A Demurrage Issue
This case highlights a demurrage time bar dispute between Waterfront Shipping Company Ltd (the ship owner) and Trafigura AG (the charterer). The facts of this case are:
- A vessel of the Waterfront Shipping Company Ltd was chartered using the Beepeevoy 3 voyage charter party to carry a cargo of gas oil from New York to Vancouver.
- The vessel arrived in New York on July 18, 2005 and loaded a full cargo; discharge was completed at Vancouver on Aug 16, 2005.
- Reversible laytime allowed under the charter for loading and discharging was 84 hours, but time used for loading was 119 hours and for discharging was 86 hours. The ship owners could therefore claim 121 hours demurrage.
- The owners claimed USD 115,000/- in demurrage, under clause 23 of the charter party. This clause required demurrage claims to be presented to the charterers within 90 days of completion of discharge. Demurrage claims needed to be supported by documents substantiating ‘each and every constituent part of the claim’.
- The dispute, however, turned on the interpretation of clause 16 of the charter-party and its relationship with clause 23. Clause 16 allows the ship owner to claim for ‘additional time’ if the full load of cargo is not discharged within 24 hours or if the rate of pumping is not maintained at 100 pounds per square in gauge (psig).
- When claiming for ‘additional time’ the owners were required under clause 16 to provide an hourly pumping log signed by the vessel or charterer’s representative, showing the pressure maintained during discharge. If this was not done, the Master was required to file a note of protest to the shore terminal for failure to maintain the rate of discharge. The protest letter was required to be countersigned by the terminal.
- The owners presented their demurrage claims on Oct 26, 2005. This was within the 90 day presentation requirement
- On Nov 4, the owners sent another set of documents which they described as voyage ‘pumping logs’, but these logs were not signed by anyone. Therefore these logs did not qualify as a ‘pumping log’.
- The charterers applied for a summary judgement that demurrage is not payable as all necessary supporting documents to justify the claim as per clause 16 were not provided. The charterer claimed that the pumping logs were not relevant and that a note of protest was not filed to the shore terminal for not maintaining the pumping rate.
- The court ruled in the charterer’s favour as it said that clause 16 supplements clause 23. Therefore the charterers are under no obligation to even consider a demurrage claim if the 24-hour cargo discharge rule is exceeded unless the owners demonstrate with documentation that they are not in breach of their pumping warranty, and that the fault lies with the terminal. The court rejected the owner’s argument that there was no need to provide pumping logs at all under clause 23 because the owner’s claims were not dependent on these logs
The Lesson LearntFrom this case it is evident that one must read the charter party carefully and provide correct documents to support demurrage claims when due.