326. National Shipping Company of Saudi Arabia v BP Oil Supply Company (The “Abqaiq”) [2010] EWHC 3043 (Comm);[2011] EWCA Civ 1127

Voyage charterparty – formalistic dismissal of demurrage claims overturned on appeal.

 

The facts

The vessel, a VLCC, was chartered for a single voyage from Freeport, Bahamas to Singapore on a modified BP VOY 4 voyage charterparty, first edition – June 1998.

The demurrage rate was stipulated as USD 70 000 PDPR (per day pro-rata)

The Vitol interim port clause was to apply if an additional load or discharge port was nominated.

Clauses 5.2 & 5.3 provided as follows:

“5.2      Charterers shall have the option of instructing owners to load the vessel at more than one berth at each loading port and to discharge it more than one berth at each discharge port in which event which owner shall, in the first instance, pay expenses arising from any of the following movements of the vessel;

5.2.1    Unmooring at, and pilotage and towage off, the first loading or discharging berth;

5.2.2    Mooring and unmooring at, and pilotage and towage onto and off, any intermediate or discharge berth; and

5.2.3    Mooring at and pilotage and towage onto, the last loading or discharging berth.

Charterers shall reimburse owners in respect of expenses properly incurred, arising from any of the aforementioned movements upon presentation by owners of all supporting invoices evidencing prior payment by owners.

5.3       Charterers shall reimburse owners in respect of any dues and/or other charges incurred in excess of those which would have been incurred if all the cargo required to be loaded or discharged at the particular port had been loaded or discharged at the first berth only.  Time used on account of shifting shall count as laytime or, if the vessel is on demurrage, as demurrage except as otherwise provided in clauses 17 and 18.2.”

Clauses 20.1 & 20.2 read as follows:

“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 90 days of the completion of discharge of the cargo carried hereunder.

20.2     Any other claim against charterers for any and all other amounts which are alleged to be for charterers’ account under this charter shall be extinguished, and charterers shall be discharged from all liability whatsoever in respect of thereof, unless such claim is presented to charterers, together with full supporting documentation substantiating each and every constituent part of the claim, within 180 days of the completion of discharge of the cargo carried hereunder.”

At the load port the vessel initially loaded cargo by ship to ship transfer from two other vessels and from shore tanks.  After the initial loading, hoses were disconnected and the vessel left its berth to await the arrival of a third vessel to load a further parcel of cargo.

The third vessel arrived the following day. Loading from this vessel was delayed by a combination of weather and congestion.  After loading from the third vessel and shore tanks the vessel left for Singapore.

One day after completion of discharge, owners submitted a claim for “time” and bunkers consumed as a result of the second berthing at the load port.

Two days later owner submitted a “demurrage” claim in respect of both ports which excluded the time taken during the second berthing at the load port.

Approximately one week later owner submitted a third claim for port costs.

Charterers queried the starting time upon which the demurrage (second claim submitted) was calculated.  Shortly thereafter owners revised their demurrage claim to comply with charterers query.  This claim was then settled.

When owners pressed their first claim for time and bunkers, charterers responded by pointing out that the claim for bunkers was not competent in terms of their interpretation of clauses 5.2 and 5.3 and that the time claim should be resubmitted properly designated as a claim for demurrage and properly supported by documentation.

The first claim was supported by a statement signed by the master of the vessel certifying the time taken for the second berthing and the bunkers consumed based on the vessel’s ROB figures.

Once the 90 day period from discharge had elapsed, charterers refused the first claim on the basis that all demurrage claims had been settled by payment of the second claim.

Findings

In the Commercial Court before Field J, owners claimed summary judgment for the cost of bunkers under clause 5.2 alternatively 5.3.  The owners reformulated their “time” claim as demurrage and introduced an alternative claim for breach of an implied term that charterers would provide cargo in time for loading during the allotted laytime.

Charterers claimed summary judgment for an order that owners’ claims had been extinguished by settlement of the second claim and that, in any event, the claims owners now wished to advance were time-barred.

Field J held that “time” claim was not for demurrage but for additional freight – in spite of the claim being formulated on the basis of the demurrage rate.  He saw this claim as abandoned by its reformulation as a claim for demurrage.  He reasoned further that all demurrage claims had been settled and that this claim had been extinguished.

He found also that the first claim for time and bunkers was not properly supported by documentation. In any event, clauses 5.2 and 5.3 did not cover the cost of bunkers consumed.  He relied to some extent on the Afrapearl and seemed to favour an argument that clauses 5.2 and 5.3 did not apply because the vessel returned to the same berth and not to a different berth during the second berthing.

For good measure he also found that the claims were time-barred.

Field J dismissed owners’ argument based on an implied term that the cargo was to be provided in time. Following Inverkip Steamship Co Ltd v Bunge, he held that where demurrage had been provided for, it was not opened for owners to claim unliquidated damages for detention.  In this instance also, he found that the claim had not been properly supported by documentation and that the time bar applied.

The Court of Appeal (Ward and Tomlinson LJJ, Sir Mark Potter – judgement per TomlinsonLJ) found for the owners on the demurrage claim and confirmed the dismissal of the bunkers claim. It was found that the owners had substantially complied with the contractual requirements for the submission of the demurrage claim. The claim for bunkers was not covered by the wording of the relevant clauses. Young QC for owners on appeal was perceived to have pressed the argument on the bunkers claim without enthusiasm.

Commentary

Clearly owners were entitled to compensation for time lost in the 2nd berthing in terms of clause 5.2 and 5.3. Insofar the relevant information for demurrage had been supplied with the 2nd claim, the same information was available to the charterers in the “time” claim which was effectively for demurrage pursuant to clauses 5.2 and 5.3.

The nomenclature used by owners did not, in the end,  make any difference. The pragmatic approach of  Bingham J in the Oltenia paid lip service to by Field J, prevailed in the CA.

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