This case is the latest in a long line of reported cases on demurrage time bars and almost certainly not the last. This note considers the main points that arose in the case and some others too.
Background facts in Kassiopi
The Appellants, Kassiopi Maritime Co Ltd appealed pursuant to Section 69 of the Arbitration Act 1996 in respect of questions of law arising out of an award of Messrs. Simon Gault and John Schofield.
Kassiopi were the owners of the vessel M/T ADVENTURE which was chartered to the Respondent, FAL Shipping Co Ltd, under a voyage charterparty.
The Owners brought a claim for demurrage in the amount of US$ 364,847.78 as a result of delays at both the loadport, Sitra, and the discharge port, Port Sudan. A formal demurrage claim was submitted by email which attached a number of documents. The Charterers disputed that demurrage was due to the Owners on the principal grounds that the demurrage claim had not attached all of the necessary documents and that, because the 90-day period to submit those documents had elapsed, the Owners’ demurrage claim had become time-barred.
The arbitration tribunal held that the Owners’ demurrage claim failed as the Owners had failed to provide; (1) The port log and time sheets kept as referred to in the Letters of Protest; and (2) A manuscript note on an email, made by owners’ port captain that the Master had received free pratique by VHF at Port Sudan. As a result, the claim for demurrage was held to be partially barred by the failure to comply with Clause 19.7 and wholly barred by the failure to comply with Clause 20.1.
On appeal the judge upheld the award.
The charterparty was on the well-known BPVOY4 from with additions and amendments etc and provided.
Demurrage rate :USD 17,000 PDPR
LAYTIME :TTL 84 Hrs SHINC
- Notice of Readiness (“NOR”)
6.3 Notwithstanding tender of a valid NOR by the Vessel such NOR shall not be effective, or become effective, for the purposes of calculating laytime, or if the Vessel is on demurrage, demurrage unless and until the following conditions have been met
6.3.2 in the case of the Vessel not berthing upon arrival and being instructed to anchor, she has completed anchoring at Anchorage where the vessels of her type customarily anchored at the port or, if she has been instructed to wait, she has reached the are with in the port where vessels of her type customarily wait; and
6.3.3 free practique has been granted or is granted within six (6) hours of the Master tendering NOR. If free practique is not granted within six (6) hours of the Master tendering NOR, through no fault of Owners, Agents, or those on board the Vessel, the Master shall issue a protest in writing (“NOP”) to the port authority and the facility at the port (“Terminal”) failing which lay time or, if the Vessel is on demurrage, demurrage shall only commence when free practique has been granted;
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
If vessel ordered to evacuate terminal or load/discharge place due to vessel’s inability to load/discharge cargo in accordance with load/pumping warranty as above, then all related time, expenses and or damages incurred by charterers shall be on owners account. Laytime shall not count till vessel again all fast at berth/terminal.
- 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.
It followed therefore that no claim for additional time used in the cargo operations carried out under this Clause 19 was validly presented unless compliant with clause 19 but even so all and any claim for demurrage, deviation or detention was also required to comply with the more general time bar presentational requirements of clause 20.
General approach to construction of time bar demurrage clauses
The commercial purpose of demurrage claim notification clauses was considered by Bingham J in The Oltenia  1 Lloyd’s Rep 448 at page 453:
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 … 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.
In The Abqaiq  1 Lloyd’s Rep. 18 (a case concerning Clause 20.1 of the BPVoy4 form) Tomlinson LJ observed that the approach to provisions such as these should be informed by certainty rather than strictness. He stated that:
- … For my part I am not sure that it is helpful to introduce into the approach to these provisions a notion of strict compliance. Where in a commercial contract one finds a provision to the effect that one party is only to be liable to the other in respect of claims of which he has been given notice within a certain period, it is fair to assume that the parties wish their relationship to be informed rather by certainty than by strictness…
- Thus the touchstone of the approach ought in my view to be a requirement of clarity sufficient to achieve certainty rather than a requirement of strict compliance which, if applied inflexibly, can lead to uncommercial results.
- The basic requirement of the clause is that the charterers shall have received both the claim and the supporting documentation within the 90-day period. I accept that the charterers must be in a position to know that the one relates to the other… I would further accept that, consistently with the need for certainty, it must objectively speaking be apparent that the documentation is that which supports the claim, but I do not consider that in approaching that issue one should adopt a pedantic or strict approach which focuses on the form of the presentation rather than the substance.”
- What is important, as Bingham J observed, is that the Charterers are put in possession of the factual material which they require in order to satisfy themselves whether a claim is well-founded or not.
[b]Clause 19 – were ‘one-off’ documents generated by the vessel in connection with the cargo operations, within the scope of “documentation maintained by those on board the Vessel in connection with the cargo operations…”?
The Owners submitted that it means documentation involving regular updates as compared to ‘one-off’ documentation and is to be compared with the wording in BPVOY3, which referred to “any documentation generated by the Vessel…”. Owners argued that “maintained” refers to a “record of the type that is kept/compiled on an ongoing basis to evidence a series of transactions and/or activities over a period of time” which was to be contrasted with “one-off documents such as e.g. a statement of facts coming into being solely for the purpose of the demurrage claim”.
The judge considered that there was some force in that distinction and that this approach might be helpful as general guidance rather than as a definition. Contemporaneous records kept by the vessel relating to the cargo operation will often be kept on such an ongoing basis, but not necessarily so.
As to whether the port logs and time sheets in this case are such records the judge though this would be a matter for the Tribunal to determine in the light of the guidance provided as to the meaning of the clause but in the circumstances the issue did not arise.
Clause 19 – obligation to produce terminal or discharging/receiving vessel documents or at least account for their absence
Clause 19 required the owner to produce copies of all other documentation maintained by those on board the Vessel or by the Terminal in connection with the cargo operations but no such document were sent with the claim in Kassiopi and nor was the absence of such documents explained; in particular no evidence of any request of the terminal was sent with the claim.
Terminal may it is suggested be presumed to include any counterpart tanker vessel where the cargo is discharged from or into a vessel.
The pumping log of the discharging vessel or its terminal equivalent where discharge is from a terminal is perhaps the most obvious document in this category.
This point did not in the eventuality arise on appeal in Kassiopi but the issue was however considered in passing in Waterfront Shipping Company Ltd v Trafigura AG where Gloster J said;
- …………………The whole purpose of demurrage time bars is that Charterers are provided promptly with all the documents necessary in order to consider Owners’ demurrage claim. The practical difficulties that Mr. Kimmins suggested Owners might encounter in having to produce the documents identified in clause 16(c) within 90 days were, upon analysis, more imagined than real. If the terminal had not “generated” a document “relevant to the discharge in question”, in the sense of producing it upon requests by the Vessel within the 90 day period, Owners would hardly have come under an obligation to produce it, as opposed to a note of protest. The clause would not be construed as imposing an obligation upon Owners to produce documents that it was realistically impossible for them to obtain from the terminal within the 90 day period.
- It would seem the better view therefore is that the owner at least has to account for the absence of such documents by sending with the claim some evidence of an unfulfilled request of the terminal or other vessel.
Clause 20 – requirement that claim had to be presented to Charterers, together with all supporting documentation substantiating each and every constituent part of the claim
The judge thought the best guidance as to the type of documents which are generally likely to meet those requirements, was to be found in National Shipping Company of Saudi Arabia where the following documents sufficed in that case; namely (1) a summary demurrage report, plus detailed demurrage reports for Freeport and Singapore; (2) notice of readiness, port log, statement of facts and Master’s letters of protest for Freeport; and (3) notice of readiness, statement of facts, discharging log, timesheet, Master’s letter of protest and pumping log for Singapore.”
In Kassiopi the Owners submitted that such documents were not required on the facts as all the information required for the purpose of the demurrage claim was set out in the signed Statement of Facts. They argued that there was no need for them to provide additional documentation which would simply provide further substantiation.
Under Clause 20.1 the Owners however were not merely to provide “supporting documentation” but “all” such documentation. Where the Owners have available documentation from the load and discharge ports such as port logs and timesheets those are, as the arbitration tribunal found, “relevant” to the claim made. In the present case that was specifically borne out by the fact that the Letters of Protest relied upon refer to delays and stoppages recorded in the port log/timesheets.
As such the judge thought that the port logs and timesheets were clearly supporting documentation for the claim made and in any event primary documents containing factual material which should have been made available to the Charterers so that they could satisfy themselves that the claim was well founded as consistent with the purpose of the clause. He accordingly agreed with the Tribunal’s conclusion that the port logs and timesheets were required to be presented by clause 20.
As to whether the email with the manuscript note was required under clause 20 he observed that at least in most cases secondary documentation of this kind would not be so required but in this case the time when free pratique was granted was important to the commencement and proper calculation of laytime and there was no record in the documentation provided of when it was granted at Port Sudan (in contrast to Sitra where it was recorded in the Statement of Facts). In such circumstances he thought it probably was to be regarded as a supporting document; as indeed the Owners so treated it and the arbitrators so found.
Obligation to re-send those documents with the claim which had already been sent to charterers by the owner or a third party
Again this point did not arise in Kassiopi but in National Shipping Company of Saudi Arabia v BP Oil Supply Company Lord Justice Tomlinson said;
- The basic requirement of the clause is that the Charterers shall have received both the claim and the supporting documentation within the 90 day period. I accept that the Charterers must be in a position to know that the one relates to the other. However I do not think that Mr Byam-Cook went so far as to suggest that the supporting documents must necessarily be presented at the same time as the claim, and if he did I would reject that suggestion. Once that is accepted, the words “together with” import no requirement other than that both presentations, that of the claim and that of the supporting documentation, must have been achieved within the 90 day period. I would further accept that, consistently with the need for certainty, it must objectively speaking be apparent that the documentation is that which supports the claim, but I do not consider that in approaching that issue one should adopt a pedantic or strict approach which focuses on the form of the presentation rather than the substance.
- So it would seem that though it may not be necessary to re-send documents with the claim the claim should at very least refer to any other documents previously sent as being documents relied upon in support of it.
Is the entire claim defeated by absence of one or more required documents ?
In [i[Kassiopi the arbitrators found that the consequence of the Owners failure to comply with Clause 20.1 was that their claim was “wholly barred” so that the claim failed regardless of whether or not the claim is partially barred under Clause 19.7.
There was no appeal on this point and in those circumstances, although it was referred to in argument, it was not necessary for the judge to choose between the differing views at first instance in two High Court decisions as to the effect of failing to provide supporting documentation in respect of a part of the claim.
In The Sabrewing  1 Lloyd’s Rep 286 Gloster J held that where one composite claim for demurrage is made then the entirety of the claim is barred even if the missing documents only related to a constituent part of the claim. However subsequently in The Eternity  1 Lloyd’s Rep 109 David Steel J took a broader view and the judge in Kassiopi said that if it had been necessary to determine this question he would have held that this is the preferable construction and that the general position is that if the required documentation relating to one part of the claim is incomplete the owner will not be barred from recovery of another part of the claim, where the two parts are unrelated.
General comments and observations
Owners should avoid or at least appreciate the dangers inherent in ‘sweeper up’ clause such as found in clause 19 and 20 BPVoy; clauses listing each and every required supporting document are far clearer and more certain.
Consider whether express provision should be made for incompletely made out claims so that the owner will only be barred from recovery of that part of the claim to which the missing documents relate.
If a document such as a pumping log is required to be signed by the Master make sure that it is indeed he who has signed it and not say his Chief Officer.
Make a note of all documents which are specifically referred to in the laytime, demurrage or claims clauses of the charterparty and send these with the claim or at least account for the absence of any. Consider also what permissions or notices are essential precursors to commencement and running of laytime.
Where ‘all supporting documents are required it is wise for an owner to send the vessel’s time sheets and port/deck logs with the claim along with other primary records. The statement of facts is usually only a secondary evidential record based on other primary material and may not of itself be enough.
The Master should make written request of the terminal or other counterpart vessel at the loadport and disport for its records and record such request in the deck log and protest any failure to comply with it.
It is preferable to send all documents relied on in one submission.