Demurrage time bar and submission of documents. Fault of owners and consequential loss of time.

 

When dealing with a demurrage time bar clause in your charter, it pays for owners to know who charterers’ agents are, as shown by London Arbitration 19/18. Owners chartered two vessels under a contract of affreightment for a series of voyages. The charters provided for the demurrage claim and supporting documents for each voyage to be sent by owners to charterers within 30 days starting from next day after discharging at discharging port. Failure to supply the documents within this period would free charterers from any responsibility for demurrage. The charter also provided that owners were to pay commission on F/D/D to a firm of brokers, D.

Charterers declined to pay demurrage accruing on eight voyages as they had not received the documentation within the 30 days. Owners claimed that they had passed the documentation to D within the 30 days and that D were charterers’ agents. The tribunal found that D were an intermediate broker who had no principals and who could look to either charterers or owners for their commission. The charter had included a specific provision to cover their commission, making owners responsible for it. D’s duty was simply to pass messages up and down the chartering chain. There was no evidence that charterers held D out as their broker and they were clearly not charterers’ actual broker. Receipt of documents by D did not amount to receipt by charterers or their agents.

The tribunal rejected owners’ argument that D had ostensible authority to act as charterers’ agents. The fact that the charterers had paid all freight claims and many of the demurrage claims which were sent by the owners to D alone did not amount to a representation on the charterers’ part that D had authority to accept all demurrage claims under the charter on their behalf as their agent. Those claims were paid, not because they were received by D, but because they were passed by D to C and it was receipt by the latter that triggered payment by charterers. Nor was there any estoppel, either by convention or promissory. The parties proceeded on the basis that charterers would pay all demurrage claims received from D within the 30 day period. The fact that charterers had paid a demurrage claim presented out of time on one voyage out of the 87 performed did not amount to a waiver of their right to rely on the time bar clause.

The tribunal also rejected charterers’ claim on another voyage to suspend laytime for consequential delay on arrival at the discharge port because of a delay on completion of loading of nine days due to engine problems. For culpable fault resulting in time not counting, the fault and the delay had to be co-extensive.

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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 five editions 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. He has also written and taught extensively on commercial law, trusts and environmental law. Simon will be a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he will teach on both the LLM (Carriage of Goods by Sea, Land and Air and Oil and Gas Law) and LLB programmes at Swansea.

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