Disputes arose under a Contract of Affreightment (COA) on a modified Gencon form. Owners commenced arbitration to recover the costs regarding the extra war risk premium for calling Messaied, bunker escalation surcharges and shifting expenses/ bunkers during shifting. A panel of three arbitrators determined the disputes. According to the contract, “All disputes arising out of or in connections with this contract shall be exclusively arbitrated at New York in the following manner and subject to U.S. law..”
The relevant clauses to these disputes read as follows:
Clause 31 – (Shifting)
“… Shifting between berths if any ordered by the Port Authority to be at Charterer’s time, risk and expense.”
Clause 32- (Port Charges)
“All port charges and any other expenses relating to the vessel are /or Owners (sic) account including taxes/ dues on vessel.”
Clause 33 – (War Risk Premium)
“.. Any increase in premium imposed on or after the date of this contract or additional premiums and or calls for such insurance including blocking and trapping and any crew war bonus and/or additional wages are to be borne by Charterers and are due on presentation of Owner’s invoices and are to be settled with Owners every 5 voyages.”
Clause 44 – (Bunker Escalation/Descalation)
“This contract of Affreightment is concluded on the basis of a price of U.S. $350.00 per metric ton of IFO 380 CST ISO 8217:2005 RME 180„ U.S. $361.00 per metric ton of IFO 180 and U.S. $660 per metric ton MDO ISO 8217:2005 DMB (‘the base prices’).
If the prices actually paid by the owners during the period of this contract for the quantity consumed on the contracted voyage(s) are U.S. $5/metric ton or more higher or lower than the figures in the above paragraph, then the difference between the base prices and the prices actually paid shall be paid by the Charterers to the owners (sic) or Owners to Charterer as the case may be on production of the Owner’s account thereof.”
War Risk Premium
The tribunal awarded owners reimbursement of $138,162.15, as claimed. This amount covers the “additional premiums” charged by War Risk underwriters for the several vessel calls at Masaieed, an excepted war risk area. Under Clause 33, those charges were for the charterers’ account. The several insurance broker invoices presented adequately supported the charges claimed by the owners.
[Author’s comment: the parties usually dispute the applicable charges. Some charter-parties mention the insurance premiums to be “ in line with London Market” or include a capped/ lumpsum amount or a calculation of estimated costs subject to no changes in the situation at the port of call (see for example now, Red Sea)].
Shifting expenses
Owners relied on Clause 31 to claim for shifting expenses, including bunkers consumed during the shift between berths. However, Clause 31 did not allocate clearly the cost of bunkers to either party. The tribunal then focused on Clause 32 and considered that the phrase “and any other expenses relating to the vessel are for Owners (sic) account” can be read to include the bunkers claimed for shifting between berths. As there was nothing to favor the owners’ interpretation of Clause 31 over the language of Clause 32, the panel considered both clauses to be ambiguous concerning the allocation of the bunkers consumed for shifting between berths. As the COA was authored by the owners, the panel resolved that ambiguity against the owner and disallowed that portion of its claim.
The panel was mindful that Clause 31 only entitled recover those shifting expenses incurred by order of the Port Authority. On the evidence, the panel found that in 8 voyages out of 14 voyages there was shifting for the convenience of the port authorities and allowed the shifting expenses to these voyages. Since the panel found that the fuel consumed during shifting was for the owners under clause 32, they have deducted the fuel portion of the owners’ claim from 8 qualified voyages. The panel allowed the owners the sum of $13,115.71 representing the shifting expenses claimed for those voyages less the fuel consumption component.
Bunker Escalation/Surcharges
As the COA primarily contemplated consecutive voyages, the owners contended that the bunker escalation surcharge was to be applied on a round trip basis for each laden and ballast voyage performed. Charterers questioned that analysis alleging that the clause was slipped into the COA without its knowledge or consent as it was not part of the previous COA. Charterers further argued that the bunker escalation surcharges should not apply to the round voyage but only to the laden voyage between Fujairah to Mesaieed based on Clause 44 “the quantity consumed on the contracted voyage(s)” and also upon the underlying supply contract stating, “Voyage starts from the time the vessel tenders the notice of readiness at Fujairah Port (NOR) and ends at the time the vessel completes discharge at Measieed Port.”
The panel found that the charterers had time to examine the COA and object to its terms, rather they jointly signed the COA and were bound by its terms. In the absence of language that the surcharge was to be applied on a round trip basis Fujairah to Fujairah, the panel interpreted the “contracted voyage(s)” to be that or those for which freight was paid. The owners authored the COA and if, as it now contended, the bunker escalation was intended to apply to a round voyage, it ought to have chosen the language used more carefully. Not having done so, and the panel found that the bunker escalation applied only to each single laden voyage from Fujairah to Messaied.
Having examined the charterers’ expert report to determine the bunker escalation costs, and owners’ calculations, the panel accepted the single laden voyage conclusions and calculations of the charterers’ expert showing balance due to the owners of $864,362.07
The Award
The panel unanimously awarded the owners the sum of $ 1,121,783.12 as follows:
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