Search Results

The master decided to alter course and speed within the Bay of Biscay to mitigate the effects of severe weather and to ensure the safety of the crew, ship and cargo. After that, the master stopped the ship for some hours to an area close to shore and less affected by the bad weather. The master reported damages on the deck. Charterers said that the ship was off-hire and/or claimed damages for this delay, i.e. the deviation and stoppage for some hours. Owners denied liability. Consequently, the parties entered into settlement negotiations. One of the parties asked my assistance in negotiating this claim. I provided comments in an effort to settle this case and avoid arbitration proceedings. Finally, the parties settled the case without incurring substantial costs to pursue or defend this case. The parties focused on the following points: The relevant provisions in the charter concerning off-hire or damages claims. Masters’ overriding authority. Contemporaneous documents proving the severity of the weather. Whether the ship was unseaworthy and/or the master failed to prosecute the voyage with the utmost despatch. Charterers asserted that the master was incompetent and was afraid to meet the weather ahead, which was not so bad for this particular period. In contrast, other ships did not stop inside the Bay of Biscay. The course of other ships in the area (this is not always relevant). It depends on many parameters. The WRC’s deviation calculations for the various manoeuvres inside the Bay of Biscay. Two weather routing companies’ advice on the prevailing weather conditions and their risk assessment by following the direct route or alternate route. Given the progress of settlement negotiations, there was no need to adduce expert evidence regarding the masters’ navigational decisions and incur further costs. Important Note: no further information can be provided as to the parties or their representatives or otherwise. #BadWeather #Deviation #Offhire #Routing

The MOA did not specify the substantive law of the contract. A panel of three LMAA Arbitrators considered this matter in a dispute that arose under a Memorandum of Agreement along with other issues referred to below. The tribunal held that although the MOA contained no express choice of law clause, there was an implied choice of English law, and it was determined that English law was thus the substantive law of the contract. The tribunal had to consider whether the Seller induced the Buyer to enter into the MOA and open the Letter of Credit in its favour by means of fraudulent misrepresentations. There is a lengthy discussion on the law of fraudulent misrepresentations that this short post does not refer to. The arbitration clause If any dispute should arise in connection with the interpretation and fulfilment of this agreement, same shall be decided by arbitration in the City of London, United Kingdom., and shall be referred to a single arbitrator to be appointed by the parties hereto. If the parties cannot agree upon the appointment of the single arbitrator, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the London Maritime Arbitrators Association. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place. If one of the parties fails to appoint an arbitrator, either originally or by way of substitution, for 2 (two) weeks after the other party having appointed his arbitrator has sent the party making default notice by mail, cable, telex or fax to make the appointment; the party appointing the third arbitrator shall, after application from the party having appointed his arbitrator, also appoint an arbitrator on behalf of the party making default. The substantive law The MOA did not specify the substantive law of the contract. By e-mail dated 19 October 2021 to the Parties, the tribunal noted that Section 46 of the Act provided as follows: Rules applicable to substance of dispute. (1) The arbitral tribunal shall decide the dispute— (a) in accordance with the law chosen by the parties as applicable to the substance of the dispute, or (b) if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal. (2) For this purpose the choice of the laws of a country shall be understood to refer to the substantive laws of that country and not its conflict of laws rules. (3) If or to the extent that there is no such choice or agreement, the tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. Prior to making its decision in this matter, the tribunal requested the Parties to make submissions on which conflict of laws would apply and which substantive law was to be applied. By e-mail dated 3 November 2021, the Buyer made submissions on the issues. The Seller did not respond. A clause choosing London arbitration is not without more and ipso facto a choice of English law but nevertheless it can in certain contexts constitute sufficient grounds for finding an implied choice of English law. A clause choosing London arbitration has been held to be such a strong indication and sufficient basis for finding an implied choice of English law where (a) the clause contemplates maritime arbitration in London, (b) the contract is in English, using legal expressions with well-known meanings in English law, and (c) the parties are of different nationalities and can therefore be presumed to have intended to choose the neutral substantive law of a major commercial and maritime law jurisdiction like England; see e.g. Oldendorff v Liberia Corporation [1996] 1 Lloyd’s Rep 380, 390 Clarke J, and Enka v Chubb [2020] 1 WLR 4117, §114 Supreme Court. All of these characteristics were present in this case. In any event there is a default rule that English law will be applied where neither party has pleaded foreign law (FS Cairo (Nile Plaza) LLC v Brownlie [2021] UKSC 45). There is also in the absence of contrary evidence (as to which none was presented here) a presumption that any relevant foreign law is materially similar to English law. Clause 6 of the 2017 LMAA Terms provides, inter-alia, that “in the absence of any agreement to the contrary, the parties to all arbitral proceedings to which these Terms apply agree: (a) that the law applicable to their arbitration agreement is English and; (b) that the seat of the arbitration is in England.” In light of the above, the tribunal held that although the MOA contained no express choice of law clause there was an implied choice of English law, and determined that English Law was thus the substantive law of the contract. On the other issues, the tribunal held that: The Seller induced the Buyer to enter into the MOA and open the Letter of Credit in its favour by means of fraudulent misrepresentations. The Seller made further fraudulent misrepresentations to the Buyer after contracting. The Seller procured payment under the Letter of Credit by means of fraudulent misrepresentations. The Buyer was entitled to damages and an indemnity as aforesaid for breach of Clause 8 of the MOA in a sum to be assessed by the tribunal in and by a further award. Declaratory award, 9 December 2021 Note: This website removes the names of the parties and the tribunal. For more information, you can visit: https://jusmundi.com/en

This case turned on the particular facts and the characteristics of the Yacht. However, the decision reflects the potential conflicting arguments in such cases, along with how the judge approached the expert evidence adduced by the parties to support their case. Parties should consider the expert’s qualifications and experience before appointing an expert to give evidence in each case. This claim concerns a transatlantic yacht delivery from La Rochelle, France to Bear, Delaware, on the eastern seaboard of the USA. The yacht was “VLARODA”, “designed for winds that may exceed wind force 8 (Beaufort scale) and significant wave height of 4 m and above”. The yacht had sustained damage during her voyage and the claimant brought a claim for damage alleging that the crew had chosen the wrong northerly route for crossing instead of the southerly route and failed to use proper weather routing, sailing into a storm. The defendant counterclaimed sums due under the contract. The central issue in the case was how and why the damage was sustained. Expert Evidence Both the weather and routing were the subject of detailed expert evidence. The parties were given permission to rely on expert evidence in the fields of (1) navigation/weather planning and (2) marine engineering. In both fields, the court approached the weight to be given to the opinion evidence, having first examined the qualifications and experience of the experts. Regarding the marine engineering experts, neither had formal engineering qualifications. Both were highly experienced and knowledgeable. They gave evidence in a way that promoted respect and confidence in that each listened carefully to questions, did not try to avoid or deflect them, gave considered answers and made concessions where appropriate. Turning to the navigation experts, the defendant’s expert qualifications and experience were of more relevance and carried more weight than those of the claimants expert who’s primary experience was as master of a variety of large tanker vessels. Although he also had extensive yachting experience and had served as sailing master aboard a Sea Cadets Square Rigger, he had never planned or undertaken a trans ocean voyage in that capacity. His experience as an expert witness was predominantly in the commercial field. He had no formal qualifications in meteorology (though I acknowledge that his Master Mariner ticket and his degree in Maritime Studies would both have involved a close study of the subject). By contrast, the defendant’s expert was a professional yachtsman who had planned and made numerous ocean passages. But to the extent that they differed, the judge found the defendant’s expert evidence more useful and more reliable and preferred it. The Northern route choice On the facts found the Judge held that the much shorter and more direct northern route via the Azores and Bermuda was a reasonable choice in November provided that it was properly planned and executed. Weather and route planning Based on forecasting available from the US National Weather Services (the “NWS”) and, by reference to that forecasting, it was alleged that the Halcyon crew had sailed VLARODA into “a storm” or “a low-pressure system which became a storm”. The proper course, it was alleged, would have been to have planned and taken a more southerly route and/or to have delayed departure.  The experts produced contemporaneous weather charts from the NWS. Of these, the most important were those issued the day before departure. These would have formed an important part of the crew’s decision making. The experts gave evidence as the “prudent” choice of route selection based on the predicted weather pattern.  The judge did not detect a great deal of difference between the experts and held that the route apparently decided upon (and taken) was the “prudent” route described by both, i.e. to head to the south of the low pressure system which was predicted to track (and did track) north east. A decision to head directly west into that system would have been lacking in prudence, or even reckless. But that was not what VLARODA did and there seems little to criticise in the planning aspect of the voyage. Such difference as there was between the experts seemed to lie in the decision to take a predominantly south westerly course in order to achieve the objective of staying south of the stronger winds and larger seas. Claimants’ expert view was that the course should have been due south and then west, i.e. two sides of a triangle. But this view seemed to give too little weight to the need to balance avoidance of stronger conditions with the need to make progress west. This was, perhaps, well-illustrated when it was pointed out that this preferred route plan would have ended up with VLARODA facing directly into a westerly wind, i.e. a headwind. The judge preferred the evidence of the defendants, which was grounded in their long practical experience of the exigencies of transatlantic crossings by yacht (as opposed to tanker). The judge concluded that the weather and route planning showed no lack of care or breach of duty. To express that in terms of the contractual terms, the planning was carried out “with professional care and attention” and was also congruent with “the best interests of the safety and protection of the vessel and crew”. The route taken and the decision to turn back to the Azores From day two the route was predominantly south west from the Azores. The wind was southerly and the log recorded that the course was changed back to a south westerly heading when the wind veered to WNW – a reasonable and seamanlike method of maximising the advantages to be gained from the wind patterns in an area of low pressure. Very importantly to the issues in this case, prior to the decision to turn back VLARODA had not encountered particularly strong winds or heavy seas. The average wind was Force 4 and the sea state was, for the most part, Slight. In other words, VLARODA did not sail into a storm, or anything approaching a storm. On the contrary, the conditions were nothing out of the ordinary and well within the warranted capabilities of the vessel. Against this, the claimant seized on some isolated entries in the log to support the proposition that for economic reasons and without weather information en route the crew had sailed into adverse conditions and then “panicked” and turned back. The submission that the crew did not have up to date weather information is also unsustainable. Why did the crew turn back? They had lost confidence in the yacht because it was “falling apart” (there were a number of observed defects). The judge attached particular significance and weight to the evidence of Mr Green (the defendant, an experienced yacht skipper) and that of the Claimants’ expert that the decision to turn back was the right one and “seamanlike”. This was the view of very experienced yachtsmen. In summary, the judge held that the planning and execution of the proposed transatlantic delivery were both carried out with reasonable care and skill. VLARODA might have been expected to suffer some wear and tear on the voyage. Instead she suffered more serious damage. But that was attributable to manufacturing defects. These were defects concerning the “finishing” of the yacht as opposed to her structure. They were not (as the crew feared) indicative of major failures. Nevertheless, in combination they were at the time reasonably perceived as serious and the crew’s decision to abandon or postpone the delivery voyage and return to the Azores was reasonable. There was no breach of duty on the part of the crew, let alone a repudiatory breach. Nor was that alleged at the time. On the material before him, the claim would have been better directed to the manufacturer. To read the full judgement, see here: Arnold v Halcyon Yachts Ltd [2022] EWHC 2858 (Admlty) (18 November 2022) (bailii.org)

This collision occurred within the pilot boarding area, just outside the dredged entrance/ exit channel to the port of Jebel Ali in the United Arab Emirates. Consequently, the claimant brought a collision action against the defendant that finally found her way to the UK Supreme Court, which had to deal with questions of real importance to mariners and to the effectiveness of the Collision Regulations in preventing, as far as possible, collisions at sea. As usual in such cases, the judge at first instance and the Court of Appeal sat with Nautical assessors ( Elder Brethren | Trinity House ); their role was to advise on matters of navigation and seamanship. This post only refers to a part of the Judgement that helpfully explains the vessel’s heading, course and bearing. The following extract is taken verbatim from the Judgement. “It will be necessary in what follows to make precise use of the words heading, course and bearing. None of them is expressly defined in the Collision Regulations. They are however words with a relatively settled meaning among mariners, as may be gathered from published nautical manuals and glossaries, and which it may be supposed that the Rules take for granted. The usage which follows has been checked with, and confirmed by, the Nautical Assessors, and is not a matter of controversy between the parties (see para [47]). Sometimes heading and course are used interchangeably, as meaning the direction in which the vessel is being steered. But for present purposes we think it better (and the Nautical Assessors agree) to distinguish between them as follows. The heading of a vessel is the direction (expressed as a point or number of degrees on a compass) in which she is pointing at a particular moment in time. So, for example, a vessel is on a heading of north if a horizontal line projected from a compass on her centre point through her bow points north. Used in that sense, a vessel does not have to be moving to have a heading (see para [48]). The course of a vessel is the direction, again expressed by reference to the points or degrees of a compass, in which she is moving. This may be through the water or over the ground. Course over the ground is sometimes called the course made good, so as to distinguish it from her course through the water. The judge uses course over the ground and course made good interchangeably. It is the course over the ground rather than the course through the water that matters for present purposes, as para 70 of the judge’s judgment makes clear. We use “course” in that sense. Where there is no wind or current the course of a vessel both through the water and over the ground may well be the same as her heading. She simply moves in the direction in which she is pointed. But this will not necessarily be so, as the Nautical Assessors have confirmed and the present case illustrates. Tidal stream, current, surface drift and wind, if present, will or may cause her course over the ground to be different from both her heading and her course through the water. Thus a vessel heading north in an easterly current will be on a course over the ground which is east of north, the amount of the easterly element being the product of the ratio between her speed (through the water) and the rate of the current. Broadly speaking, the slower the vessel’s speed and the faster the current, the greater will be the difference between her heading and her course over the ground….(see para [49]) Similarly, a wind may cause a vessel to make leeway, that is, to slide a little sideways through the water. This is almost invariably true of a sailing vessel (unless the wind is blowing from right astern) but can also be true of power-driven vessels such as high-sided container ships.. Since wind is described (unlike current) by reference to where it is coming from, a vessel heading north may have her course deflected east by a westerly wind. Leeway will produce a difference between a vessel’s heading and her course through the water. Sometimes leeway and current will act together to increase the difference between heading and course over the ground. Sometimes they may cancel each other out (see para [50]). Course used as above may describe the direction of movement of a vessel at a particular point in time. More generally course may be used to describe the overall progress of the vessel over a period of time, which may accommodate changes in her heading and speed. As explained below a vessel may be said to maintain her course despite significant changes in heading and speed, measured at particular moments in time.. (see para [51]) The bearing of a vessel, as that concept is used in the Collision Regulations, is quite different from her heading or her course. Bearing is an expression with various maritime meanings, but for present purposes compass bearing is the meaning which matters. It is the direction in which one vessel appears when viewed from another at a particular moment in time, expressed again in terms of the points or degrees of a compass…As the Nautical Assessors have confirmed, the compass bearing of one vessel from another may generally be measured with reasonable precision, by day or by night by radar and, when the vessels are in sight of each other, assessed visually by using a compass (see para [52]). Compass (or absolute) bearing is to be distinguished from relative bearing. This is the direction in which one vessel appears from the other, measured (usually now in degrees) as an angle from the viewing vessel’s heading, from zero (dead ahead) to 180 (dead astern)… (see para [53])”. Case: Evergreen Marine (UK) Ltd v Nautical Challenge Ltd [2021] UKSC 6 (19 February 2021)- See here: Evergreen Marine (UK) Ltd v Nautical Challenge Ltd [2021] UKSC 6 (19 February 2021) (bailii.org) #Routing

The below only refers to the weather experts’ input as to whether the experienced weather had any causative potency. In this case, the starboard leg of the oil rig “Cendor MOPU” was lost at sea off the coast of South Africa just north of Durban. At the time, the rig was being towed on a barge from Texas to Malaysia, with its legs in place and elevated in the air above the deck. The following evening, the remaining two legs fell off in quick succession. The experts agreed that the loss occurred because of fatigue cracking caused by the repeated bending of the legs under the influence of the motions of the barge as it was towed through the sea. The question was whether the loss was covered by the insurance or not. The answer depended on issues of causation, which largely turned upon factual evidence. The legs of this rig were unusual in that the fatigue life was controlled by the pinhole corners where there was a high stress concentration. DNV C Class was used to assess the pinhole corners, and the naval architects in their reports had set out the results of a spectral fatigue. The term “spectral” here referred to the spectrum of sea states by geographic area. As explained, this method was more involved than the “simplistic” fatigue analysis carried out prior to the rig’s departure from Galveston. It calculated the likely distribution of stress ranges based on actual wave headings, wave periods, and wave heights to be experienced along the route derived from long term wave statistics of the different sea areas passed through on the route. The purpose of these analyses was to assess how much of the fatigue life of the legs at the pinhole corners would have been expected to have been consumed during the voyage from Galveston to Lumut. At trial, much of the debate between the experts turned on these analyses. The differences in their results depended partly (but not entirely) on the data inputted , and in particular on the appropriate “motions analysis”. The motions analysis had to do with the state of the sea in the various sectors of the planned voyage. This in turn was largely based on hindcasts produced by the weather experts (a weather hindcast compared with the more familiar weather forecast is based on historic data). The significance of this input was that the action of the waves, and in particular the height of the waves, was responsible for the cycle of stresses imposed on the rig during its voyage. That determines how much stress there was, and how much of the fatigue life it would eat up (at para [40] of the Judgement). Case law : Global Process Sytems Inc & Anor v Syarikat Takaful Malaysia Berhad [2009] EWHC 637 (Comm)- see Global Process Sytems Inc & Anor v Syarikat Takaful Malaysia Berhad [2009] EWHC 637 (Comm) (31 March 2009) (bailii.org) – the case later reached the UK Supreme Court. On a separate note, it is not uncommon for different calculations in currents to occur among weather agencies depending on the method applied based on hindcast vs forecast data. Forecast data is used for future routes, whereas hindcast data is used for post-voyage performance analysis. Whether hindcast or forecast data were used requires consideration every time.

My article with the above title is now available in I-LAW: https://www.i-law.com/ilaw/doc/view.htm?id=436064 I Law has announced in LinkedIn ( https://www.linkedin.com/feed/update/urn:li:activity:7112426771857190913/ ) as follows: Expanding on the London Arbitrations summaries published in Lloyd’s Maritime Law Newsletter ( https://www.lmln.com/ ) this detailed analysis covers procedural issues which are of particular interest to arbitrators, maritime lawyers and ship owners. Drawing on a number of LMLN London Arbitrations summaries and Reports published in Lloyd’s Law Reports the author has conducted a thorough examination of London arbitration awards relating to speed and performance disputes and claims, going beyond the summaries to explain procedural issues having regard to LMAA Terms and the Arbitration Act 1996- https://www.legislation.gov.uk/ukpga/1996/23/contents Author: Prokopios Krikris, FCIArb, LMAA Supp. Member

In this arbitration, the Claimants claimed US$ 192,285.72 for payment under General Average contributions, for which they said the Respondents were liable. The dispute was referred to arbitration in London as agreed under the law and arbitration clause in the contract. Given the Respondent’s failure to participate, the arbitrator accepted the appointment as sole arbitrator with LMAA Terms 2017 to apply in the reference. The vessel was chartered under an amended NYPE 1993 and sub-voyage chartered under an amended Gencon 1994 form for a voyage “1sp Fangcheng/lsa at Mississippi River – int Associated Terminals Meraux Buoy (mile 85-87), and, in chopt, and 1-2sb in Houston” (the ‘Voyage Charter’). The intended cargo (as stated in the recap) was various consignments of different grades of barite ores, some bagged and some bulk, plus one single hold of crude talc ores. Fifteen different Congen 1994 Bills of Lading were issued in respect of the Cargo in draft form at Fangcheng. The ‘draft Bills’ identified between them, three different consignees (‘Cargo interests’). The Respondents were the named Consignees under the Bills numbered xxx(redacted) to yyy (redacted) . The draft Bills incorporated inter alia “ All terms and conditions..of the charterparty..” expressly that “ General average shall be adjusted…according to York-Antwerp Rules 1994, or any subsequent modification thereof, in London unless another place is agreed in the Charter Party. Cargo‘s contribution to General Average shall be paid to the Carrier even when such average is the result of a fault, neglect or error of the Master, Pilot or Crew. The Charterers, Shippers and Consignees expressly renounce the Belgian Commercial Code, Part II, Art. 148 ” Clause 12 of the Voyage Charter read as follows: “ 12. General Average and New Jason Clause General average shall be adjusted in London unless otherwise agreed in Box 22 according to York [1] Antwerp 1974 and any subsequent modification thereof… ” The Casualty Following the completion of loading at Fangcheng, the Vessel’s orders were to sail to Singapore for bunkers and then on to New Orleans (and thereafter Houston) for discharge. The Vessel departed the berth 1st June with a pilot on board and assisted by two tugs. While turning off the berth the Vessel made ground contact. Thereafter, it was found that the helm would only return to 5° to starboard. It was subsequently established that the rudder and steering gear motors (2) had been damaged. The Vessel then returned to the berth. As a consequence of the foregoing the Vessel could not continue the laden voyage. It was therefore necessary to tranship the cargo. The Declaration of General Average On about 8 June, the Claimants declared General Average, and xxx( redacted) was appointed as the General Average Adjuster. The expense of the transhipment exercise formed part of the General Average expenditure and/or sacrifice which was the basis of the liability on the part of the Respondents for which the Claimants contend. Following the declaration of the general average, the vessel was towed to xx port for repairs to the rudder and steering gear motors On about 28 June, the Respondents concluded and provided the Claimants a General Average Bond including among other terms that “this agreement shall be governed by English Law and the London Arbitration shall have exclusive jurisdiction over any dispute arising out of this agreement and each party shall irrevocably submit to the jurisdiction of the Tribunal” Voyage charterers, Charterers and Cargo interests entered into a Transshipment agreement on 22 June. Among other terms, it was agreed that “this Agreement and all claims between the parties in respect of the Cargo and/or under the Head Charter, Sub-Charter and Draft Bills of Lading, and any claims in relation to General Average, shall all be subject to English law and London arbitration under the latest version of the LMAA terms, with each Party appointing the same arbitrator for all disputes.” The cargo was duly transshipped, and delivered at the contractual destination.  The claimants refer to the Adjustment published on about 12 July and contend that the loss or expense claimed was properly allowed on General Average. Held, Having considered the relevant documents in this matter with care, the burden of proof was upon the Respondents to allege and to provide any actionable and causative fault in order to resist any liability to make payment of the General Average contributions which were now due. The Claimants were entitled to General Average expenditure and/or sacrifice such that the Respondents remain liable to make payment in respect of contributions due in respect of General Average. Wrongfully, and in breach of contract, the Respondents had failed and/or refused to make payment of the sums due and in respect of which they were liable. Accordingly, the said sums remain due, owing and payable, and the Claimants were entitled to recover the same in debt and/or by way of damages for the above-mentioned breach(es). By reference to the Adjustment, the sum due in respect of General Average contributions for which the Respondents were liable pursuant to the terms of the draft Bills and/or the Average Bond and/or the Transhipment Agreement was US$ 192,285.72. According to the apportionment of General Average the value relevant to the Consignees (xxx-redacted) the value is US$ 1,312,400. Based on 14.651456586% of the total Contributory Values, this equates to US$ 192,285.72 contribution. Award accordingly. Final Arbitration Award, 1 January 2020 This website removes the names of the parties and the tribunal. For more information, you can visit: https://jusmundi.com/en

Various disputes arose under an amended SUPPLYTIME 2005 form, as described below, that the parties referred to a panel of three arbitrators for determination. The three arbitrators were Members of the Baltic Exchange in the City of London and Full Members of the London Maritime Arbitrators Association (“the LMAA”). The reference proceeded by the exchange of written submissions (Claim Submissions, Defence and Reply submissions). With the Reply submissions, Owners made an application for the immediate determination of their claims. By way of analogy to the case of The “Kostas Melas” [1981] 1 Lloyd’s Rep. 18, the Owners submitted that they were entitled to a prompt determination of their claim for hire and disbursements, akin to applications for partial awards for hire on The Kostas Melas principles. The Charterers advanced separate grounds to resist this application. In the light of their findings, the tribunal made an award in the Owners’ favour. What follows is only a brief reference to the issues. The decision/ analysis was quoted almost as contained in the award. The dispute referred to the arbitration was the Owners’ claim for US$3,998,167.80 as outstanding sum under the charter party, together with interest at the contractual rate of 2% per month after the due date of each of the outstanding principal invoices. Alternatively, the Owners said they were entitled to interest to be assessed pursuant to section 49 of the Arbitration Act 1996. They also claimed their costs. The Charterers denied liability for the sum(s) claimed or any sum and asked the tribunal to make an Award in their favour: (a) declaring that the Charterers were entitled to rely on the force majeure provisions in Clause 32 of the charterparty as a defence to the Owners’ claims; (b) dismissing the Owners’ claims in full; and (c) ordering the Owners to pay all of the Charterers’ costs incurred in connection with this arbitration, including fees and expenses of the Tribunal, legal fees and expenses, witnesses’ expenses, and interest on all costs awarded. For completeness, the Clause 32 “Force Majeure” read as follows: Neither party shall be liable for any loss, damage or delay due to any of the following force majeure events and/or conditions to the extent the party invoking force majeure is prevented or hindered from performing any or all of their obligations under this Charter Party, provided that they have made all reasonable efforts to avoid, minimize or prevent the effect of such events and/or conditions: … (b) any Government requisition, control, intervention, requirement or interference; … (e) epidemics; … (i) any other similar cause beyond the reasonable control of either party. The party seeking to invoke force majeure shall notify the other party in writing within 2 working days of the occurrence of any such event /condition. Tribunal’s decision and findings The starting point was to determine whether it was appropriate to entertain the application for an immediate determination of the Owners’ claim on the basis of the submissions served to date. The Owners’ application was expressed to be pursuant to paragraph 22 of the Second Schedule of the LMAA Terms which provides: “22 Parties are at liberty to apply to a tribunal for directions which differ from those contemplated above, but any such application should clearly explain why it is appropriate for some different course to be followed.” In their response to the application, the Charterers raised four objections and that the tribunal dealt with each in turn. First, they said that the application was made in contravention of the procedural requirements set out in the LMAA Terms in that it had not previously been discussed with them. The Owners’ response was that their concern in this case was that procedural directions (specifically an order for exchange of LMAA Questionnaires) would be ordered before their application had been received by the Tribunal, thus defeating the application before it had been made. For that reason, the application was served simultaneously with the Reply Submissions. That seemed to the tribunal to be eminently reasonable in that, had an order for directions (i.e., for service of Questionnaires) been made in the interim, that would have defeated the application before it had been heard. Accordingly, the tribunal rejected this submission. The Charterers’ second objection was that, in the absence of an agreement between the parties to depart from the procedure set out in the Second Schedule, there was an obligation on both parties to complete the Questionnaires. The tribunal agreed with the Owners that, in this case, it was appropriate for a “different course to be followed” because they had all the information and submissions necessary to determine the Owners’ claim for unpaid hire and disbursements. The Charterers third argument, namely that the application was inappropriate, given the issues in dispute between the parties, and that it was appropriate that there be an oral hearing, the tribunal agreed with the Owners that each of the defences advanced by the Charterers in the Defence Submissions (including the “force majeure” defence) were capable of being determined on the basis of the submissions and the exhibits served to date and that no further evidence or submissions were required. The tribunal did not consider that an oral hearing was required for the fair determination of this matter. The Owners’ claim was based on uncontested invoices for hire and disbursements and determination of the legal defences asserted by the Charterers did not require an oral hearing. Therefore, the tribunal agreed with the Owners that the application was analogous to the determination of claims for unpaid hire under The Kostas Melas principles. The fourth argument advanced by the Charterers, namely that they were entitled to make out the remaining elements of their claim “by reference to the evidence and submissions required” was ill-founded. The tribunal agreed with the Owners that this was a straightforward claim and one easily capable of determination on the basis of the submissions and documents before them. The tribunal bore in mind that, of course, section 1 of the Arbitration Act 1996 provides: “The object of arbitration is to obtain a fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.”(out emphasis added) The Charterers have already had an opportunity to put forward their case in full through their Defence Submissions and the tribunal was in a position now to determine the merits of the Charterers’ defences. Accordingly, the tribunal had no hesitation in concluding that they should consider the application on its merits and on the basis of the submissions and documents presently before them. Thus, the tribunal turned to consider the three limbs of the Charterers’ defence. I “The commencement of arbitration proceedings was premature.” The tribunal agreed with the Owners that there are no preconditions to the valid commencement of arbitration proceedings set out in clause 34; it simply provides that “a party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice. There were numerous exchanges between the Owners and the Charterers in which the Owners sought a resolution of the dispute prior to the commencement of arbitration proceedings. In no way could it be said that the commencement of arbitration proceedings was premature. The tribunal rejected the Charterers’ assertion that they “replied constructively and honestly” to the Owners’ requests for payment. Their various responses did not explain when payment would be made and simply represented an attempt to delay (or, as the Owners said justifiably, “stall”), making payment. The tribunal noted the Owners’ position that they were entitled to commence and progress arbitration proceedings in order to obtain arbitration awards against the Charterers, in order that they can use the awards to claim under the Parent Company Guarantee issued by the Charterers’ Parent Company. Given the cash flow difficulties asserted by the Charterers, the Owners were plainly entitled to obtain arbitration awards so that they could then seek to obtain payment in respect of sums owed by the Charterers from the Charterers’ Parent Company. Therefore, the tribunal agreed with the Owners that not only were they entitled pursuant to clause 34 to commence arbitration proceedings against the Charterers to pursue their claim, but they were also justified in so doing. II “The commencement of arbitration proceedings is contrary to UK Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by COVID-19” The tribunal agreed with the Owners (for the reasons given by them) that the UK COVID-19 Guidance: (a) was not applicable to the contractual relationship between the Owners and the Charterers (neither party being a UK party); (b) was a guidance only, and did not affect the Owners’ rights and remedies available under the charterparty or at law; (c) in any event, even if the UK Covid-19 Guidance was applicable, it had not been breached by Owners. The Guidance was directed at UK companies and the UK economy, not to an international contract between the Owners and the Charterers, neither of which were UK entities. Moreover, the Guidance expressly stated that “it is not non-statutory guidance” and it was not intended to override “any specific … relief available …in the relevant contract … [and]… in law, custom or practice”. Even had the Guidance been applicable, the tribunal did not consider that the Owners were in breach of it. In refusing to make payment of the outstanding invoices (despite their contractual obligation to do so) and by failing to give any indication of the timeframe when payment would be made, the Charterers were effectively seeking an indefinite extension in the period for making payment of outstanding invoices, during which the Owners could not take any steps to obtain payment. That cannot have been the intention behind the Guidelines. III Force Majeure The tribunal agreed with the Owners that there was a need to establish a causal link between the force majeure event and the inability to perform. In this case there was no causal link between the alleged force majeure events complained of by the Charterers and the Charterers’ failure to pay the Owners’ invoices. The vessel was redelivered on 17th January 2020, before there had been any global impact of COVID-19 and before the initial lockdowns on Wuhan and other cities in Hubei Province in China were imposed on 23rd January 2020. The charterparty had been performed and concluded before the impact of COVID-19 and the only outstanding obligation is for the Charterers to make payment of the Owners’ outstanding invoices, which is not an obligation affected by clause 32. Most of the invoices fell due prior to 31st January 2020. There was no basis on which the Charterers could contend that payment of those invoices was “due to” or “prevented or hindered” by the impact of COVID-19. It was apparent from the Charterers’ Defence Submissions that the real reason that they failed to make payment to the Owners (the dominant and effective cause) is that they have “insufficient cash reserves” because of issues regarding the projects between them and [ x- Redacted]. “Insufficient cash reserves” is not a force majeure event and any delay in the “resolution of numerous change orders and related claims” or failure to receive payment from [ x- Redacted] cannot excuse the Charterers’ failure to pay the Owners’ invoices due under the charterparty. Thus, the tribunal agreed with the Owners that they are entirely separate contracts and the parties did not agree that the Charterers’ liability to pay the Owners’ invoices would be contingent on the Charterers receiving payment from third parties. Award accordingly. Final Arbitration Award, 2 September 2020 This website removes the names of the parties and the tribunal. For more information, you can visit: https://jusmundi.com/en

Perhaps no surprise that the Owners raised this unsuccessful defence to a counterclaim for underperformance in the recent London Arbitration 9/23 (published in LMLN). In London Arbitration 9/23, Owners contended that the Charterers’ counterclaim was time-barred due to delayed service of the defence submissions, based on their narrow interpretation of sub-para 5(g) of the LMAA SCP that applied to this reference. Therefore, the tribunal decided to deal first with this issue before considering the counterclaim. For the reasons found in the award summary, the sole arbitrator disagreed with the Owners’ contention and held that the counterclaim could be advanced. Readers can read more about this award on LMLN only. Regarding London Arbitration 9/23, the arbitrators’ conclusion on the issue was proper.. Sub-para 5(g) is clear in its effect and application. In addition to that stated in the summary, the full sub-para 5(g) spells out the procedure to be adopted to ensure that the tribunal will act fairly and give each party a reasonable opportunity of putting his case and dealing with that of his opponent, as mirrored in s.33 of the AA 1996, a mandatory provision of Part I of the Act. The Owners’ narrow interpretation of sub-para 5(g) – reading parts of the clause in isolation- would render sub-para 5(g) inconsistent with s.33 (a mandatory provision). LMAA ICP In the below LMAA ICP Arbitration dealing with the Owners’ claim for damages for detention, the Charterers raised the defence that the Owners’ claims were time-barred. The tribunal dealt first with this issue. The Charterer’s Lawyer has argued that ICP (2012) provides at paragraph 6 (b) that Claims submissions […] shall be served by the Claimant within 14 days of the appointment of the second member of the tribunal or the appointment of a sole arbitrator […]. The Claims Submissions were served on 28th August 2017 considerably beyond the laid down 14 days required under ICP (2012). The Charterer’s lawyer further argued that even if settlement discussions were underway, the Owners should have preserved its rights by applying for an extension of time in accordance with ICP (2012) paragraph 12. The Charterer’s lawyer added that the twenty-one day safe harbour provision otherwise applicable to a failure to comply with the ICP (2012) time limits, does not apply to claims submissions. This paragraph directs that the Tribunal shall dismiss the claim unless it would not be just to require service of claims submissions at that time but that any such determination must be made at the time the claims submissions were due. The Charterer’s lawyer accepted the benefit of the amicable resolution of disputes. However, it was submitted that there was no basis for determining that it would not be just to require timely submission of the Owner’s claim which was presented over four months after the time limit. The Charterer’s lawyer, therefore, submitted that even if, which was denied, settlement discussions had been continuing, as the parties had selected ICP (2012) for the resolution of any disputes, it was for the Owners to seek an extension of time to protect its position. The Owners failed to submit its Claims Submissions within the laid down period or seek an extension of time. The Owner’s claims were therefore time-barred and must be dismissed The Owners’ lawyers admitted late service of the Owner’s Claims Submissions but this they have said was because English law encourages parties to try to settle disputes amicably before resorting to formal proceedings. The Owner’s lawyers challenged the Charterer’s lawyer’s interpretation of ICP (2012) paragraph 12. As said, it provides that the Tribunal can give the parties 21 days to comply with a relevant step in the proceedings. The Charterer did not ask the Tribunal for an Order for the service of Claims Submissions and so none was made. Furthermore, the power to dismiss a claim arises where there is a failure to serve claims submissions which was not the case as Claims Submissions were served. The Owner’s Solicitor also drew attention to Section 33 of the Arbitration Act 1996 and added that Section 33 confers wide procedural discretion on the Tribunal and dismissing the Owner’s claims would be neither just nor proportionate. Held, ICP (2012) paragraph 19 (a) gives discretion to depart from the procedures (other than in respect of costs) in any case which the Tribunal considers to be exceptional. The circumstances of this case, with the disputed basis of the standing of settlement negotiations between the time of the arbitrator’s appointment and the service of Claims Submissions, the Charterer’s failure to seek an Order for compliance and the fact that the time-bar issue was not raised until service of the Defence Submissions, together present exceptional circumstances. Further, ICP (2012) provides for the application of English law and therefore the Arbitration Act 1996 with its requirements for the fair and impartial resolution of, and suitable procedures for dealing with, disputes. Justice and fairness would not be served by dismissing the Owner’s claims. For the reasons set out, the Owner’s claims were not time-barred. Final Award 15 February 2018 Note: For more information, please check on Jus Mundi https://jusmundi.com/en/ . These awards mostly come into the public domain through enforcement under the NYC 1958 .

Thanks to Voyager https://www.voyagerportal.com/ for raising this interesting question and considering my brief comments below on this exciting topic. Question: “What are the best practices you apply in your routine while working with demurrage? “ One must paint the whole picture of demurrage; knowledge of the entire process is key to establishing and applying proper practices while working with demurrage. Therefore, the “Applied demurrage practices” should be checked against the whole process: from pre-fixture negotiations to dispute resolution and process evaluation & improvement to add value. To address this question and for easy reference, the above image briefly illustrates the demurrage practices in my routine. In particular, it highlights the need for (i) good knowledge and understanding of market & trade practices, (ii) teamwork, i.e. collaboration with various departments within the company and 3rd parties, e.g. port agents, experts, P&I Correspondents, etc.,(iii) proper ship-shore communication and (iv) continuous process evaluation and improvement that adds value. Finally, on the right side, it reflects the whole process of demurrage, as follows. Pre-Fixture: consider amendments or incorporation of clauses or commercial terms to the contract; potential ambiguities or inconsistencies lead to disputes. Keep up to date with market changes and developments, e.g. new proposed clauses (see BIMCO) given the evolving emissions regime or for other matters, case law and arbitration awards, P&I Club circulars, seminars, etc. Pay attention to specific details or limitations about the expected employment by making proper inquiries to agents or other parties. For example, the delays at the JCC inspection area before or after leaving Black Sea caused significant demurrage disputes, the new proposed clauses dealing with decarbonisation require further consideration, etc. Post-Fixture: follow up with other departments on the proper performance of the contract, with particular consideration to notice provisions, cancelling clauses, Vessel’s nomination clauses (TBN) within the agreed periods and reconfirmation/substitution by other parties, compliance with the specific warranties given under the contract, declaration of port rotation (if any), etc. Also, guide the master constantly and ensure compliance with the instructions: when and where to tender NOR, whether to increase speed to arrive within a specific date/ time to tender NOR, inaccuracies in SOF or remarks to be inserted timely before the ship’s departure, documents to be submitted or evidence collected concerning potential disputes, etc. Demurrage Collection: comply strictly with time bar provisions, pre-conditions to pay demurrage, interim payments of demurrage, proper submission of documents along with your demurrage claim and consideration of special agreements upon preparing laytime calculations, e.g. cross-check with the Vessel’s operator and chartering team before issuing the demurrage statement. For example, the parties agreed to amend the laycan dates with NOR to be tender earlier or added another port of loading or discharging (reversible, shifting time?) or declared the demurrage rate with the Vessel’s nomination/ acceptance or reached a special agreement when the Vessel waited for orders or during the period of delay given that Owners exercised a lien for unpaid freight, etc. Dispute Resolution: this may become more complex and depends on many factors not referred to below. Again, it requires collaboration with other departments because, in most cases, the parties may settle easier when the commercial departments discuss the issue directly and preserve business relations. When this fails, how to resolve the dispute is a matter of further consideration having regard to the disputed amount, the dispute resolution options and the counterparty. Therefore, the dispute resolution provisions should always be carefully considered as these provisions may affect the party’s right to recover or significantly delay the claimed demurrage collection . For example, in some cases, the relevant clause contained pre-conditions to arbitrate, which prolonged settlement and payment of demurrage. In other cases, the clause was poorly drafted or included procedural arbitral rules unfamiliar to the parties. These prompted settlement after making discounts on the claimed demurrage amount. Entire Process Evaluation: highlight both the drawbacks and benefits of the process; continuous evaluation and feedback are essential features of this vital stage. Suggest potential corrective actions to prevent mistakes in similar cases, e.g. issues with contract drafting/ interpretation, lack of proper communication with the ship for SOF matters or other voyage instructions or collection of evidence in similar disputes, etc. Notably, I focus more on evaluating and improving the entire process; based on experience, this is an often neglected part by the parties leading to the same mistakes repeatedly. Besides, this is not without its challenges; likely a topic for another discussion. *The above list is not exhaustive.

In this LMAA Arbitration, the tribunal also considered three minor counterclaims. One related to a dispute about the vessel’s speed and performance. The Underperformance claim The charterers claimed $23,524.82 on the basis that there was underperformance on a voyage from Ponta Madeira to the South West Pass. They relied upon a X company’s report. D’s first response was that there was no speed or consumption warranty in the charter and therefore no claim could lie. This was because in Appendix A to the charter, which set out the description of the ship’s performance, appeared the words “all details about and without guarantee”.Y sought somehow to suggest that the charter did not accurately reflect the parties’ agreement. However, they did not claim rectification, a failure which itself would seem to be fatal to this contention. In any event, there was no basis for the argument. The fixture recap, although not containing the phrase in question, confirmed that all the terms and details were to be as per the “BTB” charter, i.e. the head charter which itself incorporated the “without guarantee” provision. That is enough to dispose of this point In addition, the X report did not approach the matter properly. Y referred to D’s criticisms of this report as being “doubtless well-trodden”. Whilst that description may be correct, if somewhat sarcastic, it is right because the criticisms are right. So, even absent the “without guarantee” point, Y had no basis for this claim. Final Award, 13 March 2012 Note: For more information, please check on Jus Mundi https://jusmundi.com/en/ . These awards mostly come into the public domain through enforcement under the NYC 1958 .

A balance freight and demurrage dispute arose under an amended GENCON 1994 voyage charter party for the carriage of bulk rice to two ports in West Africa. Each party appointed an arbitrator to determine the dispute with LMAA rules to apply. Of interest (as I rarely see this in other similar clauses), the “law and arbitration clause” included a particular arbitrator that the parties agreed not to be involved as an arbitrator in any dispute under the charter party. Proceedings commenced, but the charterers did not participate despite being given every opportunity to do so.[ Authors’ comment: therefore, the tribunal determined the owners’ claim based on their pleadings alone and the documentary evidence they have adduced to prove their case. However, the tribunal had to carefully review the laytime calculations and establish whether the owners’ case had been proved]. The tribunal accepted that reversible laytime applies between the two discharging ports, given the precise wording in the charter party. Then it remained to consider the main difference between the parties’ respective laytime calculations due to a long period of strike that commenced after the vessel arrived at the second discharging port, and owners made no allowance in their laytime calculations for the discharging operations being affected by strikes, i.e. all time counted as laytime or time on demurrage. As stated, this event triggered the General Strike Clause 16 (b) and the force majeure clause. The owners submitted that the force majeure clause did not apply because it concerned the provision of the cargo, which means loading . Consequently, as the dispute arose at the discharging port, this clause had no effect. The tribunal accepted the owners’ position, and thus it left to consider the impact of the General Strike Clause. Before considering this point, the tribunal noted that both parties omitted to exclude some adverse weather periods from their respective laytime calculations. That seriously affected when the vessel entered on demurrage. In particular, the owners believed that the ship was on demurrage when the strike occurred, but this was no longer the position by excluding the adverse weather periods[ Authors’ comment: surprisingly, the parties and their legal representatives ignored this apparent mistake, which would have likely resulted in settlement before or during the proceedings] . The owners raised various points to challenge the charterers’ case, alleging that a strike occurred and affected the operation at the port: first, the Receiver’s emails did not mention any strike; second, if that was known to the charterers, why did they not inform/ notify owners timely; and third, owners relied on SOF’s from other ships to support that discharging operations were not affected [ Authors’ comment: sometimes the SOF from other ships may be helpful, but this is not always the case. The Owners could have appointed a local protective agent and instructed local P&I Correspondents to gather more evidence, but they did not ]. Therefore, the tribunal had to consider the evidence put before it. As the tribunal found, the SOF from other ships did not advance the owners’ case. Instead, it could only be inferred that the vessel was delayed to get into berth as the other ships arrived ahead of it, as evidenced by the Receivers’ line-up. Thus, the tribunal considered the SOF prepared by the agents as the only hard evidence that records the vessel’s activities, and the SOF clearly recorded a strike period. In addition, the SOF carried the master’s signature and the ship’s stamp without any comment, thus being accepted by the master. The tribunal held that neither party properly prepared their laytime calculations based on the facts recorded in the SOF and the General Strike Clause 16 (b). Therefore, the tribunal drew up a laytime and demurrage calculation attached to this award and awarded the owners circa 190k demurrage. Award accordingly. Note: no further information can be provided for this Award. #Laytime #ReversibleLaytime #SOF