Issue 62


Article provided by Phil Stalley, HubSE Ltd.

The last meeting of the Sub-Committee formed about two years ago to write a new charter party for the European Barge market was held on Monday 5th September. Next steps are to tidy up the latest version and present to a wider audience in Rotterdam in November.

This working group was formed as a direct result of the barge conference held in 2014 when there was a feeling amongst the majority of attendees that TTB rules no longer fitted the bill for oil trading. Those of you who attended the conference would have heard me talk about the shortcomings of TTB rules and I'm pleased to say that the group has worked hard to produce a charter party form which is very clear and covers many of the misunderstandings and ambiguity to be found in TTB.

Key changes are:
The introduction of the "Agreed Date of Arrival". This is the contractual date that was referred to in TTB rules as the ETA. ETA as a term is still retained but for its true purpose as an Estimated Time of arrival. This means that and ETA may be a different day to the ADA but the charter party makes it clear what happens if the barge actually arrives on the ADA or indeed arrives early or late. This will mean a change in how parties use the term ETA but the introduction of ADA is a great step forward in my view.

Nominations. A standard nomination form has been introduced together with a clear set of rules defining the obligations on each party.

Awaiting Orders Clause. This has been introduced for those times when the loadport has not been declared by the charterers and the barge is waiting at some place other than the final loading port. It covers how the operator is compensated for these delays and what happens it as a result of the delay the barge misses the ADA. Previously compensation negotiations have been drawn out and arguments ensued over late barges and so on. I hope this removes those arguments and it may a clause that can be introduced into trading terms so that these costs can be passed on without undue delays.

As you would expect the rules around laytime and demurrage have been written to make the whole process clear together with a Notice of Readiness Clause and a Time Bar clause.

Inevitably there were areas where the charterers and operators could not always agree. We see this charter party as being the framework for both parties to use and amend in the same way that charter parties in the deep sea tanker market are used and I would like to think that most of it will remain intact.

If you want to see the final version of the charter party and/or attend the November meeting in Rotterdam please let Andrew Wilding know by emailing


Article provided by Phil Stalley, HubSE Ltd.

There was comment on a recent case, MSC Mediterranean Shipping Company S.A. and Cottonex Anstalt [2016] EWCA Civ 789, by lawyers from Holman Fenwick Willan who suggested that this could be a bit of a game changer as far as demurrage is concerned.

The story goes that 35 containers loaded with cotton were discharged in Bangladesh. The receivers failed to take delivery and the containers have been sitting there ever since. The situation exacerbated by legal proceedings which prevented the containers being released by the customs authorities for a number of years.

Over $1m worth of demurrage had clocked up and according to the carriers was still accruing. The shippers had sold the cotton to the receivers but the price of cotton collapsed and the receivers did not take delivery even though the shippers got paid under the letter of Credit.

The carriers claimed demurrage under the bills of lading against the shippers who declined responsibility as they no longer had title to the goods.

Note that the B/Ls were dated from the year 2011 and here we are in 2016, some 5 years later getting judgement. Both the High Court and the Appeal Court decided that the contract was long ago frustrated and the carrier was no longer entitled to keep the contract going trying to recover the demurrage, although both courts decided a different date for the abandonment of this contract.

The conclusion of this case is that the carrier could no longer pursue a case for demurrage but they were entitled to damages which were assessed by the court as the cost of replacing the containers at a value of USD 3,262 per container. I have often been asked how long demurrage can be accrued on a voyage charter if the delay continues for a long time. I don't think this case gives us any clearer answers but there will be a time when a claim for demurrage will be unreasonable. I think that time will still be a long time, possibly several months, and even when that time has expired an owner would generally be entitled to damages for delay. It is hard to see a case where the demurrage accrued is so much that it far exceeds the value of the ship.

Clearly long delays on tankers can give owners a cash flow problem and it is always prudent to add a clause in the charter party to ensure that accrued demurrage is paid on a regular basis, say every seven or ten days. Charterers may wish to add a similar clause in their oil contracts to keep their cash flow position intact.


Two recent court cases emphasise the need for clear and precise clauses that will accurately cover the intentions of the parties.

Example 1: In the High Court case of The "Coral Seas", Imperator I Maritime Company v. Bungay SA [2016] EWHC 1506 (Comm).

The charterers, Bungay, had included terms to the effect that the speed and consumption warranty applied throughout the currency of the term charter. Without such terms the speed and consumption would probably only apply at the start of the time charter.

During the voyage the vessel was delayed for almost a month at Guaiba Island Terminal (Rio de Janeiro). After the vessel eventually sailed, it was quickly apparent that its performance had dropped significantly due to barnacles on the bottom of the hull and on the propeller. The charterers therefore made deductions from the hire.

The Owners claimed that the under performance was the direct consequence of having followed the charterers' orders and that this was a reasonable defence against the charterers' claimed deduction. The judge disagreed with the owners. He held that they had to prove that the under performance was caused by a risk which was not covered by the terms of the charter party. Only then would they be entitled to be indemnified by the charterers.

It is worth noting that time charters often contain provisions to cover delays of 20 days or more in tropical waters whereby charterers are not entitled to make deductions resulting from any subsequent under performance.

Example 2: The second case was an appeal to the UK Privy Council from the Bahamas Court of Appeal, Bahamas Oil Refining Co. Int. Ltd. v. The Owners of the Cape Bari Tankschiffahrts GmbH [2016] UKPC 20.

NOTE: The Judicial Committee of the Privy Council is the court of final appeal for the UK overseas territories and Crown dependencies, and for those Commonwealth countries that have retained the appeal to Her Majesty in Council or, in the case of Republics, to the Judicial Committee.

The facts of this case were straightforward. During berthing the M/T "Cape Bari" collided with a sea berth while being navigated by a local pilot. There was considerable damage and the berth owners, Bahamas Oil Refining Co. (BORCO) demanded damages of USD 22 million. The ship owners claimed that they were entitled to limit their liability to approximately USD 17 million under the Merchant Shipping (Maritime Claims Limitation of Liability) Act 1989 which had been incorporated into Bahamian law by the Convention on Limitation of Liability for Maritime Claims 1976.

BORCO claimed that the owners had waived their rights to limit their liability by agreeing to a contract made by the parties immediately before the berthing operation. This contract was referred to as "The Conditions of Use" which had been signed by the ship's master. The contract stated that owners would indemnify BORCO for all and any loss, damages, costs and expenses caused by the vessel using the Bahamas facility.

The judge at first instance agreed with BORCO, but the Bahamas Court of Appeal reversed this, saying that it was not possible to contract out of the Convention on Limitation of Liability.

BORCO appealed to the Privy Council in London.

The Board of the Privy Council confirmed that it was possible to contract out of the right to limit liability under the convention. However, this required clear language to confirm that this was the intention of the parties.

The Privy Council stated "In short, there is nothing in the language of the agreement which suggests that the owners were agreeing to waive their right to limit. Indeed, viewed objectively, it seems to the Board to be inconceivable that the owners intended to waive their right to limit".

Moreover, if BORCO had intended that they should do so, it could reasonably have been expected for BORCO to include such a clause in the "Conditions of Use".

As a result of this judgement similar terminals may seek to include in their terms and conditions an express waiver to the right of owners to limit liability.

It is suggested that masters need to be wary of agreeing to such terms and should endeavour to sign them "for receipt only".


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