Laytime exceptions for draft survey and terminal breakdowns

Summary prepared by Prokopios Krikris, FCIArb, Arbitrator

This arbitration addressed a common topic of disagreement. The contract provided for suspension of laytime during riots, strikes, etc., or “any cause whatsoever beyond the control of charterer”. lt was held that laytime continued to run during delays for insignificant routine maintenance of shore loading equipment. Moreover, on the facts, the tribunal found that Charterers cannot exclude time for draft survey and noted that "it certainly must be considered proper operational procedure and management that Owners tried to ensure the appropriate loading progress and cargo intake". If the contract is silent on whether intermediate or initial draft survey is excluded, parties typically disagree. There are several LMAA Awards addressing this matter.

The events referred to in this dispute are described as breakdowns. They are minor in nature; the Port Log/Statement of Facts lists the following interruptions: a) delay account electrical problem --35 minutes, b)  delay account tightening belts--30 minutes, c)  delay account washing impact rollers- 15 minutes and d) delay account reclaimers overloaded- 10 minutes

The tribunal noted that Clause 4 did not focus on insignificant problems as enumerated above, but refered to “riots, strikes, lockouts,” “accidents to machinery,” “fire, floods, frosts, fogs, storms”. To bring minute loading delays, which, by their descriptions were clearly matters of routine maintenance (or more correctly the lack thereof), under the provision “any cause whatsoever” or the ejusdem generis rule was, in the tribunal’s opinion, neither justifiable by the language of the contract nor in the spirit of the commercial enterprise.

Clause 4 refers to “any cause whatsoever beyond the control of the Charterer,” but there has been no evidence that the events were beyond Charterers' control. It was insufficient merely to hold the event itself as proof positive. The burden of proof to the entitlement to an exception rests with the claimant, which has not been met. Furthermore, Charterers made the arrangements for the loading under the FIO provision of this contract and, therefore, if there was a problem or deficiency with the loading procedure, it was a matter of Charterers having to deal with their sub-contractors. Charterers cannot simply shift responsibility, expressed in the loss of laytime, to Owners who had bargained for a cost- and risk-free loading.

With respect to the “draft checks,” Owners contended that pursuant to Clause 48, laytime should not be affected for those periods when draft surveys were being conducted. Charterers, on the other hand, say that Clause 48 only applied to the final draft survey and any time used for draft readings taken by the vessel should be for Owners' account.

The tribunal held that based on the specifics of this case, any time lost for the checking of vessel's draft prior to, during and after completion of the loading was for Charterers' account.

If indeed Charterers wanted only to accept the responsibility for the final draft survey, then they should have stated so in the clause. In the alternative, if Charterers wished to distinguish between official draft surveys and those done by vessel's officers, this again could have been provided for.

One of the reasons for reaching that decision was the fact that the Bill of Lading quantity was determined by a draft survey. Unlike the loading in Norfolk/Newport News, where railroad weights apply, the vessel, under these circumstances, had no certain way to determine the quantity on board. A further point, which required the close monitoring of the cargo loaded, was the fact that specific draft limitations were imposed through the prevailing conditions at the berth. Considering that the contract provided for named terminals, under which Owners were imputed to have specific knowledge of the port limitations, it certainly must be considered proper operational procedure and management that Owners tried to ensure the appropriate loading progress and cargo intake