Time bar – back to back VCP’s – notice of claim for cargo damage served on cusp of expiry date – too late for voyage charterers to pass down in time – court willing to grant extension in terms of section 12 of the Arbitration Act 1996 provided parties acted with commercial expedition ie immediately
A cargo of distillers grains was shipped from a port on the Mississippi to Nansho, China.
Discharge took place on 16 October 2015.
A chain of charterparties began with two time charters progressing down six voyage charters on the Norgrain 1973 form, back to back.
Clause 67 read as follows:
“Any claim other than the demurrage claim under this contract must be notified in writing to the other party and the claimant’s arbitrator appointed within 13 months of the final discharge of the cargo and where this provision is not complied with, the claim shall be deemed to be waived and absolutely barred.”
On 9 June 2016 BOL holders instituted action in the Xiamen Maritime Court against head owners iro alleged cargo damage.
On the last day for initiating arbitration ie 16 November 2016, sub-time charterers, Polaris, served notice of claim on Sinochart, first in line voyage charterers.
On the same day, at 6.44 pm Sinochart served notice on P, 2nd voyage charterers. P’s office had closed for the day and it came to the notice of P’s operations department on 17 November 2016.
P’s ops dept neglected to refer the matter to its legal department but chose to make enquiries from Q, 3rd charterers, which were ignored.
On 23 November the ops dept referred the issue to its legal department which led to notice to Q and the appointment of its arbitrator on 25 November.
By contrast, immediately Q became aware of the problem on 17 November they appointed their arbitrator and notified R, 4th voyage charterer, via their brokers, B&J Shipping.
R took until 1 December to initiate arbitration with S, 5th voyage charterers.
Collectively, claimants, P and down, argued that the time bar could not be construed literally and that something must have gone wrong with the language as per Lord Hoffman’s development of the law of interpretation of contracts in ICS v West Bromwich.
Alternatively, each argued for extension of time in terms of section 12 of the Arbitration Act 1996 which reads in relevant part:
“The court shall make the order only if satisfied (a) that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question and it would be just to extend the time, or…”
Sir Richard Field, referred to the Himmerland (Mocatta J), the Stephanos (Saville J) and the Evje (House of Lords, 1975) as authorities where a similar clause was given its ex facie meaning. Accordingly, he rejected the ICS v West Bromwich argument.
Insofar as claims were by necessity passed down out of time the judge found circumstances beyond the reasonable contemplation of the parties.
It remained to be asked whether it was just to grant an extension.
This element would be satisfied if the parties acted “expeditiously and in a commercially appropriate fashion”.
P and R failed the test. Q succeeded.
A fine point attempted by the charterers was that a dispute had not arisen because merits were not contested.
Exfin v Tolani (2006, EWHC) was referred to as authority destructive of this proposition. Langley J rejected a similar argument in circumstances where a demurrage claim, admitted but simply not paid, was held to qualify as a dispute giving rise to a right to arbitration.
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