“All supporting documents” in time charter time bar clause means what it says.

 

Mur Shipping BV v Louis Dreyfus Company Suisse SA [2019] EWHC 3240 (The Tiger Shanghai) concerned the construction of the following time bar in additional clause 119 of a time charter on NYPE form.

“[Owners] shall be discharged and released from all liability in respect of any claim or claims which [Charterers] may have under Charter Party and such claims shall be totally extinguished unless such claims have been notified in detail to [Owners] in writing accompanied by all available supporting documents (whether relating to liability or quantum or both) and arbitrator appointed within 12 months from completion of charter”.”

The charter was terminated due to a problem with the feeder holes in the hatch covers which were positioned so that the loading crane at the loading port, Carbenaros, was not quite long enough to reach those on the starboard side of the Vessels. To solve this problem the Charterers wanted to cut new cement feeder holes into the hatch covers. Disponent owners refused permission for the work to be done. Shortly after the vessel arrived at the load port, a survey was conducted at charterer’s request by CSS on the cutting of new cement holes in the hatch covers. The following day disponent owners stated that their refusal was final and non-negotiable and  charterers terminated the charter.

The express basis for that termination was that the cutting of additional feeder holes fell within the ambit of Clause 46 which provided “The Charterers, subject to the Owners’ and Master’s approval which is not to be unreasonably withheld, shall be at liberty to fit/weld any additional equipment and fittings for loading … cargo. Such work shall be done at the Charterer’s expense and time, and the Charterers shall remove such equipment and fittings at their expense and time prior to redelivery, if so required by the Owners …” Charterers argued that Owners’ refusal for permission to cut such holes had been unreasonably withheld, so that Owners were in repudiatory breach and Charterers were entitled to terminate.

Charterers appointed their arbitrator within 12 months of the termination of the charter and claimed in respect of “all disputes connected with the Charterparty” which was stated to include claims for:

  1. i) The return of hire and value of delivery bunkers paid in advance,
  2. ii) costs incurred on the Owners’ behalf;

iii) damages in respect of claim from the sub Charters for the termination of the Charter; and

  1. iv) the Owners’ failure to obey instructions/ breach of Clause 46 of the Charter.

Nearly a year later charterers served claim submissions to which was attached the CSS Report dealing with the feasibility of drilling cement holes in the hatch covers, and relied on it to allege that disponent owners had unreasonably withheld consent to the works

The submission of the CSS report led disponent owners to take the timebar point, arguing that it went to the heart of the issue of liability and that had it been presented it was likely that the parties could have resolved the dispute without the need for arbitration. Charterers argued that the CSS Report was a document compiled for the purposes of the arbitration in the light of the dispute and that expert reports and other arbitration documents fell outside the category of “supporting documents” that are to be provided and Clause 119

The majority of the Tribunal found that this document was a “supporting document”, that it was not privileged; and that the claim was consequently time barred. On appeal two issues arose.

i) Is a document which would otherwise be a supporting document one which should not be counted as such if it was arguably privileged?

This point concerned arguably privileged documents as opposed to actually privileged documents. This was because: (i) Charterers accepted that the document was not privileged and (ii) Owners are prepared to proceed on the assumption that the clause does not require provision of a privileged document. Charterers submitted that if a document is reasonably arguable to be privileged, then its disclosure is not required by an “all supporting documents” time bar clause and it does not matter even if, in the final analysis, it is held not to be privileged. Cockerill J rejected this submission as the argument was “profoundly uncommercial”. Such an approach would sit very ill with the requirements of certainty which underpin clauses of this sort

ii) Is a document which is not at least at the time of commencement of the arbitration of relevance to either the identification of or support for a relevant claim as referred to arbitration, a “supporting document”.

Cockerill J held that the CSS report was a supporting document and it could not be the case that simply because a document emerges later it cannot give rise to a time bar argument. An “all documents” clause is naturally geared to the provision of more than the bare essentials; and even in the simpler cases it may be the case that the party receiving the documents may not know the full extent of the documentation available.

The question of “supporting documents” had to look to the claim being advanced. If for some reason the claim somehow changed in essence at a later stage, for example, if a timing point not previously apprehended was made, or a correction needed to be made, this should not mean that documents later relied on became retrospectively relevant at the point of the time bar. However, here, there was no change in the case or correction. Charterers’ claim was predicated on the refusal by disponent owners having been wrongful, because unreasonable. Without that, the termination was not valid. The material in the CSS Report went to this question of reasonableness.

If the reasonableness of the refusal was in play at the time when the claim was made, this document was relevant and supportive. It was significant that the clause combined both specific reference to “all” and specific reference to “liability and quantum”, while not confining itself to any particular sort of claim. The parties intended the clause to cover all disputes under the Charterparty, including inferentially claims arising out of wrongful termination. While the case had not refined itself so far as it had done at the time of the hearing, the claim (at least as to quantum) in fact depended on the date of termination and the date of termination depended on being entitled to terminate, which itself depended on unreasonable refusal on the part of the Owners. Therefore, the report was on its face within the ambit of the claim that charterers advanced and supportive of it.

The appeal against the Award was therefore dismissed.

Leave a Reply