108. Sarma Navigation SA v Sidermar S.P.A (The “Sea Pioneer”) [1979] 2 Lloyd’s Rep 408; [1982] 1 Lloyd’s Rep 13

Two separate contracts in respect of the same voyage not giving rise to separate demurrage claims

The facts

Steel products were shipped from Sicily to South America on the same vessel in terms of two charterparties entered into within days of each other.

The rate of discharge and demurrage was the same for both contracts.

Initially it was envisaged that the load referred to in the second contract would be discharged at a different port to the load described in the first contract but, in the event, both loads were discharged at the same port, Puerto Cabello.

There was a delay at the port due to congestion for which the charterer’s were responsible.

Save for a period of 5¾ hours when the loads were discharged simultaneously, the load in the first contract was discharged after the load in the second contract.

The owners argued that the two contracts should be considered separately and that demurrage should accrue on each contract, providing the owners, in effect, with double the demurrage rate agreed upon.

Findings

The two arbitrators appointed were unable to agree. They referred their decision to an umpire who found in favour of the owners but stated his award in the form of a special case for the opinion of the Commercial Court.

Lloyd J held that the intention of the parties was that the two contracts were to be read as one with the effect that the separate loads could be discharged one after the other and that only the base rate of demurrage would apply.

The decision in the Commercial Court was upheld by the Court of Appeal (per Lord Denning MR with Shaw and Oliver LJJ concurring).

Commentary

Because the loads were stowed in separate holds, the possibility existed that both loads could be discharged simultaneously. This fact prompted the owners to argue that laytime should be considered separately in respect of each load. Mustill J pointed out, however, that could not have occurred if there were two different destinations as was originally contemplated by the parties.

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