As mentioned in the last newsletter, it was agreed at the Asdem European Oil Barge Conference in May 2014 that an Industry Working Group would be formed to find solutions to various problem areas in barge chartering. There have now been two meetings of the Barge Industry Working Group, in September and November, in Rotterdam, where more than 30 representatives of oil companies, traders, barge operators, barge owners and brokers attended.
A smaller sub-committee has also been convened to provide proposals and to look in more detail at particular issues. It will have its next meeting in London in January 2015 prior to the next meeting of the full working group in February. The working group's conclusions and recommendations will be reported in future Asdem Barge Newsletters.
It is deep regret that we have to announce the passing of Sandy Wilson who had been Asdem's most senior demurrage consultant since 1995. He had worked on Asdem's behalf in the demurrage departments of many of the major oil companies. In recent years he worked mainly from home dealing with ship owners' claims. Sandy enjoyed a varied career. He obtained his master's ticket before coming ashore and joining BP in London. He was managing director of Ernaft, an oil trading company, for several years before deciding to take up a back office role in semi-retirement. As Asdem's consultant he travelled widely in Europe working in Rome, Paris, Geneva and London. On one occasion he was sent to Fujairah to liberate some tankers from the local legal system. He proposed that as soon as the vessels were free to sail he would sign a short coded message as "Admiral Wilson". The immediate response from London was "It is not a fleet. There are only two ships; you may be Commodore Wilson".
Sandy was also a very accomplished golfer, possessing typical Scottish grit and determination which made him extremely difficult to beat. He will be very much missed by all who had the pleasure of working with him.
There are many problems that can arise under Asbatankvoy which would be unlikely to occur under a more modern charter party. However, it is unusual to find quite so many disputes in a single voyage as occurred here, and these were only at the discharge port.
Validity of the vessel's NOR: The vessel tendered notice of readiness at EOSP (end of sea passage) on arrival at the pilot station. Anchoring occurred two hours later at the customary anchorage for the port which, according to the terms of an Asbatankvoy charter party, is the correct place to tender NOR. The charterers considered that a valid NOR had never been tendered and therefore laytime only commenced at all fast.
In our experience, arbitrators have not been entirely consistent in their approach to this question. Some have accepted that the pilot station within port limits is an acceptable place to tender NOR. Other arbitrators have interpreted the charter parties more strictly and have held that an NOR tendered at "end of sea passage" or at the pilot station does not conform to the terms of the charter party and is therefore invalid.
To avoid legal action and maintain good relations between owners and charterers, we have always encouraged charterers to take a generous approach and to accept the time of anchoring as the effective time of the NOR. In any event, owners should ensure that their Masters fully understand the terms of their charter parties and are careful to avoid this problem by waiting until the vessel has reached the customary anchorage before tendering notice of readiness.
Time used by owners for their own purposes: While waiting at anchor for a berth the vessel took on bunkers and fresh water. Could charterers deduct the time taken for this bunkering? As noted in Asdem Newsletter No. 43, does the judgment in The "Stolt Spur"  apply? Our answer, which is the same as that of a number of experienced arbitrators and lawyers, is that it does not apply. Provided the vessel remained at the charterer's disposal within the port and followed the charterers' instructions and could continue to do so with no significant delay, laytime or demurrage would continue to run. Unlike the facts in the "Stolt Spur", the owners are not using the vessel specifically for their own purposes if there is an opportunity during waiting time to take on bunkers or stores or change the crew etc. We are aware of only one published arbitration on this point, London Arbitration 8/08 748 LMLN 2(2), and there the single arbitrator also came to this conclusion.
Delays after completion of discharge: As per clause 6 of Asbatankvoy, laytime/demurrage ended at disconnection of hoses. A three hour allowance had been included in the charter party terms for drawing up documents. It was not clear whether this could apply at the discharge port as well as the load port. Nevertheless, if the vessel was prevented from sailing due to the charterers' action or inaction, owners would have to claim for the delay as damages for detention. Most modern charter parties state that such additional time would count as laytime/demurrage. However, it transpired that the delay was due to a fault of the vessel. There was an outturn shortage that required checking by the independent inspectors who concluded that this due to the vessel not having fully cleared its pipelines.
Time for disconnection of hoses not recorded: Asbatankvoy requires the vessel to report the time hoses are disconnected as this is when laytime/demurrage ends as per clause 11. For reasons which were not clear, the owners were unable to provide the precise time when the hoses were disconnected, possibly due to the inspectors' concerns over the shortage issue. The charterers made a proposal to accept that disconnection took place 60 minutes after completion of discharge. The English common law position is that if nothing is written in the c/p, charterer's time will end at completion of loading or discharge. This would be the position if the owners were unable to provide the time for hoses disconnection, so accepting the charterers' offer of time ending 60 minutes after completion of discharge seemed sensible.
Following on from the article above, Asdem has assisted several charterers to change from Asbatankvoy to a more modern charterparty, usually BP's or ExxonMobil's, though inevitably with numerous amendments and additions. There have been many changes to legislation affecting all aspects of shipping since BPVOY4 was published in June 1998. We therefore eagerly await the publication of BP's latest charter party, BPVOY5, in the coming weeks. We hope that it will quickly become the benchmark against which other charter parties are measured, both for clarity and reasonableness. It should require far fewer amendments than the older charter forms and may encourage charterers finally to abandon Asbatankvoy which, with its usual fifty or sixty additional clauses, so often creates disputes.
Article by Kevin Jandora, CD Gray Consulting LLC and LEAP, Principal Coordinator
Oil operators and demurrage negotiators who do business in North America are likely aware of the curious regional phenomenon known as the "Public Docks Clause". While GTCs and trade contracts have historically referred to this idea, using such vague language as "The Public Dock Clause applies", rarely, if ever, have these documents laid out the definition of a "Public Dock" nor do they specify exactly what it means for the Public Dock Clause to "apply".
Anecdotal evidence tells us that a large percentage (or even a majority) of aged demurrage claims in this region are the result of disputes regarding the applicability of the Public Docks Clause. Recently these disputes have been multiplied by the rise in marine traffic in the Gulf of Mexico and Mississippi River caused by increasing domestic crude production and clean product exports combined with the rather limited crude pipeline delivery and storage options in that region. (See this Platts article if you are interested in learning more about this topic.)
Leadership for Energy Automated Processing ("LEAP") recently published some material in order to provide a framework for parties to use to clarify their contractual positions with regards to the demurrage liability for buyers and sellers when demurrage is incurred because of congestion at terminals. The LEAP organization is familiar to readers of the ASDEM European Barge Newsletter because of their work with the soon-to-be-published European Barge GTCs. LEAP's goal is make the processing of energy trades more efficient and less error-prone through the creation of standards and the use of technology.
LEAP's publication can be found on their website and provides:
Key points of emphasis from the LEAP committee were to clarify that:
There is an emerging trend in the market for the parties to share demurrage liability in these circumstances rather than for an FOB Seller to avoid demurrage by starting time at All Fast.
LEAP intends this to be a standing committee for years to come, as the market is constantly changing and terminals throughout the region are being built and change ownership fairly frequently. The committee is currently made up of number of oil trading companies, banks, and multinational oil majors. If you are interested in joining this or any other LEAP committee, or to find out more information, please feel free to visit their website by clicking here or contact them by email by clicking here.
Article provided by Phil Stalley, HubSE Ltd.
It is still dark here in the UK in the mornings and evenings but the days are getting longer at last so spring must be on its way! This got me thinking forward to the last weekend in March when the clocks change in the UK and we move from GMT to British Summer Time or GMT+1. On Sunday 29th March 0100hrs GMT becomes 0200hrs BST so we effectively lose an hour's sleep that night, unless being a Sunday you are able to have a lie in!
Shipping is a 24 hour, 365 day business so while you are asleep your cargoes are still being loaded or discharged and laytime and demurrage carries on regardless. When it comes to calculating laytime and demurrage, what happens to that one hour?
Take a simple example where time starts at 1300hrs 28th March and ends at 1300hrs 29th March. This in simple terms is a day, but it is not 24 hours. Converting both times to GMT we get 1300hrs 28th to 1200hrs 29th March, time elapsed of 23 hours. Of course, the opposite happens in October when the clocks go back and the time elapse would be 25 hours.
For the vessel loading 28/29 March, should the time count as 24 hours or 23 hours? I have had a look round but I cannot see that there have been any court cases on this point, so how should we count time? I think there are arguments on both sides here.
On the one hand, most charter parties and contracts use wording to say that demurrage is paid at US$ xxx per day pro-rata so in the example I set out above I think it could be argued that the time elapsed is one day.
On the other hand supposing the elapsed period was less than a "day", say from 1800hrs 28th to 0600hrs 29th. Is this 12 hours or 11 hours? It is not a full calendar day so my argument above doesn't work and perhaps the answer should be 11 hours. One thing for sure, if you are going to argue that it's only 11 hours, you must be consistent and be willing to pay 13 hours when the clocks change again in October.
Do you know what the correct answer is? Have you had any experience of such disputes? Why not add your comments to my blog at www.hubse.com.
Note: We referred to this question in Asdem Newsletter No. 21 in May 2003. Although it is a relatively minor issue, it is one that has never been resolved to everyone's satisfaction.