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NOR was valid at CJK anchorage, and shifting time was excluded even on demurrage. However, any delays due to enforced lien for unpaid freight are for charterers’ account. The background The vessel was chartered on an amended BEIZAI form for a voyage from Eureka, USA, to Changshu, PRC, to carry a cargo of logs. Disputes arose between the parties about owners’ demurrage claim accrued at Eureka, mainly due to cargo shortage, of US$471,787.98 and demurrage accrued at Changshu (or damages), of US$289,400.11. For NOR issues at Chinese ports, check this post: https://charterpartydisputes.com/chinese-ports-nor-evidence-and-interpretation-issues/ The matter was referred to arbitration, and absent any response by the charterers to owners’ notices to either agree [X] to act as a sole arbitrator or charterers appoint their arbitrator, the arbitrator accepted the appointment as a sole arbitrator under section 17(2) of the AA 1996 and the current LMAA Terms. Owners served their Claim Submissions with supporting documents, copying the charterers, and charterers did not submit their Defence. Thus, the arbitrator advised the parties that he would proceed to an award based on the submissions and documents before him. The respondent made no application to challenge the arbitrator’s jurisdiction, as the clause stated, “ Maritime Arbitration Rules of the United Kingdom ,”. However, on balance, the parties must have intended to conduct the reference under the LMAA Terms. The award The charter provided for total laytime for loading and discharging 16 days for all purposes per WWD SHEX unless used. Also, NOR is to be tendered WWWW upon the vessel’s arrival. If the vessel is on demurrage by the time it arrives at the next port, then time on demurrage continues on vessels considered arrival. Loading port The arbitrator found the owners’ laytime calculations correct. In short, the vessel arrived at 12.00 on 28th July and completed loading on 17th September. Save some interruptions; the vessel exceeded the allowed 16 days all purposes by 32.16 days. The arbitrator awarded owners their loading port demurrage claim of US$471,787.98. Discharging port One delay resulted from charterers’ failure to pay freight as per charter party terms, i.e., within three banking days after completion of loading. Charterers failed to pay freight and loading port demurrage until the vessel arrived at the discharging port. Further, owners became aware that other unauthorised and/or fraudulent set of Bills of Lading was being circulated. Then, owners warned the charterers to exercise their rights of lien over the cargo unless charterers paid the outstanding freight and load port demurrage. The tribunal made these points: Charterers are responsible for the delays that occurred during discharge due to their failure to pay the freight as per charter party terms. The tribunal disagreed with the owners’ calculation that did not exclude the shifting time from anchorage to the berth, even if the vessel was on demurrage.The tribunal construed these words broadly “Shifting from .. loading or discharging berth to be for Owners’ account and time not to count ”, and held, “ There was no indication in that clause that time not to count only applied to laytime and it must therefore also suspend time on demurrage ”. Thus, the tribunal excluded the shifting time even if the vessel was on demurrage. The tribunal disagreed with the owners’ calculations that reflected the completion of discharge on 24th 1430 hours. This seems to be a typo error on the owners’ part as the discharging was completed on 23rd 14.30 instead of 24th 1430 hours. Comment The tribunal seems to have accepted the validity of the NOR tendered upon the vessel’s arrival at CJK anchorage on 8th October, 07.45 hours. This is hotly debated sometimes between the parties ( https://charterpartydisputes.com/chinese-ports-nor-evidence-and-interpretation-issues/ ). There are some published arbitration awards in favour and some against the tribunal’s reasoning concerning the meaning of “time not to count”. In some awards, reference to “time” was treated as “laytime” and not “time on demurrage” (the maxim “once on demurrage always on demurrage” applied). In some other awards, even on demurrage, the shifting time was excluded when the wording of the clause referred to “shifting time not to count”. Therefore, the words were given a narrow or wider interpretation in different cases- [I prefer to not comment on this]. In practice, the author has at least encountered similar arguments in hundreds of cases related to “shifting” or other laytime interruptions under a similar wording, “Owners’ account and time” or at “owners’ cost”. In some awards, different interpretation was given to the words “owners’ account or cost”; either accepted to interrupt laytime or not for draft survey or shifting time or time spent lashing cargo, etc. Therefore, it is suggested to clearly state if this applies to laytime or demurrage, e.g., shifting time to be for the Owners’ account and time not to count as laytime or time on demurrage or similar wording. Especially for river ports where shifting time may be considerable, it will affect the laytime or demurrage calculations. More awards related to “shifting time” or “owners’ account and time” and delays (damages) due to lien can be found in this free published guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris Note: This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi https://jusmundi.com/en/conflict-checker . These awards mostly come into the public domain through enforcement under the NYC 1958; the operative provisions of the Convention have been transposed into the law of England and Wales by Part III of the Arbitration Act 1996.

* Delay in sailing due to insufficient depth of water was an impediment beyond the Owner’s control and damages for detention are payable from completion of discharging until the vessel was able to depart*. Disputes arose between the parties under an amended HEAVYLIFTVOY form and referred to arbitration under the LMAA Intermediate Claims Procedure (ICP) 2012. The owner claimed the following sums said to be due and owing: (a) The balance of demurrage at the Port of St Petersburg: USD27,989.47; (b) Damages for detention at the Port of Kolkata: USD60,571.87; (c) Interest due on late payment of freight: USD3,822.00; (d) Interest due on late payment of the amount of demurrage already paid: USD3,321.02 and interest on outstanding amounts and costs. The owners’ claims (a) The balance of demurrage at the Port of St Petersburg: USD27,989.47 NOR tendered on 14 December 0700 hrs. Under box 10, “ Layday period (i) First layday For St. Petersburg: 19.12.2016 […] “. Thus, the laytime commenced at 00.00 hours on 19 December 2016. Loading began at 07.31 on 23 December and was completed at 11.40 on 28 December. The vessel departed shortly afterwards. The charterer was allowed 48 hours of laytime and after deducting this period, the remaining 7 days 11 hours 40 minutes, equivalent to 7.48611days, counted for demurrage. The tribunal accepted the owners’ calculation. As per clause 18 (b), “ Any sums for demurrage and/or detention shall be payable on receipt of the Carriers’ invoice by the Merchant. Payments shall be made to the Carrier’s bank account as stated in Box 1 “. Therefore, the payment fell due on receipt of the invoice. (b) Damages for detention at the Port of Kolkata: USD60,571.87 The vessel arrived at the customary anchorage at Kolkata and tender NOR at 0300 hours to discharge her cargo. The NOR was neither stamped nor acknowledged, but the Statement of Facts records that it was accepted as per BN. The pilot boarded at 0955 hours and made her way to the berth, where she completed discharge on 18 February at 1715 hours. However, draft restrictions prevented the vessel from sailing on completion of discharge. According to the extract from the vessel’s deck log entry, the vessel’s draft was 6.05 m(FWD) and 6.30m (AFT), and the Kolkata Port Trust’s draft forecast showed it would be 6.2 meters or less, which was insufficient clearance for the vessel to sail. Finally, based on 6.4 meters even keel FW sailing draft, the ship would depart at 2200 hours on 25 February. The charter party provided inter alia that: Clause 16 […] actual time lost on the vessel due to impediments beyond the Carrier’s control preventing the vessel from departing the Discharging berth/port will count as laytime or be charged as time for which damages for detention are due at the rate as stated in Box18. Held, that the delay in sailing due to insufficient depth of water was an impediment beyond the Owner’s control and damages for detention are payable from completion of discharging until the vessel was able to depart. The Owner’s calculation has been determined by reference to time lost from 21.15 hours on 18 February 2017 to the vessel’s departure when the pilot boarded at 22.00 hours on 25 February 2017, a total of 7 days 0 hours and 45 minutes or 7.03125 days. Therefore, after deducting the allowed period of 18 hours grace time, damages for detention accrued for a total of 6 days 6 hours 45 minutes (6.28125 days). The charterers said the owner issued an invoice for USD21,252.00 before issuing the invoice for USD60,571.87. The amount of USD 21,252.00 was based on a pro-rata application of the total amount of detention between various part cargoes being carried for the charterer and other interests. The charterer raised two defenses on estoppel and double recovery but failed. (c) Interest due on late payment of freight: USD3,822.00 Clause 28 of the charter read, “If any amounts due under this Charter Party are not paid when due, then interest at the rate of 1.5% per month or pro rata for part of a month shall be paid on all such amounts until payment is received.” The tribunal allowed the claim for 28 days’ interest at USD3,698.71 after making the calculations since the owners’ invoice showed an overstated amount. (d) Interest due on late payment of the amount of demurrage already paid: USD3,321.02 The owners calculated interest on the unpaid demurrage amount for 91 days which was accepted. Costs The owners claimed recoverable costs £10,889.31. The Owner’s claim amounts to USD95,704.36, so the claimed recoverable costs are below the capping level under the ICP (2012). ICP (2012) provides for costs to be awarded on a summary and commercial basis and in such manner and amount as the tribunal, in its absolute discretion, considers to be fair, reasonable and proportional to the matters in dispute. It is further provided that costs are to be capped so that neither party shall be entitled to recover more than a sum equivalent to 30% of the Claimant’s monetary claim. The Owner has largely been successful in the claims made. In accordance with English law, costs normally follow the event. After considering the reasonableness of the costs, the tribunal reduced the lawyers’ fees for document preparation by £866.50. Interest Under section 49 of the Arbitration Act 1996, the owners are entitled to interest on the sums awarded at a commercial rate compounded at three monthly rests as is usual in London arbitrations. Concerning the outstanding demurrage, it shall run from 30 March 2017. Interest on the damages awarded for detention at the Port of Kolkata shall run from 3 August 2017 and interest on the late payments shall run from the date of this Award, 15 February 2018. There is short reference to more than 50 LMAA awards concerning damages for detention before or after loading or discharging in this free guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris Note: This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi https://jusmundi.com/en/conflict-checker . These awards mostly come into the public domain through enforcement under the NYC 1958 .

The totality of the evidence showed that the five holds into which the master had advised that he was going to load the cargo were ready when the notice of readiness was tendered. The notice of readiness was therefore valid so as to trigger the running of laytime. The background The vessel was chartered under an amended Gencon form to carry salt in bulk from one safe berth in Damietta, Egypt, to one safe berth in Toledo, Ohio, USA. A dispute arose about the demurrage accrued at Damietta for US$44,012.50, mainly due to an alleged invalid NOR. Accordingly, the dispute was referred to arbitration, and a sole arbitrator was appointed under the LMAA Terms. The parties’ contentions Charterers denied the demurrage claim and argued that the NOR tendered at Damietta was not valid since the vessel arrived with three holds that were not available. In support of their case, the charterers relied on the statement of facts. In response, owners contended that all the holds were ready for loading when the vessel tendered her NOR. The charterers were confusing the number of holds the shippers wanted to load simultaneously compared to the number of holds available for loading cargo when NOR was tendered. The statement of facts The vessel had six holds and six hatches served by three cranes. The NOR tendered at 0600 hours on 23rd October 2018, and according to the statement of facts: “COMMENCE LOADING AT 0345 HRS ON 29/10/2018 AS PER MATER’S (sic) INSTRUCTION ONLY 3 HOLDS ARE ALLOWED TO USE DURING LOADING VSL COMPLETED LOADING AT 0100 HRS ON 31/10/2018 …” The masters’ letter of protest The master endorsed the statement of facts with a remark that his LOP was considered part of the SOF. The LOP stated: “I hereby wish to draw your attention to the fact that upon the vessel arrival p.Damietta, no any request or proposal from stevedores to revise pre-stow plan or loading sequence. Vessel commenced cargo operation by ship cargo gears and 2 conveyors for loading cargo. At beginning, conveyors used only for loading cargo hold no. 5 and not cargo holds nos. 1;2 and 3 due to conveyors has height limitation. I never discuss with stevedores to use ONLY 3 cargo holds for loading. Taking into account abovementioned, I totally reject the notice “AS PER MASTERS INSTRUCTIONS ONLY 3 HOLDS ALLOWED TO USE DURING LOADING” from Statement of Fact as it is not correct. In this respect, neither the Master, Owners or Disponent Owners of the vessel, will accept any responsibility for any claims which may arise there from.” Stowage plan On 12 October, ten days before arrival at Damietta, the owners sent to the charterers the masters’ proposed stowage plan showing that cargo was loaded in all the holds except for H4. The master asked the shippers to advise how many gangs were planning to use for loading and confirm the ship’s gear would be used for loading. They replied, “We will work 24 hrs with 3 gangs using vsl gear.”. As a result, the master submitted a proposed loading sequence by three gangs with H4 remaining empty. On 29 October, [REDACTED] surveyor issued a hold cleanliness letter confirming all holds (save H4) would be loaded and were ready. The Tribunal Held, that the totality of the evidence showed that the five holds into which the master had advised that he was going to load the cargo were ready when the notice of readiness was tendered. There was nothing in the documentation to suggest that anything had changed in the condition of the holds between the tender of the notice of readiness on 23rd October and the inspection by [REDACTED] on 29th October. The notice of readiness was therefore valid so as to trigger the running of laytime. Even if the statement of facts was correct that only three holds at one time were to be used during loading, that would not render the notice of readiness invalid. At most, it would mean that the Charterers would have been able to argue that demurrage should be adjusted to reflect the fact that the loading period had been extended because of the master wrongfully restricting the number of holds that could be loaded at any one time. Such an argument, if made good on the evidence, would have warranted a reduction in the demurrage payable to reflect the period by which loading had been extended compared to the period that would have been required if more holds could have been loaded at one time. It would not reduce it to “a much smaller amount” as argued for by the Charterers. In the event, however, the factual foundation that the master wrongfully restricted the number of holds to be loaded at one time was not made out. Consequently, it followed that the Owners’ claim succeeded in full. Costs followed the event in the usual manner. Final Award, 13 June 2019 Note: for more LMAA published awards dealing with NOR / SOF issues, including similar disputes, check this free guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi https://jusmundi.com/en/ . These awards mostly come into the public domain through enforcement under the NYC 1958 .

The charterers failed to prove a vessel’s “operational fault” to avoid liability for paying demurrage. Even if the vessel was not prosecuting the voyage with reasonable dispatch, and the vessel lost a berthing slot any delay thereby caused would be “completely unquantifiable”. The charterers cannot recover damages by refusing to pay demurrage. *For LMAA published awards on breach of the pumping warranty, check pages 47-50 of this free guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris The background By two charter parties adopting the terms of the ASBATANKVOY form, the vessel was chartered for the carriage of Fuel Oil from Shuaibah, Kuwait, to Fujairah, UAE. Part of the cargo was discharged at the terminal, and other by STS transfer. The owners claimed demurrage under both charter parties for US$27,694.44 (1.384722 days demurrage) and US$47,609.33(2.11597 days demurrage). The charterers denied liability. Consequently, the disputes were referred to arbitration in London, and each party appointed an arbitrator. The parties’ submissions Charter party I Charterers argued that the vessel took more time to discharge two parcels of cargo by STS. As said, the STS was ordinarily faster compared to discharging to shore, given no pressure was required, and yet the vessel took longer to discharge a smaller amount of cargo by STS than when the vessel discharged at the terminal. The pumping warranty of 24 hours in clause 9 indicated how quickly the vessel could discharge at the terminal and stood no reason that the vessel should be able to discharge quicker than 24 hours by STS transfer. As this did not happen, it indicated that there must be an operational fault, and the charterers should not be liable for the demurrage claimed. Owners rejected the charterers’ comments on delayed STS operation. First, there was no restriction for discharging time and average pressure at the ship’s manifold during the STS operation. Second, the discharge rate reduction during STS compared to that in the terminal was due to the different cargo hoses in size, i.e., 2×10″ (and not2x12″ as before at the Terminal). The discharge rate during STS is affected by the cargo hoses and the capability of other vessels to accept cargo discharged into different tanks by lower pressure and topping off each time the change of tank. The charterers were responsible for providing appropriate cargo hoses to minimise the delay. Charter party II The charterers contended that the vessel took more than 24 hours to discharge at both the terminal and by STS transfer. The warranted pressure was 100 PSI (equivalent to 7 Bar or kg/cm2), and the ship could not maintain 7 Bar based on the pumping record. The lowest recording was 3.0 Bar. Therefore, owners breached the pumping warranty under clause 9, and charterers should not be liable to pay demurrage. In addition, the charterers submitted that the vessel also took an extraordinarily long time to discharge by STS transfer. In support of their case, the charterers said that the vessel discharged 59,618.75 MT at the Terminal in 44 hours 24 and discharged 24,590,626 MT to the “[REDACTED]” in 17 hrs 41 by way of STS transfer. That produces an average discharge rate of 1,339.75 (terminal) and 1,336 mt per hour (STS). Charterers asked the owners to increase the discharge rate to 2500 cm PHRS, of which the vessel was capable, and owners failed to do so. Lastly, the charterers argued that the NOR was tendered the next day due to the vessel’s technical breakdown at Fujairah. As a result, the vessel lost her slot and had to wait at the anchorage instead of going straight to berth on arrival. Because of this, the vessel was delayed in berthing for 10 hrs due to congestion, the Charterers said. Accordingly, they should not be liable for this waiting time and hence the demurrage claimed. Owners submitted that during discharge at the terminal, they had accepted a slight reduction in the average pressure (6,164 kg/sq cm as against 7 kg/sq cm). Applying an accepted formula reduced their demurrage claim accordingly. The charterers did not challenge this. Concerning the STS discharge rate, the owners said it was 6.35 kg/sq cm, and there was no restriction in the charter party for discharging time or average pressure. The STS operation was performed with 1x 10” due to the lightering vessel’s problem in the pumproom, which could not accept 2x 10” hoses. As owners said, this provided an answer to the charterers’ complaint that the discharge rate was not increased following their instructions to do so. For the alleged delay in tendering NOR, the owners’ position was that as per charter party, the laytime starts 6 hours after tendering the NOR, and there was no provision permitting any deduction as regards the commencement of laytime. In further submissions, the charterers maintained after disclosing expert opinion that there was an inherent problem with the vessel that affected the overall discharge rate during STS operation and denied that this was caused by the number or size of the hoses. Expert evidence The charterers adduced expert opinion evidence to support that STS operations are usually faster, and this delay was due to a vessel’s fault. Charterers’ expert opined that- as a general statement – the STS transfer, when started and subject to weather conditions, will take less time as compared with an equal quantity and type of cargo being discharged through a pipeline at the shore terminal given the back pressure that will restrict the rate of discharge. Owners’ appointed expert disagreed with the general statement about STS operations and said it all depends on the facts pertaining to each operation. The smaller vessels will likely have smaller manifolds, and smaller hoses will be used than the mother ship when discharging into a shore terminal. The cross-sectional size of the hoses will have a marked effect on the flow rate and the overall discharge time. The decision Charter party I Held , that although the Charterers alleged an “operational fault” by the vessel by inference from the comparative length of time the STS operation took as against the terminal discharge, they were unable to support this by any specific proof. The slower STS discharge was explicable by a discrepancy in the diameter of the flexible hoses and manifolds on the receiving vessels. The Charterers neither disputed this as a matter of principle nor that it had not happened in practice. Charter party II The tribunal rejected the charterers’ submission on fault as this was considered in the owners’ reduced demurrage claim already. Regarding the loss of the discharge berth slot, as she “did not maintain speed during steaming”(charterers’ laytime remark): Held , that even assuming that the alleged slow steaming was caused by a breach of charter for which the Owners are not protected by an exception in the charter such as the exercise of due diligence, the Charterers cannot recover damages in the shape of refusing to pay demurrage that had accrued. Delay in giving the NOR, even if correct, did not affect the resulting demurrage claim. The tribunal expressed the view that the Charterers would fare any better if they sought and succeeded in revering damages for the alleged breach in the vessel, not prosecuting the voyage with reasonable dispatch. The owners could not fairly be taken to have assumed responsibility for the Charterers’ alleged loss of a berthing slot when the contract was entered into any delay thereby caused would be “completely unquantifiable” as the result of any such breach( The”Achilleas” [2008] UKHL 48, applied)- [ Author’s comment : similar view expressed in London Arbitration 8/05; charterers unsuccessfully defended a demurrage claim on the grounds of breach of speed warranty causing delayed arrival at disport since this loss was not reasonably foreseeable]. Final Award, 22 December 2009. This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi https://jusmundi.com/en/ . These awards mostly come into the public domain through enforcement under the NYC 1958 .

The charterers have failed to discharge the burden of proof of the allegations made against the demurrage claim. The delay in loading was due to the temporary unavailability of the transshipment vessel. The unavailability of cargo was not intended to be an additional force majeure event. It would only be an exception to laytime running and demurrage accruing if it was the result of a force majeure event, as listed in clause 45. The subject vessel was chartered on an amended Gencon 1976 to load 205,395 mt iron ore from Panaji anchorage, Goa, to Rizhao port, China. Disputes arose about the loading port accrued demurrage USD 509,826.03 and referred to a sole arbitrator under the LMAA Terms 2006. By way of counterclaim, the charterers sought to recover an overpayment of demurrage and despatch money accrued at the discharge port. In the alternative, the charterers sought a declaration that their liability to pay demurrage was no more than USD 18,245.34. The disputes centred on the proper construction of the force majeure clause 45 and the charterers’ lack of proper evidence to support their submissions. The facts The vessel tendered NOR at 01.30 hours on 14 February 2010, and laytime commenced at 01.30 hours on 15 February 2010. The vessel’s loading from the transshipment vessel took place from 14.24 hours on 6 March 2010 to 07.36 hours on 15 March 2010, and iron ore fines took place from 08.12 hours on 15 March 2010 to 07.30 hours on 24 March 2010. The owners submitted that laytime expired at 21.36 hours on 27 February 2010, and the vessel remained on demurrage until completion of loading, namely at 07.30 hours on 24 March 2010, totaling 24.020833 days. The charterers’ main argument was that the running of laytime was interrupted by an event beyond the control of the charterers, which was irresistible, unforeseeable, and the direct and proven cause of delay to loading, as listed in clause 45. In particular, without evidence (even after a peremptory order), the charterers argued that these interruptions took place: a. From 01.30 on 15 February 2010 (the commencement of laytime) to 10.55 on 6 March 2010 on account of the unavailability of cargo for loading, given temporary imposition of Government prohibition on the issue of mineral dispatch permits for the transportation of iron ore export; b. Further periods totaling 55 hours 13 minutes on account of the unavailability of cargo on board the vessel used for transshipping the cargo as a result of the unavailability and/or insufficiency of feeder barges c. Weather delays pursuant to PWWD exception; surveys under clause 34. The issues The main issue in this reference was whether or not the unavailability of cargo, or unavailability and/or insufficiency of feeder barges, and/or a Government prohibition amount to a force majeure event within the meaning of clause 45 on which the charterers relied to disclaim liability for the total balance of the demurrage claimed. The owners’ case was that neither unavailability of cargo nor the unavailability of feeder barges was a force majeure event within the meaning of clause 45. Held, The charterers have failed to discharge the burden of proof of the allegations made against the demurrage claim in both the main and in their alternative case. On the basis of the documents, the delay in loading was due to the temporary unavailability of the transshipment vessel. The unavailability of cargo was not intended to be an additional force majeure event. It would only be an exception to laytime running and demurrage accruing if it was the result of a force majeure event, as listed in clause 45. Charterers provided no such evidence. Moreover, the alleged Government prohibition, even if proven – which was not – was not one of the force majeure events listed, and so even if such alleged prohibition had caused unavailability of cargo resulting in delay in loading, this would not have availed the charterers under clause 45. Also, there was no proof that there was unavailability of cargo; it may have been unavailability of feeder barges for the delay of the vessel to commence transshipment, which was not mentioned in clause 45 as a force majeure event. The tribunal expressed the view that clause 45 was badly drafted, with missing words and grammatical errors. The tribunal added that while keeping in mind the intention of the parties and taking into account the surrounding circumstances, the clause would need to be redrafted by adding the missing words, as shown in brackets below, which were required to give meaning to the clause in the English language and to give effect to the intention of the parties: Charterers shall not be liable, if [a] force majeure [event], including acts of god, war, hostilities revolution, insurrection, acts of public enemy, sabotage, fires, floods, earth quakes, storms, landslides, bore tides, explosions, strikes, embargoes, blockage, [is the] direct and proven cause [of] . and-delay in loading or discharging including unavailability of cargo, whether in whole or [in] part. For the readers’ easy reference, clause 45 (FORCE MAJEURE) read as follows: “Charterers shall not be liable, if force majeure including acts of god, war, hostilities revolution, insurrection, acts of public enemy, sabotage, fires, floods, earth quakes, storms, landslides, bore tides, explosions, strikes, embargoes, blockage, direct and proven cause and delay in loading or discharging including unavailability of cargo, whether in whole or part”. The interpretation of the clause was restricted to the words used as force majeure events, because the word whatsoever was missing, and as an exception clause, any ambiguity would be interpreted against the party in whose favour the clause was intended. Accordingly, the charterers were liable to pay the demurrage as claimed, along with interest and costs. Final Award, 25 August 2011 Note: for more LMAA published awards dealing with similar disputes, check this free guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi https://jusmundi.com/en/ . These awards mostly come into the public domain through enforcement under the NYC 1958 .

London Arbitrations 1/22,2/22 & 3/22 provide helpful guidance on procedural rules regarding Partial Final Awards (deductions from hire based on The Kostas Melas [1981] 1 Lloyd’s Rep. 18), tribunal’s orders, security for costs and awarding costs. This practice area only discusses how the market reacted to the published summary and some general observations. To read the published summaries, visit the Lloyds Maritime Law Newsletter website. General comments and observations It serves as a good reminder that Charterers should carefully evaluate their case before making deductions from hire or bringing a counter-claim, thus avoiding exposure to costs even sometimes disproportional to the claimed amount. Likewise, a party could lose its case by failing to comply with procedural rules. For example, the tribunal may dismiss the Charterers’ counterclaim upon failing to comply with a peremptory order to provide security for costs [s. 41 (6), Arbitration Act 1996 “AA 1996”] and stay the party’s claim or such part of it as the tribunal thinks fit. This discretional power is given under para 17 (c) of the LMAA Terms 2021. Again, even if the claim succeeds, but the basis of the claim is flawed, e.g. a performance report that applies the wrong methodology, the Charterers could be exposed to costs (See London Arbitration 23/21 ). Lastly, a party’s expert relying solely on attacking the other expert’s comments and offering no assistance to the tribunal in deciding the issue may adversely affect the party’s case( see Expert opinion evidence- Speed – Consumption claim – Charter Party Disputes) . Therefore, a performance report (or WRC’s comments) is not the end of the matter. It requires much more to pursue a claim in arbitration successfully. “In good faith” Regarding the words” in good faith”, in some previously settled cases, the parties referred to London Arbitration 1/22; charterers argued that these words have no effect in the context of a speed and consumption warranty. Alternatively, the words “in good faith” have not the effect of negating any warranty, as happens with the words “without guarantee” (see The Lipa ). However, Owners may rely on The Lendoudis Evangelos II to assert that only significant discrepancies justify that the description was not given in good faith. In a recent case, the tribunal did not have to decide this issue as the Charterers’ claims failed for other reasons. Further, it is unclear whether the Charterers made any submissions on this point when pursuing their counterclaim later in London Arbitration 2/22. However, the tribunal likely accepted the Owners’ application for security of costs because they had a strong defence or Charterers a weak case on the merits. Turning to the assessment of costs, para. 8 of LMAA SCP 2017 states that “the arbitrator shall assess and award costs on a commercial basis having regard to the nature of the reference…” And s. 61(2) “AA 1996” provides that “Unless the parties otherwise agree, the tribunal shall award costs on the general principle that costs should follow the event except where it appears to the tribunal that in the circumstances this is not appropriate in relation to the whole or part of the costs.”

Lord Hamblen provides his personal insights as a helpful basis for thought and guidance to those performing as experts and play a very important part in dispute resolution, whether that be through settlement, mediation, arbitration, or litigation. ( https://www.supremecourt.uk/docs/ewi-speech-may-22.pdf ) Some ‘do’s’ and ‘don’ts’ of the experts were summarised in paras [23]-[35]. General observations-comments In a “speed and consumption” case that was resolved through arbitration, the claimants’ expert made most of the ‘don’ts’ when responding to the tribunal’s queries to make a finding of fact, i.e. about the applied methodology that adversely affected the claimants’ case. In another “speed and consumption case”, the tribunal allowed expert opinion evidence. For example, para 5 (j) of LMAA SCP 2021 provides that “expert’s reports shall only be admissible with the permission and subject to the directions of the tribunal”, and the arbitrator may, at his discretion, vary the provisions of this procedure (see para 9 (a)- (d)), as happened in London Arbitration 23/21. While under the LMAA Terms 2021( https://lmaa.london/the-lmaa-terms/ ), para 15 states that “it shall be for the tribunal to decide all procedural and evidential matters..” and in addition to the discretionary powers conferred by the Arbitration Act 1996( https://www.legislation.gov.uk/ukpga/1996/23/contents , since the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense(s. 1 & s.33 of AA 1996), para 17 (a) gives the tribunal the discretion ( “may”) to order whether expert evidence shall be called. And according to s.34 (1), “It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter”, having also regard to s.33 “the general duty of the tribunal”. In this case, that the tribunal allowed expert opinion evidence, one of the parties’ experts relied solely on attacking the other expert’s comments and offered no assistance to the tribunal in deciding the issue, which again adversely affected the party’s case. Notably, the purpose of having expert evidence is to assist the arbitral tribunal in its decision-making process and not to undermine the process. The tribunal criticized the expert for his conduct. That again reinforces the comments made in bold here: https://www.charterpartydisputes.com/london-arbitration-speed-and-consumption-claim-failed Therefore, a performance report (or WRC’s comments) is not the end of the matter. It requires much more to pursue a claim in arbitration successfully.

Reflections upon reviewing 1000 arbitration reports under the LMAA Terms (1979-2023), Prokopios Krikris FCIArb, LMAA Supporting Member Over 1000 LMAA award summaries under the LMAA terms dealing with disputes that arose under charter parties or bills of lading contracts, contracts for ship sales, shipbuilding and repair, and other agreements are currently available online. The London Maritime Arbitrators Association (LMAA) has shared on their website two tables that set out statistics for the number of appointments received, arbitrations run, and awards published. The statistics cover these periods: (1) 1983-1996 ( LMAA-APPOINTMENTS-AND-AWARDS-1983-1996.pdf ) and (2) 1996-2023 ( Statistics-up-to-2023-for-publication.pdf (lmaa.london) Approximately 20-25% of the cases referred to arbitration proceed to an award. The parties usually settle the case during the various stages of the reference. Less than 5% of these awards will likely be published as a summary in Lloyds’ Maritime Law Newsletter (LMLN), the only newsletter that regularly includes anonymized LMAA summaries. LMLN published the first award summaries in 1979. My guidebook “ charterpartydisputes.com/wp-content/uploads/2023/03/A-LIST-OF-890-LMAA-PUBLISHED-AWARDS-1979-2022-PROKOPIOS-KRIKRIS.pdf “ provides in chronological order the awards from 1979-2022 ( circa 890 awards), and in 2023, LMLN published 18 arbitration reports. In total, there are over 900 award summaries in LMLN up to date. In the guidebook, the readers can find an overview of the common issues involved in these awards under ten major categories: 1. Arbitration Practice, 2. Laytime and demurrage, 3. Hire payment- lien- redelivery- repudiation, 4. Speed and Performance, 5. Off-hire, 6. Bunkers, 7. Clause 8( NYPE), 8. Cargo Claims, 9. Stevedores and 10. Extra insurance. Jus Mundi Jus Mundi shares full copies of LMAA awards on their website. It seems that these awards mostly come into the public domain through enforcement under the NYC 1958. Article VI provides that “To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply: The duly authenticated original award or a duly certified copy thereof; …… “ The operative provisions of the Convention have been transposed into the law of England and Wales by Part III of the Arbitration Act 1996. In brief, the published awards in Jus Mundi ( Jus Mundi | Search Engine for International Law and Arbitration ) illustrate some procedural issues concerning (i) default appointments; (ii) challenges to jurisdiction, (iii) preliminary issues- applications for Partial Final Award (The Kostas Melas) and admitted sums due, and (iv) party’s failure to cooperate & participate in arbitration. Respondents chose not to participate in the arbitration The tribunal’s approach in conducting the proceedings was to be mindful of its duty under section 33 of the Arbitration Act 1996. Tribunals did their best to give Respondents the opportunity to put their case, and also to avoid unnecessary delay (conducting a balancing exercise). In particular: The tribunal asked the Claimants to reconfirm that the orders were communicated to the Respondents; The tribunal gave sufficient notices/ orders to the Respondents before issuing an order in final and peremptory terms- s.41(7), Arbitration Act 1996 was the preferred sanction for non-compliance; Prima facie, it was for the claimant to satisfy the tribunal as to the validity of the claim advanced; The tribunal rejected /disallowed any parts of the claim or its amount in respect of which was not satisfied; It was not its role to do the Respondents’ job in defending the claim. The tribunal asked the claimant to submit further evidence and clarifications when required. If the defending party fails to participate, the tribunal must test the evidence to satisfy itself that the claimant has a case. A strange and uncommon case that illustrates the tribunal’s challenging balancing exercise ( avoid delay vs give an opportunity to put his case) and how efficiently dealt with it: London Arbitration- managing unnecessary delay – Charter Party Disputes

Some frequent issues arise from trading in ice ports concerning navigation, tugs, pilotage, insurance, dead freight, laytime, off-hire or damages, indemnities, and many others. For example, a previous post in this blog discussed a decision of a London tribunal on whether the ‘frozen ballast’ is sufficient to interrupt laytime ( Frozen ballast: is it sufficient to suspend laytime? – Charter Party Disputes ). In a previous arbitration decision, some elements of the parties’ claims and counterclaims concerned a breach of the performance warranties, whether the vessel was seaworthy, and whether the Charterers were entitled to make deductions from hire about off-hire & damages. The issues The vessel was chartered on an amended NYPE form for an extended period. The charter contained additional clauses concerning the payment of hire (grace period, deductions from hire, etc.), the vessel’s speed and consumption warranties, trading limits- intended voyage, while clause 25 of the printed form was deleted. The vessel arrived at the first loading port on 29 January. She left for the 2nd loading on 31 January to load additional cargo, but she never reached that port. Having become beset by ice and asked the assistance of an ice-breaker, it was decided to return to the first port to complete loading, given the poor performance experienced when following the ice-breaker. Accordingly, on 14 February, she started her voyage for the discharging ports. Later, the Charterers failed to pay hire instalments saying that they were entitled to make deductions about off-hire and damages due to ship’s deficiencies. Finally, on 22 March, the Owners withdrew the ship. The Charterers treated the owners’ withdrawal as a repudiation, and the Owners argued the Charterers had repudiated the contract. The decision Inability to reach the second loading port One of the engines stopped on the vessel’s way to the second loading port since the camshaft had sustained bearing damage. The one operating engine produced limited brake horsepower, and after the ice-breaker freed her, the vessel experienced difficulties following the ice-breaker up the channel. The Owners submitted that: (1) even if the engines were capable, the ship could not make the passage safely. Alternatively, (2) even if the ship could make the passage with the engines producing their design output, there was no obligation of performing the ship’s engines at any output power than that required to satisfy the speed warranty in the charter. The printed warranties of efficiency and fitness were subject to the typewritten performance clauses. The tribunal rejected the Owners’ arguments. If the vessel had two engines producing the design output, the ship would get to port safely. The tribunal considered the below: The ship’s Ice-Class (class 3) was irrelevant when proceeding under the escort of the ice-breaker. The Ice Class related to strengthening the ship’s hull with the view where some forcing ice might be involved. The Ice-breaker broke up the ice into pieces of a size that would likely not cause any material danger to a ship. Ice class 3 ships did transit at that time. Although one vessel was damaged, the Owners have implicitly accepted such risks by trading to that ports. An opinion from the locals, who had a great experience and the charterers’ expert, supported the charterers’ position. The tribunal also rejected the Owners’ second argument basis the proper construction of the charter party. Based on the agreed intended voyage in the charter and looking at the contract as a whole, the seaworthiness & fitness obligations were fundamental to this charter. Deductions from hire The Charterers did not pay two hire instalments on 7 & 22 February. Instead, they presented an invoice showing a balance due to them by deducting (1) loss of profits and (2) withholding freight some $60,000 by shippers on cargo loaded at 1st port. As a security of their claim, shippers withheld freight payment because the Owners failed to load the additional cargo at the 2nd port and sued both parties. The Charterers argued that the deductions were made bona fide and on reasonable grounds. Even if Charterers made deductions on a false basis, it could be shown that the Charterers were entitled to withhold hire on other grounds and could rely on that to justify and defeat Owners’ right to withdraw the ship. The tribunal rejected the Charterers’ argument. An Owner had to be entitled to rely upon a Charterers’ overt declaration of reasons for his action. He cannot then seek to change them. The Charterers were not allowed to make these deductions. Thus it could not be made on reasonable grounds. Since this was a period charter, and the Charterers offered to arbitrate the disputes, the tribunal could not conclude that the Charterers’ conduct was repudiatory. Comments Deductions in good faith and on reasonable grounds Deductions of hire had to be made in good faith and on reasonable grounds, and a charterer could be called upon at short notice to show that its deductions were so made. If it failed in that respect it was liable to have an award made against it ( The Kostas Melas [1981] 1 Lloyd’s Rep 18).The ‘Kostas Melas test’ recently applied in: London Arbitration 5/19 that the charterers’ defence to the owners’ application amounted to no more than saying that as long as they asserted that they had cross-claims and said what those were in broad terms, then no partial final award should be made. That was wholly to misunderstand the decision in The Kostas Melas . London Arbitration 1/22 (speed claim deduction) where the tribunal explained that to meet the ‘Kostas Melas test’, the Charterers had to show a prima facie case for why their deduction was made bona fide and on reasonable grounds. For speed claims ( as damages or as off-hire), many other arbitration decisions deal with the deductions from hire: London Arbitration 26/19, 9/18, 4/11, 5/08, 9/07, 17/02, 10/16, 17/19, 17/14,6/06 ( See Speed and Consumption Claims: A practical perspective and statistics – Charter Party Disputes page 10)

Delayed departure due to ice conditions vs Masters’ unreasonable conduct – whether Owners or Charterers are responsible for the waiting time and extra berth charges The dispute The Owners were asserting a claim for detention due to the waiting time to depart the Vessel, coupled with additional berth dues. Their argument hinges on a breach of the warranty to trade the Vessel to ice-free ports. According to the Owners, substantial evidence indicated icy conditions at this port, which caused delays in the Vessel’s departure. The Parties’ contentions in brief The Charterers challenged the Owners’ claim on multiple grounds: Laytime ends upon completion of discharge. Any risk of delay in departure thereafter falls on the Owners. The Charterers argued that the pictures provided do not show the presence of navigational ice but rather “nilas,” which can be effectively cleared away by tugboats. They contended that substances like nilas do not meet the criteria for ice, thus rendering the port non-ice free. The Charterers asserted that upon the Vessel’s arrival at the port, the Owners assessed the port condition and chose to proceed for berthing without raising any objections. They argued that the Owners’ subsequent conduct altered the terms of the Charterparty and therefore, they were estopped from bringing this claim now (arguments re variation/ estoppel). As per the agents, other Vessels departed without encountering any delays. They attribute the delays in departure to the masters’ unreasonable conduct. Additionally, photographic evidence clearly depicts another ship sailing from the port. These vessels were similar in size and type, and no damages were reported. The Charterers argued that the alleged extra costs did not arise from an independent or additional obligation brokened by them. They contended that the matter was governed by the laytime terms, and that was the Owners’ sole remedy. Even if there was any delay in departure, they asserted it was due to the masters’ failure to depart timely. The Owners’ replied as follows: The Owners contended that this was not merely a laytime dispute, but rather a claim for damages for detention and/or quantum meruit. The Owners asserted that according to published ice charts, there was indeed a presence of ice. They emphasized that the parties explicitly agreed for the Vessel to only call at “ice-free” ports. They argued that there is no technical distinction between thin or thick ice, only whether the port qualifies as ice-free. The Owners maintained that the conditions at the time of the Vessel’s arrival have significantly changed compared to the ice conditions prior to departure. They denied that the Owners varied the terms of the charter-party. The Owners argued that they reserved their rights to bring a later claim by calling this ice port, thus constituting a breach of the warranted terms. They believed they had a valid claim for damages for detention and/or, alternatively, a quantum meruit claim for performing this extra-contractual service. The Owners said that they were not aware of the agreed terms or the conditions under which the other ships departed, including whether damages were sustained or not. Regardless, they emphasized that the master, being on the spot, was best positioned to assess the dangers and make the final decision regarding the safety of the Vessel and Crew. They argued that it was not for the Charterers to second-guess the master’s decision taken in the circumstances. The Owners asserted that the master acted reasonably in the given circumstances. They argued that the extra berth charges arose directly from the Charterers’ breach to call an ice port, and thus, these costs should rightfully be attributed to the Charterers. Note: These are just observations and not the author’s opinion on the matter.

According to laboratory analysis, the Charterers’ supplied bunkers at the loading port were off-spec (TSP above limits). Owners demanded the Charterers to de-bunker and supply bunkers that meet the agreed specs in the charter party. Charterers denied liability and requested owners to mitigate by taking reasonable steps to prevent further losses. The procedure: 1st test in a lab, 2nd test in a lab, 3rd test on samples from bunker tanks in lab, de-bunkering. 1st bunker sample analysis Bunker sample analysis per ISO 8217:2010, which deals with marine fuels: the fuel shall conform to the characteristics and limits given in Table 1 or Table 2 when tested by the methods specified. The fuel analysis report reflects the TSP value was outside specification limits and recommends whether to use it or not; the “Operational advice”. As said, “ TSP or Total Sediment Potential (referred to in ISO 8217 as “total sediment aged”) is a measure of how much sediment (asphaltenes) any given fuel oil will produce in long-term storage. Thus, TSP does not indicate the presence of contaminating materials but measures the fuel oil’s tendency to precipitate sediment in, for example, the fuel filters of a marine engine “- ( The Nounou [2020] EWHC 1795(Comm), [12]). Claim Notification Owners notify the Charterers that the supplied bunkers are off-spec; they refuse to burn them and request same to be disposed of (de-bunker) and replaced with suitable fresh bunkers as agreed in the charter party. In turn, Charterers pass this information to the bunker sellers and maintain a back-to-back position. A London tribunal described it as follows, “ The charterer is the party who entered into the contract with the supplier. He would be able to negotiate its terms and to bring any action for breach of the contract of supply. The charterparty only made commercial sense if the owner had a proper contractual remedy against the charterer and the charterer had the contractual remedy against the supplier ” ( London Arbitration 1/88 ). However, a tribunal decided differently under this wording, e.g. “[t]he charterer shall not be responsible for loss..arising out of acts or omissions of..bunker firms.., although engaged by charterers shall be deemed to be the servants of the owners..” ( London Arbitration 15/00 ). And the perennial problem is: that usually, the terms are not back to back in the different contracts. Therefore, Charterers seek to follow the T&C under the bunker supply contract and, if possible, maintain a back-to-back position in the separate agreements. Documentary evidence Owners present to Charterers the bunker witness sampling statement and BDN, which refers to the testing sample from the ship’s manifold (a “representative sample”). In addition, Owners ask for copies of the bunker purchase contract, including the bunker surveyors’ documentation and analysis report. At the same time, Owners demand written instructions from the Charterers on handling their supplied bunkers as the property remains vested in the Charterer until redelivery. Discussion on re-testing & Additional bunker supply Depending on the 1st analysis, Charterers resist conducting another bunker analysis on a different sample. If that fails, Charterers invite the Owners to join another bunker sampling/testing and request the details of the appointed surveyors instructed for this task. Another issue which arises will be when the ship is almost ready to depart towards the next port and the ‘good’ fuel on board is insufficient to perform the voyage. Who will deal with it? Charterers supply LSDO but reserve their right to claim damages. Owners will reject this claim because, in the circumstances, it is reasonable not to use off-spec bunkers pending re-testing. Charterers put forward other defences based on seaworthiness/ due despatch obligation. Collect samples Meantime, Charterers’ representatives appoint local surveyors to go on board and draw samples from the supplied off-spec bunkers for testing at a reputable independent laboratory. The Charterers omit to provide specific instructions about the testing methods. How and where to draw samples would require expert advice & guidance. Bunker suppliers are invited to attend but refused by alleging that the retained barge sample must be tested and the results to be final and binding on the parties. Because this is  what the parties agreed to under the bunker supply contract. Experts appointed Test results considered   Charterers instruct marine fuel experts (and chemical experts- See The Nounou ) for guidance and reject the Owners’ allegations that bunkers remain unsuitable for burning in the Vessel’s engines. Owners appoint experts to assist them in responding to various technical arguments Charterers’ experts raise. However, Charterers insist the Owners burn the fuel and follow the recommendations of their lab (see para 1, the “Operational advice”). Meantime, Charterers provide no specific instructions or directions but repeat what the Owners’ lab recommended (avoiding an indemnity claim?) in the operational advice. Further, Charterers argue that the initial analysis was not conclusive evidence or binding on the parties. Meanwhile, experts consider the fuel testing results, the witness sampling, the delivery notes, the charter party, the bunker supply contract, and survey reports. In addition, they ask the Owners & Ch Engineer (C/E) to advise on the steps taken in drawing the samples, including the condition of the cubitainer/ sampling equipment. What if there was an error by C/E in taking samples that affected the samples or analysis? Or does the C/E fail to witness the sampling on the barge side (a breach of the relevant clause)? Not uncommon during the COVID 19 pandemic, the bunker barges did not allow the ship’s crew to witness the sampling at the bunker barge manifold. Obtaining confirmation Charterers check whether Owners agree to test the samples at the proposed laboratories from bunker suppliers. Testing methods- expert advice At this juncture, marine fuel experts recommend an additional testing method on samples (Total sediment accelerated & density, Sulphur, Carbon, Vanadium) to compare the outcome with the analysis of the initial sample; input from Owners’ experts is sought. If the delivery samples were taken by continuous drip from a different end of the supply hose, the test results should usually provide similar quality characteristics. Upon opening a sample, a strong/ non-typical smell will be something of further consideration. Density results may suggest that the samples were not from the same fuel source. As observed in a recent case, “[ t]he analysis of the composite sample prior to loading revealed an on-spec level of TSP because the samples used were unrepresentative of the product loaded on board” . Will this assist the Charterers in supporting their claim against the suppliers? (Tortious liability was considered to escape the narrower contractual limitations). Disputed sample Owners maintain their position, i.e. the charter party terms should be strictly followed and provide which samples must be tested. Owners request that the acceptable representative samples be tested and taken at the ship’s bunkering manifold. Further, in the case of 2nd analysis, both parties must agree on the instructions, the testing methods and the laboratory to carry out the tests. Otherwise, it will be open to challenges. Sampling conducted -2nd analysis in progress Finally, surveyors collected the samples for analysis and sent pictures. Some issues worth considering are: (a) whether it is possible to carry out the analysis based on the method proposed at this port (lab availability?) and (b) whether this is a method agreed upon by the charter party. For (a), not always. The parties extensively discussed the witnessing seals breaking and the test’s scope, which delayed the entire process. Usually, experts propose additional analysis on fuel components like Ash, TSA, TSP, Density, TSE, Sulphur, Metals, etc. For (b), Owners will reject any such proposal as the charter party will usually not refer to it. Conflicting evidence Charterers wait for their surveyor’s preliminary advice and discuss with the expert for further guidance on how to proceed. At this stage, as observed in other cases, the suppliers provided the lab analysis of the barge retained sample, showing that the fuel specifications are within specs or marginally below the maximum allowable figures (substantial discrepancies may call into question the source of the barge sample or the whole process of testing). Charterers asserted that the barge sample was referred to in the BDN and is a ‘representative sample’ within the meaning of the relevant clause. Also, the barge samples carry considerable evidential weight; as a London tribunal stated, “ Had they been taken, properly witnessed and acknowledged, analysis of them would have been of considerable weight ” ( London Arbitration 8/98 ). The documentary evidence proved that the sample was adequately witnessed and acknowledged. Despite that, the Owners argued that from the point of view of the evidence, the two sample analyses have more relationship and probative force compared to the incomplete test results in the barge sample. As observed in other cases, the suppliers provide a preliminary analysis of the bunker sample. If the point of dispute concerns the TSP results, they may only give an analysis of the TSP. That cannot assist the lab (or experts) in properly comparing the results of the various samples and concluding whether the barge sample was indeed taken from the same bunkers supplied. Mitigation plan In the meantime, the Charterers consider the following steps: de-bunkering and a mitigation plan. However, the Charterer will request Owners to burn the off-spec bunkers with prior trial purification conducted or de-bunker and seek to recover from bunker suppliers (obtaining advice from local lawyers) or their insurers. The following steps depend on the additional evidence submitted by all parties and the individual legal advice on the merits under the separate contracts. Meantime, Charterers reject liability and point to the Owners’ duty to mitigate. Parties are considering whether de-bunkering is allowed at the next port, when testing results will be available, including salvage selling of fuel and corresponding expenses. The regulations change occasionally, and getting approval for de-bunkering might be more challenging. In a previous case, the customs were on strike, so obtaining their permission was impossible. Charterers will raise these points for the trial purification: even if they have failed to provide suitable bunkers, the resulting loss or damage is subject to questions of causation and mitigation. The clause contemplates that Charterers are liable for loss or damage and includes the off-loading of bunkers. So, de-bunkering is not the only option, but one of the options if that is the reasonable step (expert advice required?), which is not unless trailing the fuel to determine whether there is a risk. Thus, Owners become exposed to a significant claim for the value of bunkers, time lost and other losses/ expenses. Owners’ concerns Apart from safety concerns, Owners consider issues of burden (reverse burden of proof), causation (owners to establish that the off-spec bunkers caused the damage) and mitigation (defend arguments on mitigation might be easier- the standard of reasonableness is not high). 2nd analysis The 2nd test results show that the fuel is off spec and not fit for use. The next steps? Charterers evaluate their position against Owners and Suppliers-   Whether it is possible to burn it without issues Charterers will request the bunker suppliers to cover all losses, including the de-bunkering and cleaning of tanks (or sometimes claiming betterment from Owners). In addition, Charterers will check whether there is salvage value (if discharged as sludge- no value) or it can be reconditioned (minimize exposure to costs). Finally, Charterers seek legal advice locally for claiming against the bunker suppliers and whether to test different bunker samples from the Vessel’s storage tanks to give more info or potential grounds to defend or pursue a claim. Based on the analysis, the expert may suggest a possible sampling error that affected the results and further testing to be carried out on samples from bunker tanks before de-bunker (a last resort). Further, experts may request a trial consumption of a small quantity to observe whether it produces sludge and is burned without risk. Owners oppose saying that the master has raised safety concerns and they cannot jeopardize the safety of the crew, ship and cargo. Charterers respond to this argument by saying that there is advice from experts and lab on how to burn the bunkers and if the crew cannot follow a simple instruction, that raises a point of “crew incompetence”- being Owners’ matter. Finally, experts highlight the difficulties in mixing fuels on board to bring them back “on-spec”; a typical inquiry made by the Charterers to the experts. Owners challenge any such proposal on different grounds, for example: “on-board blending carries extra technical challenges. The best practice is to blend the components ashore before delivery to the vessel” ( The Nounou, [23]) or that this is not within the ambit of the relevant terms in the charter party. Owners to mitigate- experts input Up to now, costs rise considerably Charterers assert that Owners must mitigate, and since experts guide how to treat the fuel safely, Owners must follow their recommendations and mitigate losses. Additionally, Charterers may propose an expert to attend the entire procedure and stay on board for further guidance and assistance. On the other hand, Owners will argue that the charter party clearly states that if the supplied bunkers are off-spec, the Charterers shall provide new bunkers that meet the agreed specifications (the word “shall” indicates a mandatory obligation). In one case, Owners further pressed that Charterers’ words or conduct evinced an intention not to be bound by the charter(relying on bunker supply contract) and their total or partial failure to perform obligations which have fallen due, i.e. by refusing to de-bunker & supply fresh bunkers. That being the case, Owners threatened to terminate the charter party due to the Charterers’ repudiatory breach. Also, Owners said that if Charterers & their experts that give recommendations are willing to provide a letter of guarantee for all losses/ damages sustained by burning the off-spec bunkers, Owners would consider burning the bunkers. Charterers said there is a difference between “burning” and conducting “trial” fuel purification. Lawyers instructed- additional costs Charterers instruct external lawyers to assist in both claims that arise under the separate contracts. The lawyers respond to the Owners’ request for de-bunkering, pursue the claim under the bunker purchase contract and consider the advice received from lawyers based in the suppliers’ country with the potential steps to secure the claim against the suppliers. Lien, unpaid bunkers- Costs in obtaining legal advice At the same time, another issue concerns the unpaid bunkers. Charterers seek advice on whether the supplier can arrest the Vessel for unpaid bunkers (off-spec) and potentially breach their obligation not to create or permit to be continued any lien or encumbrance in the Vessel. It depends on whether the courts have jurisdiction to grant an arrest where the ship is trading. Also, the local lawyers will advise whether it is lawful to withhold payment in the light of the dispute and potential options (payment to an escrow account?) to secure a claim against the suppliers, the time limit to bring an action and the procedures for commencing legal proceedings. Sometimes, this re-testing process may not be resolved by the due date of payment of the bunker invoice. Again, Owners must mitigate Charterers apply pressure on the Owners to accept their proposals to mitigate, alleging that they will redeliver the ship with bunkers as on board and leave Owners to sort it out, or Charterers will make an application to an English court for an order. Charterers will likely say that the local customs authorities request more information on the condition of the bunkers remaining in the tanks to decide whether to accept de-bunkering. And Owners have an implied duty of cooperation. Assume the parties agreed to test other samples from the Vessel’s bunker tanks. Then, Charterers will also consider with their experts on the testing & sampling method and if there are labs available in this country to carry out this task. If not, when and where the samples should send for further analysis? Is the Vessel engaged on a charter? How soon must a decision be taken? These are critical factors. De-bunkering plan? Meantime, Charterers evaluate with local correspondents whether it is possible to de-bunker. That may require further input if this is allowed locally. Agents and local correspondents or lawyers can advise further on the requirements of the port. At the same time, Charterers consider their options with the local lawyers at the de-bunkering port and set a strategy. 3rd sample analysis from bunker tanks Any challenges? Costs increase At this juncture, the parties focus on taking additional samples from the bunker tanks (how? any specific instructions?) for analysis in a lab. Owners may request written confirmation from the Charterers on certain conditions to apply before allowing the charterers to make any arrangements: samples drawn are not “representative samples”, the charterers will not rely on their analysis to bring any claim and the costs related to this sampling and testing, or any other delays, will be for the Charterers’ account.   It may be problematic if there is no lab to make the analysis, and it would require time for arranging the samples to be dispatched to another country. For example, the ship is scheduled to immediately depart from the port or committed to another employment that requires full bunkers stored in Vessel’s bunker tanks. The more the bunkers remain in the tanks, the more the parties’ liabilities increase, given the consequential losses due to delays/ deviation, etc. A potential solution is for Charterers to supply LSDO. Still, again this depends on the bunker tank restrictions, availability and the quantity of good fuel oil remaining on board at separate tanks. Thus, the process becomes even more challenging. Collecting samples The parties are arranging for their representatives to attend the collection of vessel tank samples. The procedure is to obtain samples from different levels of the bunker tanks (top, middle and bottom) without sounding pipes. The samples must be labelled and sealed, referring to sampling location, method and time—one set to be retained on board. Notably, there must be evidence of where, how and when those “samples” were taken ( See London Arbitration 8/98 ). Potential limitations in testing or analysis- Commercial considerations If there is no lab availability, samples will be sent to another country [X]. The previous samples tested or kept in the custody of the surveyors that attended the 2nd analysis will also be sent to the same lab in [X] Country, including the suppliers’ sample. All parties are invited to participate and witness the testing and analysis results. Charterers seek advice from their expert on the proper bunker sample method analysis, and experts may recommend a step-by-step procedure to avoid unnecessarily increased costs. The procedure may depend on the required time to provide the results, as the Vessel is due to depart from the port that de-bunkering is allowed, and parties need to decide whether to de-bunker there and avoid deviation costs/ delays. Meanwhile, Charterers continue to evaluate the costs and options to de-bunker, viewing the Vessel’s commercial program. Still, will the suppliers take any action for the unpaid bunkers pending the test results? Now the payment for bunkers is overdue. Additional evidence Based on observations from other cases, suppliers may provide supplemented evidence from another ship that received bunkers after the present supply and were within specs. Experts consider all the bunker sample analysis and form a view on the fuel quality/ characteristics. Whilst the suppliers’ evidence may not be admissible, parties will refer to it during settlement discussions. Pending results- how to reduce losses ? Now, the bunker sample analysis is in progress. Some parties have not witnessed it. Charterers are under pressure as they must decide their next steps due to the Vessel’s departure from the port. Charterers are still checking where to de-bunker at the best possible terms to reduce losses. 3rd analysis off-spec Whether responsibility can be shifted? The bunker tank samples were tested and show that the bunkers are not fit for use. Charterers now consider de-bunker but make last attempts to convince the Owners to burn these bunkers. Charterers will press the point of mitigation and that there is no risk of burning the bunkers. Also, the lab results are just indicative; the position differs when the fuel is heated/ used. If a purification test proves that there is no substantial amount of sludge, the fuel is stable and can be used. Suppose the test results demonstrate that pre-existing water in one tank affected the testing results or any other factor that falls on the owners. In that case, Charterers will argue that this is an Owners’ matter and Owners must cooperate for the benefit of both parties. For the former, what if the TSP results are high and segregating the wet layer at the bottom of the tank, the fuel would create issues if burned in any event? A critical consideration is when and where to conduct trial purification, avoiding increased risks and other claims due to a potential collision, grounding, etc. Parties focus on the points raised on mitigation/ proper interpretation of the charter Owners responded to the Charterers’ above points on mitigation and interpretation as follows: Interpretation There is little or no precedent for off-spec bunker issues. However, as a matter of construction: If, as alleged, the clause strikes a right balance and the commercial purpose favours a wider interpretation, it lessens the Charterers’ absolute obligation to supply bunkers that meet the agreed specifications. The repeated use of the word “shall”( i.e. Charterers shall supply) in the clause indicates that the obligation is mandatory. Also, Charterers would benefit by selling to Owners off-spec bunkers at higher charter prices than the purchase prices. But as a matter of principle, in construing a contract, it was to be presumed that the parties would not ordinarily have intended that either should be entitled to rely on his breach and obtain a benefit. Lastly, the expert’s advice or the lab recommendations cannot modify the express terms or the scheme of the charter or re-write the charter in the interests of commercial convenience for one party. Mitigation Charterers rely on general law principles on damages and misuse the concept of mitigation to impermissibly re-write the charter party, forcing the Owners to accept un-contractual procedures in burning off-spec bunkers. The purpose of the clause is to avoid such debate/ risks/ costs in the aftermath on whether the bunkers are suitable for use. That also brings commercial certainty. Further, Owners contended that the duty to mitigate does not extend to placing the safety of the crew, Vessel and cargo at risk. Besides, the hurdle of mitigation is not high. As argued, another factor to consider is whether the off-spec bunker quantity is substantial (i.e. would 800 mts compared to 150 mts make a difference? Experts may say yes), thus increasing the possibility of damage by burning it, even if it was found “slightly” off-spec. After all, the concept of mitigation applied only where a party was in breach, and the other had to act reasonably to keep its losses to a minimum, not to reduce the defaulting party’s losses. Also, the loss can be increased by mitigation, as here, the Owners provided a letter from the engine makers recommending not to use the bunkers as there is a risk of damage. Lastly, Owners said that by obtaining a quotation from the market from potential buyers of the off-spec bunkers, then typically, Charterers cannot sell the bunkers at prices above that offered in the market. Debunker- recover claims Charterers de-bunkered at the next convenient port, supplied fresh bunkers and sought to recover the expenses from their insurers and the bunker suppliers. However, each case is fact specific and does not necessarily end up in de-bunkering, and most disputes are settled. As noted, this happens because “ ..neither party has a truly representative sample of the fuel as it was bunkered. ” (‘Fuel Oil in Marine Engines and some Legal Implications’, 2000, Lloyd’s Shipping & Trade Law), while the above process adds to these findings more reasons for consideration. Below are some references for consideration: Time Charters, §12.7- 12.12 Carver on Charterparties,  §7-057, §7-060, §7-064, §7-066 McGregor on damages, Ch. 9 “Mitigation of damages” Septo Trading Inc v Tintrade Ltd (The Nounou) [2020] EWHC 1795(Comm)-Whether cargo of fuel oil complied with the contractual specification- TSP found over the maximum permitted value under ISO 8217:2010 Nippon Yusen Khaisa v Alltrans Group of Canada Ltd (1984 LMLN 116 3)- Charterers’ duty is absolute and not merely one to exercise due diligence; modern forms now specify the details of the bunkers required. London Arbitration 1/88 -the Charterers’ obligation to supply bunkers of proper quality is absolute. London Arbitration 8/98 -charterers are liable for delivering contaminated bunkers. London Arbitration 14/84-the cost of cleaning the sludge tanks is for the Owners; unless demonstrated that the fuel was of unusual specification. London Arbitration 20/16 -Owners can recover the cost of surveyors’ attendance on de-bunkering. London Arbitration 6/21-the fuel supplied by the charterers did not meet the specifications; held that slight differences could not justify the Vessel’s poor performance. The award was referred to support the proposition that a negligible departure is excused ( de minimis) . London Arbitration 15/00-fuel supplied did not meet specification, and Charterers successfully relied on exemption clause deeming bunker firms to be servants of the shipowners. IMO Resolution MEPC.96(47) Guidelines for the Sampling of Fuel Oil for Determination of Compliance with MARPOL 73/78 Annex VI or any subsequent amendments.

The vessel loaded her cargo in the Black sea, and the main dispute concerned a long period of 6 days which was said to be bad weather (gale warnings). Each party relied on a statement of facts produced by different agents, which showed other things. The second dispute concerned when time on demurrage ended, i.e. upon completion of loading or when the cargo documents were delivered on board the Vessel at the outer anchorage. The latter was immediately agreed upon, so the focus turned on the bad weather periods. Three Statement of Facts The vessel arrived on [xx] August and dropped anchor at OPL, waiting her turn to load at the inner anchorage from barges. Owners prepared their laytime calculations based on the SOF prepared by their agent, and the vessel was on demurrage before the long period of gale warnings in force that loading was suspended. The Charterers appointed a protective agent to check the SOF and weather stoppages a week after the vessel arrived. According to the Charterers’ agent SOF, there were periods of bad weather whilst the ship was waiting at OPL. Notably, the minor differences between the SOFs greatly impacted the demurrage amount since it determined whether the vessel entered on demurrage or not before the long period of bad weather. The submitted SOFs were silent on whether the operation was suspended at the inner anchorage and only listed the weather conditions at OPL: speed (18-23 m/s) and sea swell (1.0-1.5m). A third-party SOF was submitted by the Owners from a vessel of similar type and cargo loaded and showed that in some of the disputed intervals, the operation continued at the inner anchorage. Accordingly, on the balance of probabilities, had the subject vessel been at the designated place, loading would have continued during the periods in question, and therefore laytime should count. Lastly, the weather entries in the deck log, the Owners’ agent SOF and the 3rd party SOF were consistent. Significantly, in similar weather conditions, the Charterers SOF recorded some periods the operation was suspended due to gale warnings. Still, during the period the ship waited at OPL, it was not registered as a gale warning. No records of gale warning announcements were produced by the agent or the master or weather reports from a weather bureau to clarify this point. The parties contentions The Owners Owners contended that as the Charter party provided for loading per “weather working day”, the critical question is whether the loading would have been possible if the vessel had been in the inner anchorage at the relevant time. The burden of proof rests with the Charterers to show, on the balance of probabilities, that loading would have been so prevented. So far, the Charterers have not adduced irrefutable evidence to discharge that burden as regards bad weather periods and, absent precise wording in the charter party, their SOF is not the main evidence to calculate demurrage. In contrast, Owners said that their evidence was strong enough to disprove a fact in issue to the requisite standard of proof. Besides, since insufficient direct proof of the facts in issue was available, the Charterers adduced no circumstantial evidence on which the facts in issue may be inferred; likely, from the weather bureau or other ships as this is not possible on every port there. Owners’ alternative case was that, even if the vessel was not on demurrage during the long period of gale warnings, it is trite that if gale warnings had been issued, the time so covered did not amount to an interruption to laytime. This is just a threat and not itself bad weather. Also, the SOF provides some prima facie evidence of adverse weather, but it was doubtful if the weather prevented the operation; under similar weather conditions, the ship worked for some periods. Thus, the only inference drawn from the SOF is that other reasons prevented the loading. The Charterers The charterers said that various considerations militated against the proposition that the Charterers’ protective agent SOF should be ignored. The SOF produced by their agent was a contemporary document and the most persuasive evidence to calculate laytime or demurrage. Its evidential value is unquestionably strong, and, when signed by the master without notations, it is enough to discharge the Charterers’ burden of proof to the facts. Besides, it is not enough for Owners to say that the draft SOF was presented soon before the vessel’s departure and the master had no time to check it. Therefore, even if, as alleged, there were inconsistencies between the SOFs, these were within the masters’ knowledge, and as per standard practice, the master was expected to exercise reasonable care and skill before signing the SOF. Concerning the weather delays, the Charterers argued that the words “weather working days” are descriptive rather than exceptive, thus importing no causative connection with the delay or placing the burden of proof on the Charterers. The Charterers need only to show that there was bad weather, and the weather conditions prevailing at the time discharge that burden. Turning to the submitted SOF from another vessel, it must also be remembered that what might constitute bad weather for one vessel will not necessarily be the same for another, even though both are in the same port simultaneously. So, this is insufficient counter-evidence to reverse the truth of the evidence (agent SOF). Again, the general rule is that the party who asserts must prove, and the burden of adducing evidence falls on the Owners. Lastly, the Charterers had argued in the alternative that the periods excepted from their laytime calculations were also excluded by the Force Majeure clause. Settlement The parties agreed to reduce the demurrage amount from about 300k to 200k. Comment The two main interrelated issues that led to the dispute are (a) SOF discrepancies and conflicting evidence and (b) weather interruption vs weather exception clauses (burden of proof). Likely, the outcome would be different with a weather exception clause or a modified provision of the “weather working day” (as inserted for top-off operation) or if the master had not signed inconsistent SOFs under time pressure for the vessel to sail. For more information on past London Arbitration awards on SOF, download for free this guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris #BadWeather #Laytime #Mustread #SOF