Voyage Charters. Demurrage Claim. Last updated 14-May-2015

Extent of compliance

The commercial intention underlying this clause seems to me plainly to have been to ensure that claims were made by the owners within a short period of final discharge so that the claims could be investigated and if possible resolved while the facts were still fresh (cf. Metalimex Foreign Trade Corporation v. Eugenie Maritime Co. Ltd., [1962] 1 Lloyd’s Rep. 378 at p. 386, per Mr. Justice McNair). This object could only be achieved if the charterers were put in possession of the factual material which they required in order to satisfy themselves whether the claims were well-founded or not.
Per Bingham J in Babanaft International S.A. v Avant Petroleum Inc. (The Oltenia)[1982] 1 Lloyd’s Rep.448 at p.453

Authors of Laytime and Demurrage in the Oil Industry, underline the importance of presenting all the relevant documents with the demurrage claim, because without this documentation a claim could be time barred even if the claim itself is presented within the 90 days. They furthermore clarify that such set of documents "must include the notice of readiness, the Statement of Facts and Discharge Pumping Logs where applicable … [and] bear the signatures and stamps of the parties concerned, at the very least those of the vessel and that of the loading or discharge terminal."

List of documents which satisfactorily represent documentation sufficient to support demurrage claim vary from case to case, but general principle, as stated by Tomlinson LJ in The Abqaiq [2012] 1 Lloyd’s Rep. 18, is "a requirement of clarity sufficient to achieve certainty rather than a requirement of strict compliance which, if applied inflexibly, can lead to uncommercial results." Lord Judge was also sceptical to the idea that "… one should adopt a pedantic or strict approach which focuses on the form of the presentation rather than the substance". What is a balance between commercially acceptable result and pedantic approach is a difficult question as we shall see.

In Kassiopi Maritime Co Ltd v Fal Shipping Co.Ltd (The Adventure) [2015] EWHC 318 (Comm) owners claimed demurrage (21 days 13 hours and 48 minutes) in the amount of US$ 364,847.78 as a result of delays at both the load port, Sitra, and the discharge port, Port Sudan. Charterparty was on amended BPVOY4 form with relevant provisions as below:

19.7 No claim by Owners in respect of additional time used in the cargo operations carried out under this Clause 19 shall be considered by Charterers unless it is accompanied by the following supporting documentation:
19.7.1 the Vessel's Pumping Log signed by a senior officer of the Vessel and a Terminal representative showing at hourly intervals the pressure maintained at the Vessel's manifold throughout the cargo operations; and
19.7.2 copies of all NOPs issued, or received, by the Master in connection with the cargo operations; and
19.7.3 copies of all other documentation maintained by those on board the Vessel or by the Terminal in connection with the cargo operations

20. Claims Time Bar
20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which Owners may have under this Charter unless a claim in writing has been presented to Charterers, together with all supporting documentation substantiating each and every constituent part of the claim, within ninety (90) days of the completion of discharge of the cargo carried hereunder.

The Tribunal found that the following documents were presented by the Owners:

(a) An invoice for US $364,847.78 dated 5th August 2011;
(b) A laytime/demurrage calculation for Sitra and Port Sudan;
(c) A Notice of Readiness for Sitra;
(d) A statement of facts for Sitra;
(e) Four Letters of Protest for Sitra;
(f) A Notice of Readiness for Port Sudan;
(g) A pumping record for Port Sudan;
(h) A statement of facts for Port Sudan
(i) Four Letters of Protest for Port Sudan;
(j) An Empty Tank Certificate for Port Sudan.

The Tribunal crucially found that a number of the Letters of Protest at Sitra referred to delays or stoppages "recorded in the vessel’s port log/time sheets." The Tribunal held that the Owners had failed to provide the following documents to satisfy requirements of both Clause 19.7 and Clause 20:
   (1) The port log and time sheets kept as referred to in the Letters of Protest;
   (2) A manuscript note on an email, that the Master had received free pratique by VHF at Port Sudan.

On appeal in the High Court judge agreed with the Tribunal. He didn’t attempt to answer the question whether the port logs and time sheets in this case are such 'one-off' documents which are generated by the vessel in connection with the cargo operations, within the scope of wording of BPVOY4 Clause 19.7.3 "documentation maintained by those on board the Vessel… in connection with the cargo operations…", deciding  that this would be a matter for the Tribunal to determine.

The main question which the learned judge answered in the charterers favour was that on a proper construction of Clause 20.1 "all supporting documentation substantiating each and every constituent part of the claim" for a claim for demurrage did require owners to provide all relevant supporting documentation, and not only ‘essential’ supporting documentation. That relevant supporting documentation inevitably included time sheets and port logs, since they were referred to in the Letters of Protest.

Owners argued that proper construction Clause 20.1 only required presentation of "essential" supporting documentation, which generally means the NOR and Statement of Facts, and that such documents were presented. The judge, however, held that documents are required to be presented as can be found in Tomlinson LJ's judgment included a port log and a timesheet.

As to the record that vessel received free pratique by VHF at Port Sudan, the judge held that a manuscript note on an email, that the Master had received free pratique by VHF at Port Sudan was important to the commencement and proper calculation of laytime. For Port Sudan, in contrast to Sitra where it was recorded in the Statement of Facts, there was no record in the documentation provided of when it was granted at. Accordingly the judge agreed with the Tribuanl that such record is to be regarded as a supporting document.

Commenting this decision I shall first of all note that, unless mentioned in Letters of Protest, neither Time Sheet nor Port Log would probably not be required for the purpose of BPVOY4 Clause 19.3 and 20.1, being outside of "supporting documentation substantiating each and every constituent part of the claim". List of documents "maintained by those on board the Vessel or by the Terminal in connection with the cargo operations" usually included as the authors of Laytime and Demurrage in the Oil Industry suggest the NOR, the SOF and Discharge Pumping Logs where applicable, meaning that such logs are necessary for discharge port only, where vessel has to maintain certain discharge pressure and rate, which are recorded in pumping or port logs. Evidently that such requirement for loading port log is unnecessary surplusage in case of loading operation because any slow loading is for the charterers account.

Secondly, Statement of Facts usually "maintained by those on board"(BPVOY4 cl.19.3), in absence of any reference to Time Sheets and Port Logs, as owners unsuccessfully argued, does provide information which substantiate "each and every constituent part of the claim" and that there was no need for them to provide additional documentation which would simply provide further substantiation. Most probably ship’s staff used a standard or outdated form of Letter of Protest with reference to Time sheet/Port log, whereas both documents were in reality replaced by another document, i.e. Statement of Facts, which was maintained on board had all details required.

Finally, "all other documentation maintained by those on board the Vessel" (BPVOY4 cl.19.3) is largely depends on inner shipowner’s/manager’s policy which prescribes forms to be used. From my personal experience neither Time Sheet nor Port Log are usually within forms prepared by ship’s staff during cargo operations. All timing is recorded on board in Statement of Facts, which sometimes referred to as Time Sheet and sometimes as Port Log. Discharge Log is utilised in discharge port only, to satisfy requirements of pressure/discharge rate recording.

Similarity between Statement of Facts, Port Log and Time Sheet is noticeable from definitions provided in Dictionary of Shipping Terms:

Port log Statement, prepared by the ship’s agent at the loading and discharging ports, which shows the dates and times of arrival of the ship and the commencement and completion of loading and discharging. It details the quantity of cargo loaded or discharged each day, the hours worked and the hours stopped, with the reasons for the stoppages, such as bad weather, a strike or breakdown of equipment. Also referred to as a statement of facts.

Time sheet Statement, drawn up by the ship’s agent at the loading and discharging ports, which details the time worked in loading or discharging the cargo together with the amount of laytime used. This latter figure, when compared with the time allowed in the voyage charter-party, is used by the shipowner and charterer to calculate demurrage or despatch, as the case may be.

Port Log is equivalent to Statement of Facts. On the other hand both Time sheet, and Port Log said to be  prepared by ship’s agent and can hardly be referred as document "maintained by those on board the Vessel". In reality all details in Port Log or Statement of Facts or Time sheet,  irrespectively of name, and prepared either by agent or by ship’s master or by terminal consist of same factual details, i.e. time of arrival and NOR, commencement or completion of loading and discharging, hose connection and disconnection, etc.

Commercial soundness of this decision is therefore a bit questionable. Requirement of clarity sufficient to achieve certainty, as suggested by Tomlinson LJ in The Abqaiq, was by far exceed by requirement of strict compliance. The Tribunal and the court while appreciating that different vessels and different terminal will not all keep the same type of record, concluded that it was plain from the letters of protest that a port log and time sheets were kept on board. Thus ignoring an alternative inference that existed and submitted to the charterers Statement of Facts kept on board was actually "type of record" similar/equal to Time Sheet or Port Log, and contained same details, albeit titled differently.


Reid’s Test. Analysis

Your Lordships would be doing a disservice to the shipping community if, so shortly after the Reid test had been laid down by this House in The Johanna Oldendorff, you did not reaffirm it and insist upon its application to the instant case.
Per Lord Diplock in Federal Commerce and Navigation Co Ltd v Tradax Export SA( The Maratha Envoy) [1978] AC 1 at p.14.

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Bibliography

Commencement of laytime, D. Davies, 4th edt. 2006

On foreseeability in construction of contracts in laytime matters – a comparison between English and Scandinavian law, Professor Trond Solvang.

Web sources

ASDEM

BIMCO

INTERTANKO

Case-law

Bulk Transport Group Shipping Co. Ltd v Seacrystal Shipping Ltd. (The Kyzikos) [1987] 1 W.L.R. 1565

EL Oldendorff & Co GMBH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479

Leonis Steamship Company, Ltd v Rank, Ltd [1908] 1 K.B. 499

Federal Commerce and Navigation Co Ltd v Tradax Export SA(The Maratha Envoy) [1978] AC 1

Wilson’s Carriage of Goods by Sea

The Adolf Leonhardt [1986] 2 Lloyd’s Rep. 395

The Aello [1961] A.C. 135

The Delian Spirit [1971] 2 All ER 1060


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