Andrew Wilding who runs Asdem’s office in Singapore is a very experienced shipping lawyer. He has contributed the following article for this News Update:
In the case of Golden Fleece Maritime Inc v. S.T. Shipping & Transport Inc. [2007] a change in MARPOL regulations for the carriage of fuel oils occurred while two vessels were performing time charters on an amended Shelltime 4 form. These regulatory changes meant that the vessels could not legally carry fuel oils for the remaining 20 months of the charter period unless physical modifications were made to their tanks at a cost of US$ 600,000 per vessel. Charterers were unable to continue to trade the vessels as they intended and asked the owners to make the modifications. The owners refused. The English High Court held that the terms of both time charters obliged the owner to deliver a vessel capable of carrying the agreed range of products within the agreed trading limits. The owner’s obligation to maintain the ship in that condition was ongoing and continued for the duration of the charters. The obligation extended to both the physical and the legal fitness of the vessel. Legal fitness required that the ship complied with all applicable regulations and conventions including the documentary requirements of MARPOL as amended from time to time. By refusing to make the necessary changes, the owners were in breach of their maintenance obligations and liable for substantial damages to charterers. Andrew Wilding can be contacted at awilding@asdem.com. Telephone no: +65 6534 9278.
Just occasionally the High Court gives us a decision that creates more confusion and disputes than it resolves. The judgment in Waterfront Shipping Co. Ltd v. Trafigura AG [2007] All ER (D) 06 has already been criticised in the legal press and it is not too difficult to see why. The ship owner had failed to provide a signed pumping log as required under clause 16 of BPVOY3 to support a claim for pumping time in excess of the c/p allowance of 24 hours. The judge, Gloster J, held that the owner’s entire demurrage claim, not just the claim for excess pumping time, was therefore time barred. The judge decided that clause 16 was overridden by clause 23 that states that charterers were released from any claim for demurrage “unless a claim in writing has been presented to Charterers together with supporting documentation substantiating each and every constituent part of the claim within 90 days of the completion of discharge…”. As the claim for excess pumping was a constituent part of the claim and it had not been substantiated by the correct documentation, the whole claim would fail. The judge rejected all the owner’s arguments including the proposal that the lack of signatures on the pumping log was “de minimis”, i.e. too minor to be of any real importance. He also declined to follow the reasoning of the judge in “The Minerva” (News Update No.16) because he was not bound by a London County Court judgment. In that instance, the judge had simply disqualified the part of the claim that had not been properly documented.
While it is unlikely that an arbitrator in London or New York would be keen to follow the judge’s reasoning, we would recommend that owners should consider seeking an amendment to the time bar clause 23 of BPVOY3. Similar wording appears in BPVOY4 clause 20.1 which additionally covers claims for detention and deviation.
One of the issues reported in the London Arbitration 21/07 (2007) 725 LMLN 2 was whether a Notice of Readiness tendered while the vessel was drifting outside the port of Lagos was valid. According to clause 6 of the charterparty, Asbatankvoy, the NOR had to be tendered “upon arrival at customary anchorage at each port of loading or discharge.” The arbitrators considered that this wording allowed them to accept that a valid NOR could be tendered when the vessel reached the customary anchorage even if this was situated outside the port limits. This was contrary to the normal position in English law that a valid NOR could not be tendered until the vessel had entered the port. The tribunal was then prepared to interpret “anchorage” widely enough to include a drifting area when it was either impossible or unsafe to anchor within the port itself.
Rather than go to such lengths to stretch the meaning of “customary anchorage”, one might wonder why the arbitrators had not concluded that the charterers were in breach of the warranty to provide a berth “reachable on arrival” in accordance with clause 9 of Asbatankvoy. The precedent for this was set in the High Court case of The President Brand [1967] 2 Lloyd’s Rep 338 (see News Update No.34 for details) and has been followed in several subsequent court cases and arbitrations. If the vessel is delayed because it is prevented from entering the port, the time waiting outside will be usually be claimed by the owners as damages for detention.
To avoid any dispute, many charter parties now include an additional clause permitting a valid NOR to be tendered outside the port if the threat of piracy makes it unsafe for the vessel to remain waiting at the customary anchorage.
27 London arbitrations were published by Lloyd’s Maritime Law Newsletter in 2006 of which 26 related to disputes between ship owners and charterers. Of these 26 arbitrations, the charterers were successful on 12 occasions and won two-thirds of the points at issue in two other cases. This was a great improvement on 2004 when we reported that charterers had won only 6 out of 32 published arbitrations (See Asdem News Update No.27 for our comments). As the ship owners most often initiate these arbitrations, perhaps charterers are becoming better at chosing which cases to defend. Over the last 10 years, an average of only 24 maritime arbitrations have been published in London. This possibly represents no more than a quarter of all such arbitrations and is far fewer than the 80 - 100 published in New York each year by the Society of Maritime Arbitrators (SMA).
We would very much like to see the London Maritime Arbitrators’ Association adopt the SMA’s procedure, whereby arbitrations are automatically published unless both sides have agreed in advance that they will not be. We feel this would add considerable weight to the international reputation of London arbitration. We previously expressed further reasons for more publication in News Update No.15 of January 2001.