Oil & Gas/Shipping - Time bars and supporting documents in demurrage claims

In Tankreederei GmbH & Co KG v. Marubeni Corporation (the “Amalie Essberger”) [2019] EWHC 3402 (Comm), the Commercial Court decided that the Owner of a Vessel was not time barred from bringing a demurrage claim against the Charterer under a voyage charter party, despite the fact that the claim was not accompanied simultaneously with certain “supporting documents”. In doing so, the judgment demonstrates the approach of the Courts to common questions arising in the context of a demurrage claim.

Facts

Tankreederei GmbH & Co KG (the “Owner”) was the owner of the vessel M/T Amalie Essberger (the “Vessel”). The Vessel was chartered to Marubeni Corporation (the “Charterer”) for a voyage from Rotterdam to Castellon carrying Cyclohexane (C₆H₁₂).

The Vessel experienced delays in discharging at Castellon due to contamination in one of the Vessel’s tanks. The total laytime permitted for loading and discharging of the Cyclohexane was 48 hours but, as a result of the delays, this was exceeded by approximately 11 days.

The Owner claimed demurrage from the Charterer in the sum of USD 154,875.

The Charterer defended the claim on two grounds: (i) the contamination caused the delay and the contamination occurred onboard the Vessel and, as such, was the Owner’s fault; and (ii) the demurrage claim was not submitted within the permitted “time bar” period of 90 days after final discharge. On the second ground, the Charterer applied for summary judgment on the ground that the Owner had no real prospect of success.

The relevant provision read:

“Any claim for demurrage…shall be considered waived unless received by the Charterer…in writing with all supporting calculations and documents, within 90 days after completion of discharge…Demurrage…must be submitted in a single claim at that time, and the claim must be supported by the following documents: A. Vessel and/or terminal time logs; B. Notices of Readiness; C. Pumping Logs; and D. Letters of Protest.”

The claim was made the day after the final discharge and so was within the permitted period but was not accompanied by Pumping Logs or Letters of Protest documents (the “Disputed Documents”), which had been submitted during or shortly after the original loading (some 21 days earlier).

The issues were:

1. whether the claim had to be “supported” only by documents relevant to the claim, i.e. whether there was a requirement to produce irrelevant documents as well;
2. whether the obligation to provide supporting documents included documents already in the Charterer’s possession; and
3. whether the supporting documents had to be provided at the same time as the claim or whether it was sufficient that the documents were provided “at some point” before the expiry of the time bar period.

Decision

In respect of the first issue, the Court held that the words “must be supported”, followed by a list of categories of documents, made it “clear” that all categories of documents (i.e. A to D) must be provided in support of the demurrage claim – even if they were strictly irrelevant.

In respect of the second and third issues, which the Court took together as temporal issues, the Court held that there was no clear language requiring the supporting documents to be provided at one time and the same time as the claim. The only temporal requirement was that the supporting documents had to be provided within the permitted time period after discharge. This did not mean that, if supporting documents were provided prior to discharge, any claim relying on such documents would be time barred. Indeed, the fact that the claim did not reference the Disputed Documents did not detract from the fact that the Owner had already provided those documents to the Charterer. There was no requirement to re-submit the Disputed Documents when making the claim.

In these circumstances, the demurrage claim was not time-barred and the Charterer’s application for summary judgment was refused.

Comment

Time bars to demurrage claims are a common feature of voyage charter parties. Such clauses regularly require “supporting documents” to be provided. Parties vary in their approach whether to list the categories of documents or to keep the requirement general and to avoid lists.

It is noteworthy that both “list” and “non-list” cases accept the following principles:

1. the commercial purpose of a time bar provision is to ensure that demurrage claims are made by owners within a short period of final discharge so that claims may be resolved when facts are fresh, which requires the charterers to be put in possession of factual material in support of the claim;
2. there is no automatic requirement that the documentary requirements of a time bar provision should be strictly complied with; it is fair to assume that the parties wish their relationship to be informed rather by certainty than by strictness (i.e. substance over form); and
3. as a time bar provision has the potential to prevent the making of an otherwise valid demurrage claim, the provision must be clearly stated, with any ambiguity construed restrictively against the charterers – although, as the Court noted, such an approach to interpretation is now (after later Supreme Court authority) a “last resort…there must be a real ambiguity” and the initial analysis should be of the ordinary and natural meaning of the language used, the commercial purpose and the factual background, and such analysis should be applied less rigorously than with the approach to exclusion clauses.

This case joins a growing number of cases (including The Ocean Neptune [2018] EWHC 163 (Comm)) interpreting the requirements of a time bar provision which includes a list of categories of “supporting documents”. In these cases, the very presence of a list may indicate an intention that all such documents must be provided, especially where: (i) mandatory language is used; (ii) the list covers documents often (or always) relied upon in support of a demurrage claim; and (iii) the provision of such documents is straightforward and not onerous. The Courts are consistently satisfied that the irrelevance of a document is not – in and of itself – a sufficient reason for a failure to give effect to the clear wording of the time bar provision.

The case can be compared with the recent decision in MUR Shipping B.V. v. Louis Dreyfus Company Suisse S.A. [2019] EWHC 3240 (Comm), a “non-list” case concerning the time bar for owner liability. The documentary requirement in the time bar provision was for “all available supporting documents (whether relating to liability or quantum or both)” to accompany the claim. The Commercial Court held that the charterer's claim for repayment of advance hire on termination of the charter party was extinguished where the survey report did not accompany the claim but was attached to the claim submissions after the 12-month time bar period had expired. Mrs Justice Cockerill said:

“What is supportive is dictated by the claim which is being advanced. What is required to support the claim is elucidated by the process of setting out the limbs of the claim, here covering both liability and quantum. If there is a document which supports any limb or claim it needs to be supplied; and it is telling that when following that process, albeit at a later stage of the dispute, [the charterer] turned to this document and it did so to support its case as well as anticipating a defence”.

In line with its predecessors, the Court in The Amalie Essberger demonstrated the importance a Court will attach to the practical considerations accompanying the provision of documents concerning the operation of a vessel. For example, the Court reached its conclusion on the first issue (the documents to be provided) in part because the listed documents were almost always relied upon in demurrage claims; and, in respect of the second and third issues, in part because some supporting documents had to be provided within seven days of loading, which in many cases would be before completion of discharge.