Search Results

Laysun Service Co Limited v Del Monte International GMBH [2022] EWHC 699 (Comm) The contract of affreightment concerned the carriage of refrigerated bananas from the Philippines to Bandar Bushehr in Iran from 1 January 2018 to 31 December 2018. It was for a total of 36 voyages, being 3 per month. After 17 shipments, the Charterers stopped providing cargoes. The Owners brought a claim for their losses arising out of the Charterers’ alleged wrongful failure to perform the remaining 19 shipments. The Charterers denied liability. Their defence rested on two declarations of force majeure served on 25 June 2018 and 28 June 2018, stating that: (a) it was impossible to make payments from Iran to a bank in another country due to the US hardening its stance against Iran, and (b) it was impossible to import bananas into Iran due to the imposition by the Iranian Government of various restrictions on import permits. Under the contract, the Charterer “ shall bear the cost and risks of loading and unloading at the Port of Shipment and the Port of Destination “. Further, a force majeure clause 8 applied to “ any circumstances beyond the reasonable control of that party that prevents such party, practically or legally, from performing any or all of its obligations under this Agreement, including, without prejudice to the generality of the foregoing..”. As a result, the Charterers contended that the force majeure provision was engaged and that they were entitled from the end of June 2018, with immediate effect, to reduce the shipments to nil. The arbitral tribunal found for the Charterers. The Charterers couldn’t perform their obligations under the prevailing conditions, i.e. import permits not issued by the Iranian Government, and there was no alternative way to perform the COA by delivering cargo to another party to mitigate the force majeure event. The Owners appealed under s.69 of the “AA 1996”. The questions of law were: (a) Whether on the facts found and on the true construction of the Agreement, the Charterers were entitled to invoke the force majeure provisions of clause 8 so as to relieve them from liability for failing to make and pay for shipments thereunder for the entire period covered by the Agreement, namely until 31 December 2018; and (b) Whether the Tribunal were correct in law in holding that the judgment of the Court of Appeal in The Crudesky, whereby a party seeking to rely on a force majeure exemption cannot rely on the acts/omissions of that party’s delegates, was restricted to the case where there was an ‘…ongoing relationship…’ between the party and the said delegate and did not extend to the case where that relationship has been terminated. The appeal under s. 69 was dismissed. These suggested questions of law did not arise in the light of the tribunal’s factual findings, and the Owners have not identified any error of law. Whether the Charterers could rely on a force majeure exemption because of the acts/omissions of that party’s delegates and the relationship had terminated did not arise in the tribunal’s findings of fact. Further, the court expressed that when the force majeure event had ceased around July 2018, the rest of the force majeure clause had no operation, and the Charterers had no duty to mitigate. So, assuming that the wording of the clause “ The Charterer shall bear the cost and risks of loading and unloading at the Port of Shipment and the Port of Destination ” imposes a duty on the Charterers to discharge the cargo at the destination, that duty is subject to the force majeure provisions in clause 8. Therefore, the Charterers do not have an absolute duty but are subject to the force majeure provision.

It is common ground that the increasing GHG emissions have caused concern in the last years. An option to reduce the emissions could be optimizing shipping operations and the overall transport chain. So, the concept of just in time (JIT) arrival is one of the proposed solutions to the problem, without ignoring the barriers lying in the nature and complexity of this type of maritime adventure, requiring a higher level of co-operation between the parties involved in the trade. R e gulating the vessel’s speed However, under a voyage charter party, the Owners and Charterers have conflicting interests in relation to contractual terms governing the timing of the vessel’s arrival. For example, a delayed arrival may be in the Charterers’ interests when no cargo is available, or the port is congested; waiting costs money. On the other hand, the Owners may order the ship to increase its speed to arrive earlier and within the agreed dates & hours stipulated in the ‘NOR clause’ or ‘laytime clause’, enabling the ‘laytime clock’ to start ticking. Notably, the Owners will consider the port costs, fuel costs, paid hire (if acting as disponent Owners), fuel prices, and other related expenses or factors affecting the commencement of laytime before deciding to vary the ship’s speed. In fact, the ship will not always arrive timely as expected, and Owners (or disponent Owners in the charter chain) will suffer both costs and time on their account (time not to count as laytime or time on demurrage). Practically speaking, the vessel’s time of arrival may be affected by several factors (known or unknown): bad weather, shipping accidents, delays en route at intermediate ports to lift bunkers or receive spare parts or conduct crew changes (primarily due to COVID nowadays), technical or mechanical issues affecting the vessel’s performance (engine damages or defects, hull fouling, etc.), delays to follow a convoy (HRA or Canal transit etc.), pre-inspections conducted at adjacent ports or other operational issues en route(inspection by authorities), delays due to local regulations (pilotage in & out restricted areas-straits, navigation subject to weather conditions, deviation due to ballast exchange at open sea), delays occurred at intermediate voyages performed (i.e. before the present charter), a divergence that added extra time on the voyage, and some unforeseen events (See the Ever Given grounding at Suez etc.), etc. Even if the ship arrives timely, laytime disputes may arise for many other reasons, e.g. invalid NOR as the pre-conditions to tender NOR were not fulfilled ( delayed attendance of the surveyor to conduct holds inspection or NOR not tendered at the agreed place), lack of information on the berthing schedule/congestion, or prevailing weather conditions (swell, ice, fog) at the port ‘obstructing’ the vessel’s berthing or arrival at a position to tender NOR, etc. Division of responsibility Therefore, it is suggested that making JIT arrival work requires rethinking the parties’ obligations on the charter party side and reconsidering several clauses. As the standard proposed JIT clauses remain untested in arbitration, this post only refers to past arbitration decisions and highlights some issues concerning the parties’ claims or defences to demurrage claims due to the vessel’s delayed arrival at the loading or discharging port. For example, from the parties’ perspective in the trade (charter party and sale contract), the importance attached to the giving & receiving of proper notices of the estimated date and time of the vessel’s arrival (ETA) is fundamental. Thus, a typical charter party clause stated “the master to give the discharging port agents and the charterers 15, 10, seven, five days and 72, 48 and 24 hours’ notice of the expected date and time of arrival at discharging port..”. And “any failure to provide the required notices can allow the Charterers extra laytime of 24 hours for loading or discharging”. Finally, suppose the masters’ failure to give the agreed notices caused a delay. Then, the charterers defend a demurrage claim based on a counterclaim for damages or claiming breach as a potential defence to the Owners’ demurrage claim. However, is it sufficient to defend a demurrage claim or counterclaim damages? The previous decisions The below decisions offer some guidance and clarify this point: 1.It concerns an old issue with a line of authority stemming from The Monroe Bros Ltd v Ryan (1935) 51 Ll L Rep 179. In the present case, the parties agreed to amend the laycan dates, and the ship was engaged in an intermediate voyage. As a result, on her fixed voyage, the vessel’s berthing schedule was delayed at the discharging port for about 11 days and the Owners claimed demurrage. The issue was whether the Owners failed to prosecute the voyage with all reasonable despatch, and the Charterers could be liable for the demurrage claim. The Charterers’ defence was that the Owners’ claim for demurrage was that the amount claimed was the same as damages suffered by the Charterers by the Owners’ insertion of the intermediate voyage, thus failing to prosecute the voyage with the utmost despatch. Then, the parties relied on various authorities to support their position, but the present case was different because the parties had agreed to extend the laycan dates. The extension of the laycan agreement deferred the Owners’ obligations as to the expected readiness date. The tribunal observed that to rely on fault as a defence, the fault and loss of time had to be concurrent; here, the loss occurred before laytime started(draft limitations). Notably, when the parties agree to amend the laycan dates, there should be additional precise wording to allocate the rights & obligations due to delays at the ports of loading/ discharging. 2.The issue was whether the Charterers were entitled to extra 24 hours laytime when the master failed to signal some of the ETA notices of the expected date and time of the vessel’s arrival. The master gave all the notices but not the 15 days- notice, and the Owners gave the Charterers all but not the seven and five-day notices and 72 hours- notice. Based on the proper construction of the clause, the omission of some of the notices was not sufficient to establish a breach of the relevant notice provision, as there was no substantial failure that could arguably have had some effect on the ship’s operations at the discharging port. Accordingly, the Charterers were kept adequately informed and were not allowed 24 hours of extra laytime. 3.The parties agreed by an addendum to the charter party, the ship to load additional cargo (top off). Then, the Owners’ provided ETA for that port depended on how the despatch on the previous loading will run. The vessel arrived and was delayed due to port congestion. The Owners advanced a demurrage claim, and the Charterers denied liability on the ground that the vessel’s ETA was not honestly and reasonably given. The parties’ submissions centred on the proper calculation to substantiate the provided estimate. On the facts presented and the qualification of the ETA, the tribunal allowed the Owners’ claim. 4.As per the charter party, the ship must “proceed with all possible despatch” and “will be ordered to steam at about 12 knots service speed permitting”. The Charterers rejected part of the Owners’ demurrage claim, purporting an alleged breach of the Owners’ contractual obligation to perform the voyage at about 12 knots, resulting in delay at the discharging port—the word ‘about’ imported half a knot allowance. The vessel did not perform at 11.5 knots or anything like it. However, it was not permissible to establish a breach simply by dividing the duration of the voyage and the distance involved. The various incidents and stoppages on her voyage slowed her progress and for which the Owners were not responsible. Even if the Owners’ breach caused a delay, the damages would not be recoverable by counterclaim. Because the losses were not foreseeable when making the contract, and the Charterers’ objections failed. 5.Charterers sought to defend a demurrage claim under a tanker charter party because the Owners’ breach concerning the geographical rotation caused the relevant delay. However, the Charterers’ late nomination of the loading ports caused part of the delay and the nomination by the Owners of the geographical rotation. Then the Charterers relied on the ETA clause to defend their position that stipulated “ETA clause (if applicable) 14/10/7/5/2 days”. The Charterers asserted that the clause entitled them to declare the grades/ quantities seven days before the ship’s arrival at each port. The tribunal rejected the Charterers’ submission, and since the Charterers’ fault caused the delay, the Charterers were liable for demurrage. 6.The ship was delayed in departing from the loading port due to engine issues, consequently delaying her arrival at the discharge port. The Owners claimed demurrage, and the Charterers said that the consequent delay arose due to the Owners’ fault and time should not count. They relied on a particular clause that excluded delays from counting as laytime resulting from or connected with “any vessel equipment breakdown”. However, the clause did not extend to consequential delays later in the voyage. Also, the fault and delay had to be co-extensive to establish a culpable fault and time not to count. As a result, the Owners’ demurrage claim succeeded. 7.The Owners claimed demurrage, and the Charterers counterclaimed that the Owners were in breach of charter (ASBATANKVOY) by failing to give ETA required by the charter. Consequently, the receivers failed to make the proper arrangements and the vessel’s berthing was delayed. Therefore, the Charterers’ counterclaim in damages was in the amount of demurrage claimed by the Owners. However, the receivers knew the laycan, including the short voyage performed and a large number of the other ships waiting. Hence, there was no persuasive evidence of a causal connection between breach and delay. Further, there was no breach by the Owners because the ETA’s were provided, and it was not the Owners’ fault if the same were not received. 8. The master sent his ETA to all parties, which was the ship to arrive out of office hours, and NOR could not be tendered. The shippers / Charterers informed the master that if he could improve the ETA, the master would be allowed to tender NOR. However, the Shippers later decided to berth a competing vessel ahead of the subject vessel. The Owners claimed damages for detention because the Charterers failed to load the cargo timeously; an absolute obligation or an implied responsibility to act with reasonable despatch. The tribunal disagreed as there was no obligation on the Charterers to load or discharge a vessel in strict turn on her arrival without an express agreement. Yet, the Owners objected to latecomers jumping in the queue, but again the Owners had no claim for detention. Conclusion The above decisions illustrate that not always a breach of the notice provision, or the delayed vessel’s arrival, will provide a complete defence to a demurrage claim or a valid basis to counterclaim damages. The decisions also provide that although the parties cannot control the unforeseen events on the voyage that might delay the vessel’s arrival, they maintain control over the language used to allocate their rights and obligations during the various stages of the voyage. This can be sufficient to avert or minimize disputes.

Cargo interests may bring a cargo claim against the carrier in varied ways. First, however, does the claimant has title to sue under the bill of lading? If not, the claim is thrown out, and the carrier will find a quick escape route from the claim- demolishing the claimant’s locus standi . London Arbitration 15/22, highlights the importance of establishing title to sue in cargo claims recovery. Also, it helpfully reflects the complexities in establishing title to sue, which cannot always be straightforward. And it guides on procedural issues regarding witness statements submitted by the claimants and other evidence to ground their case but unsuccessfully here. *This is only a short commentary on the published summary. The reader should visit the LMLN website https://www.lmln.com/ Lloyd’s maritime law newsletter to read the award.

London Arbitration 14/22 recently considered issues related to economic duress & quantum meruit under a voyage charter party about laytime, additional premiums, and others. This practice area only cites general observations from settled cases, not the above award. General comments- observations Economic duress cases are extremely fact-heavy and sensitive and will likely not succeed. Therefore, parties should be cautious when raising a plea of economic duress. Even if they succeed on other issues, they risk having a split costs award because they run a problematic and costly case and lose. It is normal commercial practice for the parties to discuss a potential variation of the charter-party terms and reach a ‘special agreement’ during the performance of the charter party. However, it is not uncommon for the parties to disagree later on the ‘special agreement’ terms. Past cases reflect some of the common issues on laytime & demurrage due to special agreements reached: See London Arbitration 3/92; Arb 6/12; 12/15; 22/03 ; 24/95; 1/10; 18/17; 7/17; 20/82; 10/99; 12/90; 21/00, etc. The previous London arbitration decisions, 11/08 and 18/17, discussed and considered issues of contract variation. The ‘quantum meruit’ was argued as well in the below decisions: London arbitration 7/17 – call at the intermediate port; London arbitration 18/17- waiting off port pending instruction to call another port; London arbitration 12/90-drop anchor pending disport declaration ; London Arbitration 19/98-owners to be compensated for all waiting time allowed; and More recently, in London Arbitration 14/21 -delays before berthing to be compensated by way of quantum meruit; the argument failed. Economic duress in general Duress in the law of contract focuses on an illegitimate threat (or illegitimate pressure) which induces a party to enter into a contract. If duress is established, the remedy for the threatened party is rescission of the contract (sometimes referred to as the avoidance, or setting aside, of the contract). In this case, we are concerned with that form of duress that has been labelled “economic duress”. Economic duress was first recognised in English law in first instance cases in the 1970s… -Lord Burrows , 2021 A contract that is entered into under duress is voidable. The third type of duress, and the most difficult one to stabilize, is economic duress. In line with the authorities, the present decision shows that a party would not easily seek to set aside an agreement on the grounds of duress. It may also be exposed to costs if one tries to argue it unsuccessfully. It should be remembered that while courts have recognized a doctrine of economic duress, it is still applied cautiously by the courts (See Pakistan International v Times Travel [2021] UKSC 40). The previous mechanism to prevent such promises from being enforceable was the doctrine of consideration, but it is likely to be diminished. The courts will be more willing to find consideration and leave it to duress to regulate the fairness of the renegotiation. Turning to London arbitration decisions, there are limited published decisions dealing with arguments on economic duress: London Arbitration 5/93, 18/93 & 20/03. Lastly, previous decisions support that a party that unsuccessfully argues economic duress will be likely exposed to costs. In some cases that settled commercially, the duress defence was unsuccessful. In particular, some issues related to tug expenses( re-float a ship), the payment of shore cranes ( alleged defective crane) and alleged fines due to purported stevedore equipment damage. In addition, there was a threat to delay the ship’s departure in all three cases, but this is insufficient to raise a potential defence on duress and set aside the agreement. #BunkerCosts #Duress #Premiums #Shifting

In London Arbitration 13/22, the tribunal decided on two issues about quantification of loss due to:(i) excess redelivery bunker quantities; and (ii) insufficient redelivery notices tendered by Charterers to head Owners. This practice area cites practical observations on similar cases settled in practice. This is not a commentary on the published summary. General comments- observations It is common for the parties to disagree on issues related to the bunker quantities on redelivery (and prices) and the proper way to quantify the loss. Some charter parties address this matter, but again disputes may arise. In a previous case that was resolved commercially, it was argued that Owners could sell the excess bunkers at better prices to the next charterers and suffer no loss. But, even if this approach is adopted, the Charterers benefit from their wrongdoing (breach of contract) because they sell the excess bunkers at higher than CP prices to Owners. So, the issue centred on the damages’ principles to apply. Further, an argument advanced was ‘The Alghussein’ overrides ‘The Good Helmsman’ because the principle is a long-established rule of construction under English law and “The Alghussein” is a House of Lord’s case and thus a higher authority. But, to my knowledge, ‘The Alghussein’ has never been tested in the context of a bunker redelivery claim. Simply applying the market prices is an easy reference point to calculate damages; otherwise, the whole exercise becomes artificial, and damages may be too remote. The author’s previous article on MRI and I-Law includes some of the common arguments presented by the parties when the matter arises (operationally- wise) to defend their position before the case escalates. London Arbitration 13/22 supports some of the arguments stated in the article that was published before the award (See: Redelivery bunker quantities remain a topic of heated debate – Maritime Risk International (maritime-risk-intl.com)

A guest lecture was held at International Maritime Business Academy (IMBA ) Some of the topics discussed are: The terms of the contract The nature of the contract Arbitration clause: ‘is there a dispute’? Why do disputes occur? Common disputes under a time Charter party, emphasizing a COVID 19 case, speed and consumption claims, bunker disputes (quality & quantity, Maritime lien), and a deviation claim. The laytime & demurrage claim process, considering some issues on SOF and disputes based on real examples.

Glad to share a unique and practical presentation on laytime & dispute settlement on “bad weather” background music in some parts. However, after a storm comes a calm. This short video presentation includes: The general background (observations from Lord Diplock, Lord Reid, Sir John Donaldson, Sir David Foxton). The Maritime Adventure. The process of Laytime & Demurrage- Detention claim, based on the stages included in my short guidebook: A snapshot guide to Laytime & Demurrage. A practical example based on common debate issues: shifting, draft survey, open hatch, interpretation issues, NOR, when laytime ends, SOF, etc. The commercial settlement; the parties’ negotiation and arguments on the various issues. Not all points could be addressed in this short video presentation. The A-Z laytime calculations using Benefit laytime software, and All the above under “bad weather” background music in some parts, since ‘bad weather’ is very relevant to laytime. If necessary, you can pause the video to read the content of the slide; that might be necessary on the commercial settlement stage. Thanks to Benefit software for permitting me to share the laytime calculations prepared in their laytime software and to my IT for his outstanding efforts. Thanks for watching! And do not forget to turn your audio on…

The parties commonly disagree on a vessel’s position to tender NOR before discharging her cargo to Chinese Ports. Therefore, the parties have shaped their “NOR clauses” to deal with common issues. China Maritime Arbitration Commission decided the below on 14 November 2012, but it was published again in 2021. The Mv RIZHAO EXPRESS was chartered on an amended GENCON94 form to load part cargo from Kosichang(Thailand) and discharge it to Taizhou, Jiangsu. The ship loaded different charterers’ cargoes on this voyage. The Owners claimed demurrage, and the Charterers disputed it on various grounds: The claimants were not the cargo carrier and had no right to apply for demurrage. Further, the respondents were not the consignee of the cargo, thus not liable for demurrage. The NOR was not delivered adequately at the Yangtze River Estuary. Only a copy of the NOR was provided, which should not be the basis for identifying the facts. The Owners applied the wrong unloading time calculation. The parties’ arguments The NOR issue The Owners argued that the NOR could be delivered at the Yangtze River Estuary under clause 8 of the charter. Clause 8 stated that the NOR could be provided by telegraph or fax, etc., at any time, WWWW. The Charterers said that only a copy of the NOR was sent and did not identify the facts. According to Chinese laws, the claimant, a company outside the mainland, which provided evidence on the action in the mainland, should certify it by notarization. Thus, this evidence was illegal in its form. Further, the evidence was just a copy, which other evidence could not prove and therefore did not have the probative effect. With the evidence provided by the claimant, the ship was at the Yangtze River Estuary, not at the Taizhou Port regulated by the charter. It takes about two or three days to reach Taizhou port. So, the ship was not ready to discharge the cargo when the NOR was initially sent on 6 March; instead, the NOR was just an ETA. The claimant said it was the carriers’ right to decide when the NOR was sent. The claimant also alleged it was a practice to tender NOR at Yangtze river and approved by the relevant cases. However, these cases might be different since “the unloading port was the main port of China”, not a named port as here. The Calculation The claimant had not excluded the unloading time from demurrage. The claimant said that since the cargo was stored in hold 1, the unloading time was 2.58 days, with a 2500t/day unloading rate, which the claimant deducted. The respondent disagreed: the full cargo was more than 33000 mts stored in many holds. By applying 2500t/day, the agreed unloading time of all four spaces was 13.2 days. Thus, the vessel was on demurrage for 4.8 days. As the cargo in No1 was 6400 mts (1/5 of total weight), the demurrage time was less than 0.9 days. The claimant applied the discharging rate for each cargo space. Thus, he could claim demurrage from all charters. The decision On the first issue not addressed in detail here, the tribunal disagreed with the Charterers’ view and held that the parties’ roles were clear, and the claimant was the shipowner, while the respondent was the charterer. The NOR After the hearing, the tribunal decided that: The claimant got all the pieces of evidence. Albeit these were copies, the respondent could not deny the authenticity. Instead, the respondent should provide counter-evidence to reverse the truth of the evidence. As for the point of notarization, the tribunal held that the evidence offered by the claimant was legal and valid. The parties have chosen the GENCON94 as the legal basis and deleted/ changed part clauses for their benefit. In addition, the parties agreed on the delivery time and place of NOR. The English laws adore the freedom of contract, which is prominent on the voyage charter party. Therefore, the present wording is relevant and the parties’ common intention. The claimant could not provide evidence to prove the NOR tendering at Yangtze River Estuary was valid or complied with the shipping practice. The NOR clause allowed the ship to tender NOR on the vessel’s arrival WWWW. However, the parties disagreed on interpreting the ‘vessel’s arrival” as appearing in the clause. In the absence of evidence from the claimant, the tribunal could not confirm whether the delivery of NOR at Yangtze River Estuary conformed to the word of “arrival” or not. The ship must arrive in ‘port or not’ shall be interpreted as the appropriate distance, not far away from the loading port. The respondents said that 2-3 days of sailing time was not the proper distance from the port. The claimant did not rebut it or offer evidence to prove the agreed point to tender NOR. The tribunal construed the wording of the GENCON 94 and, in particular, the words ‘arrival’ and ‘off’ port. So, the vessel should arrive in a certain range even if the word ‘off’ the port was added in the clause. The tribunal held that the NOR sent on the first time was premature and the 2nd NOR tendered when the ship arrived at the Port of Taizhou was valid. The Calculation The tribunal adopted the below calculation. Laytime runs from 19 March 0800 hrs till 04 April 0300 when the discharging is completed. Therefore, Laytime shall be 15 days and 19 hours altogether, i.e. 15 days + 0.79167= 15.79167 days. Then, it deducted 2.58745 days to find the demurrage time 13.20422 days x 4000 USD per day = 52,816.88 USD. The tribunal held that the respondents’ argument that the 4 spaces were unloaded equably so the unloading time should be counted according to the total weight of 4 spaces cargo but not each space’s quantity had no contractual basis. #Laytime

Taking the opportunity to share some past issues related to the NOR tendering & laytime due to Christmas Day (Holiday) or adjacent days. The terms of the recap state: “Scale load/xxx MT SHINC”, otherwise as per proforma, logically amended to reflect the main terms agreed. The proforma CP state: “Discharging Rate: xxx metric tons Sundays and Holidays included, excluding Super Holidays.” The vessel was discharged during the period 24-27 December. W as the time to count during Christmas Day under the ‘SHINC’- provisions in the recap? Calculation of notional laytime consequent upon delay caused by Owners’ breach; whether the notional analysis that considers Christmas Holidays and New year Holiday produces damages reasonably foreseeable or on the cards or not unlikely to occur. Upon arrival, the vessel tendered NOR on Saturday, 26 December, to load the cargo and remained anchored due to congestion. The port shipping activities were operational on that date- not one of the four gazette holidays in the year. Monday was a public holiday. Clause X stated, “load rate xxx Sundays and Holidays included- see also clause Y. Clause Y provided the turn time upon tendering NOR business hours. Another clause provided the dates/ hours that the vessel could tender NOR, including the cancelling dates. The issue related to when the NOR was considered valid and the laytime clock started ticking. The word Saturday was struct out from the original printed text of the charter party that provided the NOR to be tendered on Saturday 0001-2400 hours. The Charterers argued that the parties intended that NOR would not be tendered on Saturday by striking’ Saturday’. The Charterers said that the 26 December was a de facto holiday. Was the reference to ‘business’ hours precluded the service of a notice on Saturday, as was struct out from the original printed text of the charter party? W as Saturday a normal working day ( business day) for NOR tendering/ validity and laytime counting? Whether Monday 27 December was a holiday for laytime purposes and time did not count. The parties relied on conflicting evidence provided by different sources to support their case. The Charterers relied on an invoice from the port authorities that included extra service for public holidays performed on 27 December and a notice from the port authorities that 27 December is officially declared as a public holiday for Christmas. The SOF was silent on the point. The Owners adduced a message from an international shipping association stating that 27 December was not officially declared as a public holiday, according to their sources. They also relied on a statement from local lawyers who said that the date in question was not a public holiday. S o, on the balance of evidence, was the day in question a holiday? #Mustread

This guidebook on Speed and Consumption Claims consists of three parts: Part I briefly introduces speed and consumption disputes and provides twenty common debate issues between the parties before or when the case escalates. Part II illustrates the bulk of the published London Maritime Arbitration awards from 1980 to 2020. The decisions are categorized basis the issues involved. A one-page ‘map’ was added to reflect the decisions in the relevant categories for easy reference. The already published parts I & II have now been slightly amended. For example, part II now includes some of the Owners’ main arguments to reject the implication of positive sea currents; the long-standing debate. Part III outlines intense debate issues, either in the parties’ charter negotiations or settlement discussions. It relies on the analysis of 400 charter parties, 800 circulated vessel’s ‘position list’ in the market, chartering brokers’ input, and the authors’ practical experience in proposing or amending such clauses during charter negotiations. Thanks to Dr. Arun Kasi (Barrister & Arbitrator) for reading a previous draft of this guidebook, SCMA for including it in the November Knowledge Sharing, and LMAA for circulating among the members.

It summarizes the parties’ usual points of a dispute regarding the redelivery bunker quantities, namely: The meaning of ‘about’ – issues of interpretation, i.e., whether to put a gloss on the word ‘about’ basis the parties’ conduct; the parties’ arguments on the purpose of the words ‘min/max’ in the bunker clause; analysis of sophisticated bargains, using some examples, etc. The applicable prices for a damages claim or compensation claim, using some examples. The parties’ main arguments to defend or pursue a claim, as the case may be. The bunker survey findings, i.e., whether the masters’ or the surveyors’ conflicting figures, should prevail by adopting a ‘back calculation,’ including some of the complexities of using this method to resolve the case (consideration of an unpublished award). The recent London Arbitration 19/21 discusses some of the above issues. Aside from the parties’ submissions in arbitration, the article includes some of the common arguments presented by the parties when the matter arises (operationally- wise) to defend their position prior the case escalates. Some of these arguments found favor in the arbitration decisions, while others did not. The full article was published in Maritime Risk International (MRI) on 26.10.2021 Thanks to Dr. Arun Kasi ( Barrister & Arbitrator) for reviewing a previous draft.

This post has been slightly amended in the subsequent guidebook: “Speed and Consumption Claims: A practical perspective and statistics”- Please refer there. “Speed and Consumptions were, generally speaking, pretty routine and were matters with which arbitrators had considerable familiarity”. (London Arbitration, 1997) Speed and Consumption claims are usually of relatively low value and most of these cases are resolved either amicably or by arbitration. Only a few cases reach the Courts by way of appeal or application from the arbitration. Therefore, the parties rely on the numerous awards that have been published in the past years: when drafting or negotiating a performance clause before finalizing the fixture; when attempting to reach an amicable settlement of their dispute; when submitting their claim to arbitration or following an alternative dispute resolution process. The below graph or ‘map’ provides a quick view of most of the awards issued by London Tribunals and published in LMLN for the period 1980 to 2020. Further, it illustrates that ‘speed and consumption claims’ regularly involve a plethora of factual and legal issues; as briefly stated in the previous article Speed and Consumption Claims (Part I): A practical perspective. For easy reference, the awards have been categorized on the basis of issues discussed or determined by the tribunal; and on how often the issue is raised in practice. In particular, the ‘map’ includes the below categories: The dispute (the starting point) No ‘good weather’ and the ‘near good weather’ conditions were considered to establish breach or loss; whether the warranty was a continuing warranty e.g. “throughout the duration of this charter” or “during the currency of this charter”; whether the loss is ‘de minimis’ and merits no consideration; and whether the qualified words without guarantee ‘WOG’ in the speed and consumption figures negate any contractual warranty- this bars a contractual claim for breach of warranty. Interpretation or Construction A high proportion of speed and consumption disputes involve issues of interpretation. Where this is the issue, views may differ about the interpretation of contractual terms. It appears that however hard those who negotiate the relevant terms may try, for different reasons understood by different parties, there will be cases that the parties used vague or inconsistent terms to express their agreement or poor drafting (words or syntax, etc.). The below decisions from London Tribunals, randomly grouped in three parts, illustrate some key issues involved during the last decades: Interpretation or Construction Part A- Arb 6/19 (typographical error, contradicting terms in clause, surplusage); Arb 12/14(advance current was a misprint of ‘adverse’); Arb 9/18 (use of disjunctive “or” in the clause was considered); Arb 17/99 (reconcile main body with riders, deletions and amendments were discussed); Arb 15/05 (proforma and recap terms were read together to define the benchmark conditions); Arb 4/11(the language used was not ideal to support that the deficiency applies only to certain periods- words appearing else in the clause were considered). Interpretation or Construction Part B- Arb 16/13 (whether good weather qualifications in the proforma were expressly incorporated, implication of ‘good weather’ qualification was considered); Arb 21/18 (whether the words ‘A tolerance’ import or not a ‘double about’, interpretation of words used in the clause); Arb 13/92 (the contra proferentem rule of construction applied against the Charterers, terms in the main body were read together with terms in the proforma, whether ‘about’ implied by viewing the other charter terms, whether the Charterers’ ordered speed of 14 knots was warranted, implication of terms was considered); Arb 26/19 ( implication of ‘ no adverse swell’ instead of ‘ no swell’ was considered); Arb 15/07 (the implication of ‘positive currents’ as part of the warranty was rejected) Interpretation or Construction Part C- Arb 21/18 (the implication of ‘positive current’ factor to apply was rejected, contra proferentem rule considered); Arb 15/06 (rectification, the words ‘fully laden’ were ignored); Arb 9/07(questionnaire considered, contra proferentem rule applied); Arb 17/80 (meaning of ‘or’/ ‘and’ in clause, implication was rejected); Arb 5/06 (description provision was not carefully drafted, inconsistent use of terms and syntax); Arb 8/86 (meaning of about max daily consumption- i.e. is it about or max?); Arb 13/97 (clauses 71 & 79 were considered together- whether ‘continuous warranty’ applies, average speed does not include ‘about’), etc. Whether to imply a positive current factor: endless debate? In many cases, the tribunals rejected that a ‘positive current factor’ was part of the performance warranty by implication (See Arb 15/07; Arb 21/18 as followed in Arb 27/19, etc.). While some tribunals accepted the implication since the express warranty was one of capability (See Arb 4/94; and Arb 4/12- the latter not followed in Arb 21/18). And other tribunals rejected the application of currents, due to: (i) the imprecise calculation of it (See Arb 20/07, etc.); (ii) the express wording of the clause ‘Owners to have the benefit of positive currents’ (See Arb 22/18); and (iii) the calculated loss was not an ‘actual loss’ or ‘net loss’ to award damages when the ship actually performed. However, it is often the case that the Owners, the Charterers and the weather routing companies disagree on the adopted methodology that takes into account a positive current factor in evaluating the vessel’s performance. Some maintain that, absent binding precedent, positive currents can be considered in subsequent arbitration decisions. Since there is no binding precedent on this issue, the parties’ dispute often centers on the settled principles by which contracts are to be construed; or emphasizing different aspects of those principles –sometimes referring to the concepts of reasonableness and fairness, or invoking commercial common sense, to justify the implication; thus conflating the distinct principles. This matter will be analyzed no further in this article. Set -off against hire & Net loss Among the issues considered were: whether there is a right of deduction from hire (express right or otherwise) or the clause provided a bar to any deduction-deductions on reasonable grounds and in good faith considered; whether to set-off the time loss claim against the bunker under-consumption (or vice versa) in a damages claim; and time bar & Hague Rules defences. Evidence The issues were identified as: whether the weather routing company( ‘WRC’) is ‘independent’; disclosure of relevant documents to the claim; contrasted reports on methodology or data; whether the logs or the WRC reports to prevail (the usual debate); and whether the WRC reports are binding or ruling (methodology vs analyzed data considered). The arbitration decision 21/18 considers the issue of establishing a claim basis a report from a non-agreed WRC – a point earlier stated in Part I ‘Speed and Consumption Claims: A practical perspective’. Weather criteria The issues were as follows: the meaning and application of the ‘good weather criteria’; whether a weather factor to apply in the performance assessment; and the meaning and application of DSS3 – sometimes contractually expressed in relation to the significant wave height or the combined sea and swell wave, or any other similar wording. The Arb 6/19 discusses the matter of reconciling DSS3 and the significant wave height. Current factor The issues were: whether implied the positive currents to be considered as to establish breach or loss; the meaning and effect of the adverse currents or ‘negative influence of currents’ considered; and whether the calculation of currents remains an imprecise science or not. Whether the currents are part of the ‘weather conditions’ as warranted in the charter party. Methodology The issues were as follows: the proper assessment of liability and loss (The two- stages approach basis The Didymi , The Gas Enterprise as referred recently in The Ocean Virgo ); the meaning of ‘about’ (or no double about or one about or no about – absolute figures, application of de minimis- how strictly to comply?) in the speed and consumption clause; meaning and application of average speed; proper distance steamed basis the masters’ reports or the WRC’ analyzed positions; and steaming in restricted areas (is it always excluded?). Weather routing companies Some awards discuss whether or not the weather routing companies adopt a methodology that is compliant with the English authorities or the parties’ agreement; or apply a methodology being not supported by authority, e.g. The London Arbitration 26/19 stresses that: Closer attention needed to be paid to warranty conditions if weather routing organisations’ reports were to be accepted at face value in London arbitration … There was no doubt that the weather bureau paid lip service to the English authorities in assessing vessel performance … Sample of time The issues were: the proper sample of good weather periods to establish a claim: a) between consecutive noon positions; and b) for entire voyage. See also The Ocean Virgo (2015). In practice, sometimes, the wording of the clause is different from that considered in The Ocean Virgo, which again raises issues of contract interpretation. Alternative remedies -separate breaches of contract The common issues considered (indirectly in some cases) and decided were: maintenance obligations- engine or technical issues affecting the vessel’s performance; whether the master complied with his obligation to perform the voyage with utmost despatch; whether deviation (including minor diversion) caused extra time lost and extra bunkers consumed (these decisions were considered in my previous article: How do you calculate loss following a ‘triangle form’ deviation? Maritime Risk International, August 2021); hull fouling –factual and legal burden to prove liability and loss- even under concurrent causes; and whether there is contractual basis to bring an off- hire claim- the evidence considered and, in most cases, the Charterers had failed to discharge their burden of proof. This post has been slightly amended in the subsequent guidebook: “Speed and Consumption Claims: A practical perspective and statistics”