UK: Liability For Demurrage Under A "Liner Out" Voyage Charter: Construing The Provisions Of A Voyage Charterparty

Last Updated: 4 October 2012
Article by Daniel Jones and Peter Hazell

London Arbitration 1/12, LMLN 3 August 2012

This arbitration concerned owners' claim for loss of time due to delay in obtaining a berth at the port of discharge.

The background facts

The parties had entered into a voyage charter for the carriage of steel bars from Poland to Luanda in Angola. En route, the vessel also picked up a part cargo in Scotland. When the vessel dropped anchor in Luanda, a notice of readiness (NOR) was tendered. Shortly thereafter, the Scottish cargo was discharged at a private jetty. The vessel then had to wait some 11 days before a suitable berth became available, so that the cargo carried under the present charter could be discharged. Once at the berth, discharging was also delayed for a total of 10 hours waiting for trucks for the cargo. The owners claimed that the time spent waiting for the berth after completion of discharge of the Scottish cargo, together with the time lost waiting for the trucks during discharging, was for the charterers' account.

The charterparty was contained in a recap and the charterers' executed Gencon 94 pro forma. The dispute hinged on the fact that the terms of the recap were apparently at odds with the terms of the pro forma. The recap contained the provision "Freight eur 72,50 - pmt free in lsd/liner out under hook" (our emphasis). "Liner out" generally means that the freight rate includes the cost of discharging at the port of discharge. "Under hook", in the context of discharging, means that the owners/shipper will arrange for discharge over the ship's side.

The tribunal's decision

The tribunal found that there was a "fundamental conflict" between the provisions of the recap and the charterers' executed Gencon pro forma. On the one hand, the recap contained provisions for the counting of laytime and demurrage at the loading port, but no such provisions for the discharge port. That position, in addition to the "liner out" provision, clearly indicated that the owners should undertake responsibility for discharging, including time involved in waiting for berth, although not during the discharging operation. On the other hand, the Gencon pro forma indicated there should be a NOR and laytime at the discharging port, thereby imposing obligations on the charterers in those respects and giving rise to a liability for damages (i.e. demurrage) if they were breached.

The tribunal could see no way of reconciling the conflicting provisions. They found that the only sensible way to interpret the contract was on the basis that the recap recorded the parties' most specific intentions, and accordingly that this should take precedence over the recap in case of conflict between the two. This was consistent with the term of the recap stating "Rest of terms as per chrts exec gcn 94 c/p, logically amended as per main terms [i.e. the recap]...". On this basis, the owners' claim for the time spent waiting for the berth failed.

The owners' claim did succeed, however, in respect of the time lost during discharging because of the unavailability of the trucks. The tribunal determined that the inclusion of the words "under hook" in the recap provision meant that the owners' responsibility ceased once the cargo was placed on the pier apron or, in the context of the present case, on to the trucks. From that point on, it was the charterers' responsibility to remove the cargo, from which it followed that any delay in providing trucks to take the cargo away was also their responsibility. The charterparty did not contain any agreed demurrage rate for discharging, so damages were to be quantified on the basis of the vessel's daily market rate at the time. On the basis, however, of the parties' agreement as to loading demurrage (set out in the recap) and the evidence adduced by the owners as to the losses they claimed to have suffered, the tribunal ultimately awarded damages at the loading demurrage rate of EUR 10,000 per day.

In case it was wrong on the conflict between the recap and pro forma, the tribunal went on to find that the NOR given on dropping anchor at Luanda was defective. The ship was not ready at the time the NOR was tendered, because the Scottish cargo had not yet been discharged. A fresh NOR was required, but none was given. On that alternative basis, therefore, the owners could not have succeeded in their claim for loss of time spent waiting for the berth.

The tribunal further held that congestion or occupation of a berth was not covered by the exceptions in the following charterparty clause:

"Time lost by reason of all or any of the following clauses [sic] shall not be computed in the loading or discharging time viz: War, Rebellion, Tumult, Civil Commotions, Political Disturbances, Riots, Strikes, Stoppage of lighterman, tugboatmen or other hands essential to the working, carriage, delivery, shipment or discharge of the said cargo whether partial or general, bad weather, intervention of customs and/or constituted Authorities or partial or total stoppage on railways, or any other causes beyond the control of Charterers."

The closing words "or any other causes beyond the control of the Charterers" had to be interpreted in the context of what preceded them and the occupation of a berth or congestion could not be considered as being similar to the matters enumerated earlier in the provision. Therefore, the time lost would not have been excluded by that clause.

Comment

This case is a stark example of the application of the principle that, where a contract is entered into on the basis of specific negotiated terms which incorporate by reference some form of standard terms, in case of conflict between the two the specific terms will generally take precedence. In this case, the inclusion of just two words, "liner out", in the recap were, in conjunction with the other terms of the recap, a crucial factor in essentially negating some substantial obligations of the Gencon pro forma.

The tribunal's findings in respect of the NOR given at the anchorage in Luanda, although not ultimately decisive of the award, follow established judicial precedent, in particular the Court of Appeal decision in The Happy Day [2002] 2 LLR 487, and underline the importance of tendering a fresh NOR if the first one is defective.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions