Laytime and Demurrage

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The question of whether demurrage liquidates all or just some of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime has divided practitioners and academics for decades and, more recently, the English Court in K Line Pte Ltd  v. Priminds Shipping (HK) Co Ltd [2021] EWCA Civ 1712 (The Eternal Bliss). Now, in granting permission to appeal to the shipowners, it is a question which the Supreme Court has said it will answer.…

Continue Reading The Eternal Bliss – Permission to appeal granted by the UK Supreme Court

Public today: an important judgment handed down by the English High Court this morning has re-opened the door to recovering damages in addition to demurrage for losses caused by exceeding laytime in cargo operations.

In today’s 43 page judgment in K Line Pte Ltd vs Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [2020] EWHC 2373 (Comm), Mr Justice Andrew Baker thoroughly surveys almost 100 years of law and commentary on a question that has never been properly resolved and which has divided the opinion of academics and practitioners alike.

In reaching the “firm and clear view” that The Bonde (1990), thought by some to have settled the issue 30 years ago, was wrongly decided the Court found that, quite apart from demurrage, damages can be also recovered for other losses caused by a failure to load or discharge within the allowable laytime. No separate breach of charter is required.
Continue Reading Damages in addition to demurrage – long standing debate settled in owners’ favour

There seem to be endless variations of the clauses in voyage charterparties requiring owners to provide copies of the relevant or supporting documentation with demurrage claims. We receive a surprising number of queries relating to what is required.

In Amalie Essberger, a Commercial Court decision of 11 December 2019, the charter was on an amended ASBATANKVOY form, and there were two rider clauses dealing with documentation.
Continue Reading Demurrage claims

Two Ocean Tankers’ vessels were held in Houthi-controlled Hodeidah, Yemen in 2016 due to a payment dispute. That dispute – for around US$19 million (excluding interest) – has now been decided by an interesting commercial court decision that highlights the importance of careful wording in demurrage provisions.

Background

The claimant, Gunvor SA (the Seller), entered into a contract (the Sale Contract) in April 2015 with CruGas Yemen Ltd (and/or CruGas Ltd) (the Buyer) for the sale of gasoline in 12 monthly shipments CIF Hodeidah.

In order to fulfil the Sale Contract, the Seller had entered into a long-term contract of affreightment (CoA) with one of its group companies, Clearlake Shipping Pte Ltd (Clearlake), in January 2015. The CoA stated that, when the Seller needed a vessel, Clearlake would charter-in a vessel from the open market and then sub-charter her to the Seller “at cost”. In other words, the freight and demurrage rate from each charter would be incorporated into the CoA.

Several cargoes of gasoline were delivered to the Buyer without a major issue. However, problems arose under shipments on the Chang Hang Xian Feng (sub-chartered by the Seller around 10 July 2015), Ocean Mars (sub-chartered around 22 July 2015) and Hong Ze Hu (sub-chartered around 10 September 2015 and again around 10 February 2016).

The key issue was the Buyer’s failure to make the agreed pre-delivery payments for each shipment and also to pay outstanding demurrage. The Seller therefore refused to permit the vessels to discharge the gasoline at Hodeidah. While being held, the vessels incurred substantial demurrage (for example, the Hong Ze Hu was on demurrage for 261 days) and expenses such as anchorage fees and increased AWR premiums.

Eventually the Seller terminated the Sale Contract and issued a claim for around US$19 million plus interest. This comprised demurrage which had accrued under each of the three vessels, market losses in relation to the 55,000 tonnes of gasoline remaining on-board the Hong Ze Hu, and other expenses. The key issues which arose during the hearing (which the Buyer did not attend) are summarised below.

Issues

Who was the Buyer – CruGas Yemen Ltd (the first defendant) or CruGas Ltd, the party named in the Sale Contract (the second defendant)?…

Continue Reading Parties to a contract: demurrage liability under sales contracts – lessons learned from Gunvor SA v. CruGas Yemen Ltd & CruGas Ltd [2018] EWHC 2061 (Comm)

NYK Bulkship (Atlantic) NV (Respondent) v Cargill International SA (Appellant) (“The Global Santosh”) [2016] UKSC 20 (overturning the Court of Appeal [2014] EWCA Civ 403)

The Supreme Court last week handed down an important decision concerning the issue of when a charterer will be held responsible for its agents under a charterparty.

Contractual position

NYK was the disponent owner of the m.v. Global Santosh (“the Vessel”). NYK time chartered the Vessel to Cargill on an Asbatime form, which is a variation of the NYPE 1946 form. Cargill sub-chartered the Vessel to Sigma Shipping Limited under a voyage charter. The Vessel carried a cargo of cement in bulk from Sweden to Nigeria under a sale contract between Transclear SA (“Transclear”) and IBG Investments Ltd (“IBG”). It is likely that Transclear was a further sub-charterer of the Vessel.…

Continue Reading The Global Santosh: The Supreme Court provides guidance on a charterer’s responsibility for its agents

Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd [2015] EWHC 318 (Comm)

Owners and Charterers had entered into a voyage charter on the BPVOY4 form. The charter contained the following provisions:

  • Clause 19.7.1: demurrage claims to be accompanied by the vessel’s pumping log signed by a senior officer of the vessel and a terminal

…

London Arbitration 14/14

The vessel in question was chartered by way of a fixture recap. Owners brought a claim for demurrage against Charterers. Charterers argued that the charter did not contain a valid arbitration agreement/clause, and that although they had agreed to pay freight, they had not agreed to be liable for demurrage.

Incorporation of …

London Arbitration 4/14.

Facts

The subject vessel tendered NOR around 75 miles from the loadport of Matadi. At the time she was stated to be “in Matadi Roads”, but was in fact at Banana pilot station rather than Matadi Port Anchorage. She then proceeded to the port of Boma, where she awaited a change of…