Is  a ‘Waiting for orders’ claim a demurrage claim?

 

 

The answer to this question matters because of the documents required under a time bar clause for “demurrage claims”.

In The Ocean Neptune [2018] EWHC 163 (Comm) the vessel was chartered for a voyage from Taiwan to three Australian discharge ports on ExxonMobil VOY2005 form, and the Lukoil International Trading and Supply Company Exxonvoy 2005 clauses dated 30.05.2006 (“the LITASCO Clauses”). Clause 2 of the Litasco clauses provided a requirement for demurrage claims to be provided with supporting documentation within 90 days of completion of final discharge, with a similar provision for other claims but with a time limit of 120 days. In addition cl. 2(b) specified the types of documentation that had to be required for a demurrage claim.  Clause 4 of the Litasco clauses was a ‘waiting for orders’ clause which provided “If charterers require vessel to interrupt her voyage awaiting at anchorage further orders, such delay to be for charterers’ account and shall count as laytime or demurrage, if vessel on demurrage. Drifting clause shall apply if the ship drifts.”

At Gladstone, the first discharge port, the vessel berthed but then shifted back to the anchorage, remaining there for more than a month until charterers ordered the vessel to sail to Botany Bay.  The reason for the delay at Gladstone was that the receivers, Caltex, refused to take delivery of the cargo on the grounds that it was alleged to be contaminated/off specification. Owners initially presented this delay claim as a demurrage claim, but then reformulated it as a claim under cl. 4. The Tribunal held the Owners’ demurrage claims were barred because they failed to include a statement of facts for the loading port and the discharging ports, countersigned by the terminal, or if it was impossible to obtain such a countersignature, a letter of protest from the Master, as required by cl. 2(b). However, the Tribunal found that cl.2(b) did not apply to the claim for delay under cl.4. Charterers appealed against the finding.

Popplewell J allowed the appeal. The claim under clause 4 was a demurrage claim. Demurrage was defined by clause 13(d) of the ExxonMobil VOY2005 form which provided that demurrage was to be paid for all time by which the allowed laytime “is exceeded by time taken for loading and discharging and for all other Charterer’s purposes and which, under this Charter, counts as laytime or as time on demurrage.”  Clause 4 provided that the delay caused by waiting at anchorage shall “count as” used laytime or demurrage. Demurrage was not limited to a claim where charterers had exceeded the allowed laytime by the time taken for loading and discharging. The waiting time was, therefore, time taken for Charterers’ purposes which under the charter counted as laytime or demurrage.  This was to be contrasted with other clauses in the charter which provided merely that compensation for delay caused by breach would be at the demurrage rate.

 

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

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