Arbitration- disputed NOR at ice edge and weather delays

Summary prepared by Prokopios Krikris, FCIArb, Arbitrator

The key disputed issues in this arbitration were the validity of the NOR at an ice port area, and the weather-related delays during discharging at St Petersburg, resulting in the Owners claiming unpaid demurrage of USD 136,250.00. Charterers denied liability.

The vessel was fixed under a Baltimore Berth Grain Form for a voyage from ports in the US Gulf to St Petersburg, Russia. The cargo was to be discharged “free of risk and expense to the vessel (free out discharge) at the average rate of 1,500 tons per weather working days of 24 consecutive hours, Sundays and holidays excepted, even if used (WWDSHEX EIU);”. The vessel loaded a cargo of exactly 30,010 metric tons of yellow corn and no disputes arose at the loading port.

For the discharge port, the ship arrived and tendered NOR near fairway buoy No. 10, as recommended by the icebreaker, a location approximately 17 miles west of the port's inbound pilot station. Some ten other vessels were also anchored and waiting at this anchorage. Contemporaneous ship-to-shore communications following the vessel's arrival at the ice edge attested to some concern over where and when NOR could legally be tendered.

The panel of arbitrators was constituted in accordance with the arbitration clause. Three evidentiary hearings were held to hear the testimony of three witnesses, and substantial documentary evidence was introduced into the record by both sides. Post-hearing and Reply Briefs were exchanged.

Owner's claim for demurrage at St. Petersburg was premised on its contentions that 1) the vessel properly tendered her NOR to trigger the running of laytime; 2) the primary cause of the delays was attributable to shortages of railway wagons, rather than the “bad weather” alleged by the Charterer. The owner also rejected the Charterer's assertion that there were weather delays, which suspended laytime under the charter party's “weather working days” provision.

Owner dismissed Charterer's weather records as inadequate, self-serving and in stark contradiction to the detailed weather information it had obtained through the U.S. Department of Commerce, National Climatic Data Centre, as well as the vessel's contemporaneous logbook entries and those from two other unrelated vessels in port, discharging corn for Charterers at the same time.

Charterers’ defence was that first, the NOR tendered on January 15, 2002, when the vessel was short of the ice edge near buoy No. 10 and before she had arranged for icebreakers, was premature and ineffective; second, the laytime exclusions allowable for bad weather were properly applied; and third, Owner failed to demonstrate that the railcar shortages were deficiencies attributable to the Charterer, and materially affected the working of the vessel and adversely impacted the counting of laytime. Indeed, it argues that not only was the NOR invalid, it was never tendered to the proper party and accordingly laytime did not commence until the commencement of discharge.

As to the weather, Charterer, and for that matter all the parties doing business with the port, relied upon the information collected and disseminated by the official state agency, the Russian Federal Agency for Environmental and Hydrometerological Monitoring, at its station in the port of St. Petersburg. Indeed, the periods of rain and snow recorded by that agency accurately match those used by Owner's agent in its timesheet and laytime statement. From January through March, there was a considerable amount of precipitation that frequently precluded unloading of agricultural commodities. By contrast, Owner's weather data had been recorded by unofficial sources at some remote observatory before being made available to the National Climatic Data Center in the USA and, for that reason alone should be considered unreliable, or at least inappropriate for the intended purpose.

The panel decided as follows:

The charter party described the discharge port as “ONE (1) SAFE PORT, ST. PETERSBURG, RUSSIA,” which by definition makes this a “port charter” and so obliges the vessel to reach jurisdictional limits of the port before she can be considered an arrived ship. The position off the outer ice edge near buoy No. 10, although considered part of the fairway into port, clearly was outside the port's fiscal limits. Whereas the vessel herself may have been physically ready in all respects to discharge her cargo, she was not at the ready disposition to the Charterer. Further, the custom of the port required the vessel to tender her NOR from the pilot station in order to be considered for a berth assignment. The prevailing ice conditions did not provide relief either; the charter party, in no uncertain terms, required the vessel to either be able to navigate in “icy waters” or, if she was not ice-strengthened, to make arrangements for ice breaker service. Applying the doctrine of “substantial readiness” the panel, however, finds that it was permissible for the vessel to tender her NOR from the ice edge position, being substantially ready to discharge, only that time would not start to count until she actually reached the pilot station.

If indeed a berth had been available for the Vessel upon her arrival, she could have entered the port and proceeded to her berth which was to be assigned by Charterer/Receiver. The proximate cause for the delay at St. Petersburg was the lack of an available discharging berth and not whether the vessel tendered her NOR at the ice edge or at the inbound pilot station. In light of the panel's finding on this issue as set forth above, Charterer's argument that laytime should commence upon the commencement of discharge failed.

Weather delays

The parties were at odds with respect to the prevailing weather conditions and the impact on the counting of laytime. The Panel found that the most realistic proof for the weather conditions and the effect upon the cargo operation is the contemporaneous entries in vessel's logs, work reports for the port, other vessels discharging the same cargo and the vessel's stevedoring records. With the presence of the Vessel’s logs, the burden was upon Charterer to disprove Owner's assertions conclusively. The vessel recorded snow a total of 40 hours 43 minutes of rain during the vessel's stay at St. Petersburg, compared to the Charterer's number of 549 hours 5 minutes.

To produce a document stating that it rained on a given day without, however, stating the amount of precipitation is not very helpful in assessing the effects upon the corn discharge. For the days the vessel was waiting at the pilot station, it would have been necessary for Charterer to produce the log for a vessel in port discharging a grain cargo. However, in the absence of such information, the panel saw no justification to apply laytime deductions on the basis of the existing record.

The owner has cited occasions when the vessel discharged cargo during periods, which the Charterer has excluded as “bad weather.” If the vessel works in what could possibly be considered excepted periods, the Charterer was not entitled to a suspension of the running of laytime for those periods. In a “free out” situation, the Charterer/Receiver controls the discharge operations, and the Owner acts according to their directions. Therefore, delays caused by the shore workforce/stevedores were Charterer/Receiver borne risks. Considering the total available information on the prevailing weather conditions, the panel was not persuaded that the vessel's logs were incorrect or prejudicial.

The panel has considered Charterer's general data obtained from the Russian Federal Agency for Environmental and Hydrometeorological Monitoring and compared it to vessel's logs, the Master's testimony as well as that of the Port Captain, the actual working periods and the information provided by the U.S. Department of Commerce National Climatic Data Center. The panel did not find that the cumulative effect of these submissions establishes that the vessel's observations should be ignored. Therefore, the panel accepted the vessel's logs as prima facie evidence of the prevailing weather conditions. The panel's decision was further supported by Owner's Port Superintendent, who testified during these proceedings. The Panel found the record keeping was not a model of clarity and required the Panel's interpretation of entries from various documents in order to determine when the vessel went on demurrage.

The panel awarded the Owners USD 93,357.64 of their demurrage claim.

SMA 3835

Editorial Note: In several analogous matters, it fell within the province of the tribunal to evaluate the evidentiary record and adjudicate upon the legitimacy of delays asserted on the basis of “weather” conditions. In certain proceedings, the parties adduced meteorological data from local weather stations in support of their respective contentions. For reference to LMAA awards concerning weather-related delays, readers are directed to the Snapshot Guide to Laytime and Demurrage (P. Krikris, 2nd ed.), available free of charge for download in the publications section. Additionally, Readers can check other award summaries on the "Arbitration List- Laytime," located next to the blog section, which is updated periodically with new awards.