporting documents (whether relating to liability or quantum of both) and arbitrator appointed within 12 months from completion of charter.”
Charterers wanted to cut cement feeder holes into hatch covers because the feeder holes on the hatch covers were positioned in such a way that the loading crane was not quite long enough to reach the starboard side of the vessel.
Charterers asked owners to agree, pursuant to a clause which stated:
“The Charterers, subject to the Owners’ and Master’s approval which is not to be unreasonably withheld shall be at liberty to fit/weld any additional equipment and fittings for loading… cargo. Such work shall be done at the Charterer’s expense and time, and the Charterers shall remove such equipment and fittings at their expense and time prior to re-delivery, if so required by the Owners …….”
Owners rejected the request. Charterers appointed a survey firm who issued a report investigating issues surrounding the cutting of new holes.
Following owner’s refusal, charterers terminated the charterparty, asserting that owners had been unreasonable and alleging repudiatory breach of the charterparty. Subsequently, charterers sent a letter of claim seeking return of hire which had been paid in advance and attaching details of the claim. The survey report was not included in that claim letter.
Within the 12-month period, charterers appointed an arbitrator and owners in response did likewise. Almost a year later charterers served claim submissions. The submissions attached the report in support of charterers contention that there was no technical reason why the new cement holes could not have been made.
Owners contended that the original claim had not been presented in enough detail and as the report went to the crux of the issue it should have been sent with the claim letter or, latest, before arbitration was commenced. Charterers argued that the report had been produced for arbitration and therefore fell outside of the category of supporting documents.
In arbitration, the Tribunal held that the report was a crucial document that ought to have been disclosed within the 12-month period. As it had not, they found that the claim was time barred.
On appeal, the Court decided that the case was unusual given the extent of the time bar clause, but the Judge held that there were no grounds to bend the construction of the clause. The report was indeed vital evidence and it should have been disclosed before the time bar expired. As it was not, the Court upheld the Tribunal’s finding that the claim was time barred. As per the Judge:
“What is supportive is dictated by the claim which is being advanced. What is required to support the claim is elucidated by the process of setting out the limbs of the claim, here covering both liability and quantum. If there is a document which supports any limb or claim it needs to be supplied; and it is telling that when following that process, albeit at a later stage of the dispute, MUR turned to this document and it did so to support its case as well as anticipating a defence.”
“Amalie Essberger” Tankreederei GmbH & Co KG v Marubeni Corporation – EWHC 3402
In the second matter a rider clause provided:
“Any claim for demurrage… shall be considered waived unless received by the Charterer or Charterer’s broker in writing with all supporting calculations and documents, within 90 days after completion of discharge of the last parcel of Charterer’s cargo(es). Demurrage, if any, must be submitted in a single claim at that time, and the claim must be supported by the following documents:
- Vessel and/or Terminal Time Logs;
- Notice of Readiness;
- Pumping Logs; and
- Letters of Protest …”
A second rider clause stated:
“For any load/discharge operation Owner must provide Charterer with a complete set of cargo documents including:. …
These documents should be forwarded to Charterers within 7 banking days after completion of loading or discharge ….”
After loading, owners sent the pumping log and a letter of protest as required by the second rider clause.
Subsequently and within 90 days, Owners submitted a demurrage claim. The claim, as presented, did not include the pumping log or the letter of protest, which had already been sent to charterers. On an application for summary judgment by the charterers to the effect that the claim was time barred, the following questions fell to be considered by the Judge:
- whether “supporting documents” only extended to documents which were relevant;
- did owners’ obligation to provide supporting documents for the demurrage claim extend to documents previously sent to charterers; and
- if the claim had not been properly made, did that impact on the whole claim or only that part of the claim to which the documents related.
The Judge held that “all supporting documents” refers to documents on which owners rely in support of their demurrage claim, such that the pumping log and letter of protest were necessary in support of the demurrage claim.
However, although the clause required the demurrage claim to be submitted “in a single claim at that time”, he found that there was no express requirement that the supporting documents be provided in one tranche at the same time as the demurrage claim. It was not necessary to remind charterers that they had received the other documents at an earlier time.
Accordingly, it was held that the claim was not time-barred. It should be noted however, that the Judge said that if the claim had been time-barred, then the whole claim would have been.
When compiling a claim, close scrutiny needs to be given to the wording of any applicable claim/time bar provision, and it is better to be safe than sorry and put all possible documentation in even if it is already in the other party’s possession.
Should clients have any queries in relation to this bulletin then they should contact their usual contact in the Claims department in London, Dubai or Shanghai
Sian Morris, Deputy Claims Manager,