Prior dealings affected demurrage time bar claim

Summary prepared by Prokopios Krikris, FCIArb, Arbitrator

One of the issues in this arbitration concerned the Owners’ demurrage claims arising out of several shipments performed under a COA. The time bar clause stated that all demurrage claims shall be waived unless notified to the Charterers within 60 days after discharge of their cargo.

The Owners argued that the Charterers had, on previous voyages, paid demurrage claims that were submitted late. The Charterers said that a waiver of previous breaches was not indicative of any intent to waive future defaults.

It was recognised that there are sound commercial reasons for setting a notice period for demurrage claims and that previous arbitration cases mainly involved single voyage charters where past practice (as between the parties) was never an issue in those decisions.

In this case, the parties had an ongoing, long-term relationship over the term of the COA, and prior demurrage claims were submitted and settled on a routine and informal basis. There was no question but that the parties had established a relaxed course of dealing on demurrage claims, and there was no prior history of the Charterers' reliance on the strict provisions of the time bar clause.

It was held that the Charterers could not invoke the time bar proviso as a defence to the Owners’ demurrage claims.

Note: this is for information purposes only.