Pumping Log as costly as USD114,887.40 The cause of failure of demurrage claim

‘Unless [owners] produce pumping logs, they cannot, in circumstances where discharge has taken longer than 24 hours, justify their claim for additional time …
Waterfront Shipping Company Ltd v Trafigura AG [2007] EWHC 2482 (Comm)

Story below tells how a very slap-dash way to procure and submit discharging documents resulted in loss of otherwise perfectly valid demurrage claim in value of USD114,887.40.

Owners’ vessel was chartered for a voyage with unleaded gasoline from New York to Vancouver. Charterparty contract was concluded on Beepeevoy 3 form, which stipulates the following requirements for documentary evidence provided by the owners in support of their demurrage claim, if any:

16. Owners shall undertake that the Vessel shall discharge a full cargo, as defined hereunder, within 24 hours, or pro rata thereof in respect of a part cargo, from the commencement of pumping or that the Vessel shall maintain an average discharge pressure of 100 psi at the Vessel’s manifold throughout the period of discharge except when stripping provided that the shore receiving facilities are capable of accepting discharge of the cargo within such time or at such pressure…
Any additional time used owing to the inability of the Vessel to discharge the cargo within 24 hours… or to maintain a average discharge pressure of 100 psi at the Vessel’s manifold throughout the discharge except when stripping shall be for Owners’ account and shall not count as laytime or, if the Vessel is on demurrage, as demurrage. If the shore receiving terminal facilities are unable to accept discharge of the cargo within the aforementioned time or at the aforementioned discharge pressure the Master shall present the shore receiving terminal with a Note of Protest forthwith, and in any event prior to the Vessel’s departure from the berth, and shall use all reasonable endeavours to have such Note of Protest countersigned on behalf of the shore receiving terminal in the absence of which countersignature the Master shall present a further Note of Protest to the shore receiving terminal.

Charterers will not consider any claim by Owners for additional time used in the foregoing circumstances in the absence of the provision by Owners of the following documentation:-
(a) an hourly pumping log, signed by a responsible officer of the Vessel and a terminal or Charterers’ representative, showing the pressure maintained at the manifold throughout discharge and, in the absence of a signature from a terminal or Charterers’ representative, a Note of Protest;
(b) copies of all Notes of Protest issued or received by the Vessel in relation to the discharge in question; and
(c) copies of any other documentation generated by the Vessel or by the shore receiving terminal relevant to the discharge in question.
23. Charterers shall be discharged and released from all liability in respect of any claim for demurrage which Owners may have under this Charter unless a claim in writing has been presented to Charterers together with supporting documentation substantiating each and every constituent part of the claim within 90 days of the completion of discharge of the cargo carried hereunder.

Vessel was granted with 84 hours of laytime.

For loading in New York Charterers used 118.683 hours, so when the vessel arrived to Vancouver she had already been on demurrage for 34 hours and 41 minutes. A total of 86 hours and 43 minutes was used at the discharge port and it was altogether 205 hours and 24 minutes the vessel spent at the load and discharge ports.

Shortly before expiration of the ninety-day period for presenting a claim for demurrage, in accordance with clause 23 of the charterparty (90 days after the completion of discharge), the Charterers received a hard copy of Owners’ demurrage claim and pumping logs. However, these documents stated by the owners to be pumping logs, were not on their face described as pumping logs; were not signed by a responsible officer of the Vessel; signed by a terminal or charterer’s representative and actually were not signed at all. No any other pumping logs meeting requirements of clause 16 were ever received.

Absence of signatures on pumping log as required by clause 16 allowed the Charterers to contend that they relieved by clauses 16 and 23 from any obligation to consider demurrage claim because the Owners failed to provide pumping logs to Charterers prior expiration of the ninety-day period, as part of the documentation under clause 23 necessary to support the demurrage claim, and therefore the entire claim is time-barred.

The court supported Charterers’ argument on the following main grounds:

1. A claim for ‘additional time used’ (on top of 24 hours allocated to the Owners for discharging) is a demurrage claim. Clause 16 makes it imperative that Charterers are under no obligation even to consider a claim for demurrage for such ‘additional time’ if Owners are unable to demonstrate, by provision of the relevant documentation identified in clause 16(a)-(c), that they were not in breach of their pumping warranty, and that the fault lies with the terminal. In other words breach of pumping warranty extinguishes any demurrage claim for time spent in discharging port.
2. Regardless the time spent during loading, the Charterers will not consider any demurrage claim from the Owners unless Owners support their demurrage claim by providing all the necessary documentation mentioned in clause 16(c).

This decision looks harsh, even surprisingly harsh, because Owners lost not only demurrage money due for delays at discharge port but also those 34 hours and 41 minutes vessel was on demurrage upon completion of loading. Unfortunately for the Owners even if there is a harshness, there is no inconsistency in this ruling. Tanker charters traditionally much more detailed and particular with regard to the discharging operation. Clause 16 of Beepeevoy 3 supplements requirements of time-bar clause 23 with the list of documents required for demurrage claim. Both time-bar and documentary evidence requirements very strict but not really unusual and moreover well known within the industry.

Readers will note the importance of presenting all the relevant documents with the claim: these must include the notice of readiness, the Statement of Facts and Discharge Pumping Logs where applicable. Without this documentation a claim could be time barred even if the claim itself is presented within the 90 days. It is also necessary to ensure that these documents 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.
(Laytime and Demurrage in the Oil Industry, Edkins and Dunkley, LLP 1998, at p. 71 )

Finally, harshness of law sometimes can be if not questioned but at least regretted in instances of liabilities for so-called misfortune risks, but in described case there was evident gross negligence on the part of Owners’ employees who failed to procure such important document as pumping log, which any chief officer knows must be ready by the end of discharging. Read full report here

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