Time-barred demurrage claim

THIS dispute before New York arbitrators turned on whether an owner had given timely notice to a charterer of its demurrage claim as required under the claims clause in a charter party.

Stolt Tankers, as the time-chartered owner of the Stolt Pride, entered into a tanker voyage charter on the Exxonvoy 90 form with Stinnes Interoil Inc as charterer, pursuant to which the vessel loaded a cargo of gasoline at Bajo Grande and Punta Cardon for discharge at New York/New Jersey.

Stolt sought to recover $54,520 in demurrage at arbitration, which claim Stinnes contended was submitted untimely and was thus time-barred. There were no disputes with respect to the voyage or cargo operations, and the amount of demurrage claimed was not contested.

Stolt contended that it had forwarded its fully supported demurrage invoice to its broker for transmission to Stinnes well within the ninety-day requirement under the charter. For its part, Stinnes maintained that it had had no notice of any demurrage due at its New Jersey offices. Instead, Stolt’s demurrage claim had been forwarded to the Stinnes office in Hamburg, Germany, where it was not received until 91 days after discharge.

The arbitration panel found the charter party clause relating to demurrage payment to be straightforward and unambiguous, and included by mutual agreement. It was found that the clause contained three clear provision. (1) For owner to provide charterer with written notice of any demurrage claim within ninety days. (2) For owner to sufficiently support that claim within 150 days. And (3) to commence arbitration or litigation within one year of discharge.

In addition, the clause provided clear directives as to where and to whom such notices were to be tendered. There was no doubt that Stinnes had received Stolt’s first demurrage notification a day after the ninety-day time bar. The panel said the very purpose of the deadlines was to provide an orderly accounting process.

Although it was argued for Stolt that there were no prior decisions on this point, the arbitrators pointed to the Katerina P (SMA 3038, 1994), in which it was held that “ … in the absence of any specific circumstances, such as the promise of payment, time bar provisions should be narrowly construed and upheld.” And, in Sun Oil Trading v The Belcher Co (SMA 2637, 1990) it was held that, “Where the contract spells out specific time bar wording, arbitrators have upheld these provisions when they were strictly complied with, casting aside ideas of fairness, equity, prejudice etc., Simply stated, commercial arbitrators accept the proposition that parties may agree to contractual provisions which suit their individual purposes and that it is not within the arbitrators’ province to undo what the parties have agreed to.”

Noting that the charter party demurrage clause clearly required notice of a demurrage claim, not merely constructive notice of delay, the arbitrators denied Stolt’s claim for demurrage as time-barred.

One or two ports?

TBS North America Liners Ltd v Contilatin Del Peru SA

THIS dispute before arbitrators in New York concerned the issue of whether two berths, thirty miles apart on the Mississippi River, were to be considered berths within one port, or in two separate ports, and whether the owner was responsible for various port and handling charges at the second berth when the charter party stated that the vessel was responsible for only one set of port charges.

TBS North America Liners chartered the Magnus Challenger on a Baltimore Form C (1990) charter party to Contilatin Del Peru to lift a cargo of bulk wheat and soyabean meal from the Mississippi to Peru. Under the charter, Contilatin had the option to load at “1-2 safe berths/wharfs/anchorages Mississippi … vessel paying only one set of port charges.”

Clause 16 of the charter provided, “Port Charges: Any dues and/or taxes on the vessel, including those calculated on the cargo quantity, which are part of the normal port charges, to be for owners’ account. Normal port charges, including dockage, always to be for owners’ account.”

Clause 50, meanwhile, provided, “Any dues and/or taxes on cargo to be for charterers’ account both ends. Any dues and/or taxes on vessel and/or freight to be for owners’ account both ends.”

The vessel first loaded about 11,400 metric tons of soyabean meal at Destrehan, before proceeding upstream to Paulina, where it loaded the balance of its cargo of roughly 6,700 metric tons of wheat. TBS paid the port charges incurred at Destrehan, but when invoiced for dockage, linesmen and harbour fees at Paulina, paid only under protest. It was these charges that TBS sought to recover at arbitration.

TBS produced evidence to show that Destrehan and Paulina were referred to as two separate ports, moreover in two separate customs districts. It also maintained that the distinction was in any case irrelevant because two sets of port charges had been imposed in contravention of specific provisions in the charter.

Contilatin, meanwhile, argued that the Mississippi River, with the exception of Baton Rouge, consists of one port according to trade custom, and that Destrehan and Paulina were therefore two berths within the same port.

The arbitration panel was not persuaded by Contilatin’s argument that that trade custom considered the Mississippi as one port from Southwest Pass to Baton Rouge. The arbitrators noted that, were this so, it would be customary for charterers to accept notices of readiness tendered by vessels upon arrival at Southwest Pass, which isn’t the case in practice.

The arbitrators also referred to the specifically added language in the charter party providing that TBS was responsible for only set of port charges. And they said it was immaterial whether Destrehan and Paulina were one or two ports, because there was compelling evidence in the express terms of the charter party to warrant a finding that TBS was not responsible for the charges assessed at Paulina.

It was held that the typewritten additions of special language and the deletion of printed language surrounding the issues involved in the dispute plainly indicated that they were the subject of specific negotiation. “It is,” concluded the panel, “a fundamental principle that a contract is the sum of all its parts, and must be viewed in its entire context. It is also fundamental that, where there is a conflict, specifically added typewritten language generally takes precedence over printed terms.”

The panel noted, among other things, that the first part of Clause 16, relating to load port charges, had been deleted in its entirety. It was held that reading Clauses 16 and 58 in context with the added language limiting TBS’s responsibility to only one set of port charges, it was clear that TBS was not responsible for the dockage and harbour fees incurred at Paulina. The arbitrators found that the cost of linehandling charges at Paulina should be equally shared between TBS and Contilatin.