The High Court of Justice (Business and Property Courts of England and Wales) (the “Court”) heard a case in which, pursuant to section 69 of the Arbitration Act 1996, Tricon Energy Limited (the “Claimant”) appealed an award granted by the arbitral tribunal (the “Tribunal”).
MTM Trading LLC (the “Defendant”) was the owner of the vessel, MTM Hong Kong (the “Vessel”) which was chartered (leased) to the Claimant under a charterparty, dated February 2017 (the “Charterparty”). A charterparty is a deed or an agreement for the hire of a ship and delivery of cargo between a shipowner and a trader. The Defendant brought a claim against the Claimant in the amount of USD55 841.16 (Fifty Five Thousand Eight Hundred and Forty One United States Dollars and Sixteen Cents) for demurrage (the “Claim”). Demurrage is a charge payable to the owner of a chartered ship for failure to load or discharge the ship within the time agreed. The Claimant had been delayed at both the loading and the discharge port and thus a formal demurrage claim was sent to the Claimant with a number of documents attached (the “Demurrage Documents”). The Claimant disputed that the Defendant was entitled to the Claim on the basis that (i) the Defendant had not attached all of the necessary documentation to the Demurrage Documents and (ii) that because the 90-day period to submit the Demurrage Documents had elapsed, the Claim had become time-barred. A time-bar refers to a bar of a legal claim that arises from the lapse of a defined length of time.
The Claimant disputed that the Defendant was entitled to the Claim on the basis that (i) the Defendant had not attached all of the necessary documentation to the Demurrage Documents and (ii) that because the 90-day period to submit the Demurrage Documents had elapsed, the Claim had become time-barred. A time-bar refers to a bar of a legal claim that arises from the lapse of a defined length of time.
The Tribunal considered the wording of the Charterparty, taking into consideration certain provisions. Clause 10(g) of the Charterparty provided that “In the event of the Vessel being delayed in berthing and the Vessel has to load and/or discharge at the port(s) for the account of others, then such delay and/or waiting time and/or demurrage, if incurred, to be prorated according to the bill of lading quantities”. Further, clause 38 therein held that “Any claim/invoice which Owner [the Defendant] may have under this Charterparty shall be waived and absolutely barred, if claim/invoice and all supporting documents are not received by Charterer [the Claimant] before the time bar (being 90 days)“.
In light of the above, the Defendant’s claim was submitted within the 90-day period with certain supporting documentation, however the Defendant did not provide copies of the bill of lading as required by clause 10(g) of the Charterparty. A bill of lading is a detailed list of a ship’s cargo in the form of a receipt given by the master of the ship to the person consigning the goods.
At arbitration, the Claimant argued that the Defendant had failed to provide ‘all supporting documents’ in line with clause 38 as copies of the bill of lading had not been provided. The Defendant held that their claim was sufficiently documented within the documents that they had provided.
In light of the arguments put forward by each of the parties, the Tribunal considered the following question of law – “where a charterparty requires demurrage to be calculated by reference to bill of lading quantities, and contains a demurrage time bar which requires provision of all supporting documents, will a claim for demurrage be time-barred if the vessel owner fails to provide copies of the bill of lading?“
The Tribunal answered this question of law in the negative and thus held that the Defendant’s claim succeeded in full. The Claimant was then given permission to appeal.
APPEAL IN THE HIGH COURT
In the Court, the Claimant argued that the Tribunal had erred in construing that clause 38 of the Charterparty required no more than sufficient information to allow the Claimant to understand the Defendant’s case. It argued that ‘all supporting documents’ had to be submitted which included the bill of lading, without which they could not establish whether the Defendant’s claim was well founded. The Defendant argued that the Tribunal had been correct and that clause 38 only required ‘essential’ documents on its proper construction.
The Court referred to the case of National Shipping Company of Saudi Arabia v BP Oil Supply Company (The Abqaiq)  EWCA Civ 1127, wherein the court held that the requirement was for “documents which objectively would or could have substantiated each and every part of the claim” and so a party must be “put in possession of the factual material which they require in order to satisfy themselves that the claim was well-founded.”
Taking the above into consideration, the Court held that it could not consider it possible to treat the bill of lading as outside the requirements of clause 38. Accordingly, the Court found that the Defendant’s failure to produce and deliver a bill of lading to the Claimant in supporting the Demurrage Documents, resulted in barring their entire Claim. Thus, the Tribunal’s award was set aside and the Claimant’s appeal was successful.
This case indicates that the courts will give effect to the actual wording of a charterparty, requiring that ‘all supporting documents’ be provided when submitting a claim of demurrage. The judgment illustrates that both shipowners and traders are required to have a clear understanding of the terms of their charterparty and ensure that any claims made by one against the other must be processed strictly in accordance with the terms of the charterparty.
Written by Michal Asoulin and Angela Paschalides