DEMURRAGE : TRICON ENERGY LTD. V MTM TRADING LLC [2020] EWHC 700 (COMM)

BACKGROUND

Indonesia’s practice of maritime industry frequently executes BIMCO’s Standard Form of Charter Party, a Standard Form of Charter Party derived mainly from common law principle and precedents. The usage of BIMCO Standard Form of Charter Party is allowed under Indonesian law owing to the freedom of contract principle. However, we have seen that in some Charter Parties (C/P) in which an Indonesian legal entity is as one of the parties, the C/P is governed under Indonesian law. Unfortunately, in the event of dispute, the Indonesian parties may find it difficult to apply, and make reference to certain issues due to a lack of legal cases, precedents and/ or other material. Even though, we are aware that Indonesian courts are not bound by precedents, let alone English court precedents, nonetheless, such legal vacuums caused by the lack of precedents may be filled, especially in the interpretation of a Charter Party by reference to a decision from the English High Court, giving the local Court guidance on its interpretation and an additional perspective. The following case may be instructive for Parties who may face an issue of the need for documentation in the case of demurrage.

Keywords: Shipping, Charter Party, Demurrage, Time Bar, Bill of Lading.

CASE NOTE

1. Parties

The case between Tricon Energy Ltd. as Claimant (“Charterer”) and MTM Trading LLC [2020] EWHC 700 (Comm) as Defendant (“Owner”) is in point.

Both parties entered into a Asbanktavoy C/P. A dispute concerning demurrage between the parties was previously resolved through arbitration. The Charterer (Tricon Energy Ltd, was a Respondent in Arbitration – Claimant in Appeal) then, submitted an appeal against the Arbitration Award to the English High Court and the English High Court rendered its decision on 23 March 2020 (“the Decision”).

2. Legal Analysis (Direct Quote and Excerpt from the Decision)

a. “Relevant Charterparty

The most relevant provisions of the Charterparty were as follows:

By clause 10:
“Laytime/Demurrage
… …
(e) If load or discharge is done simultaneously with other parcels then laytime to be applied is prorated between the parcels.
…
(g) In the event of 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”.

By clause 12:
“Statement of Facts

Statement of facts must be signed by supplier or receiver, respectively. If they refuse to sign, the Master must issue a contemporaneous protest to them. Owner shall instruct each port agent to release port information to Charterer on request and to forward to Charterer the statement of facts and N.O.R. as soon as possible after Vessel has completed loading or discharge there”.

By clause 38:
“Time Bar Clause

Charterer shall be discharged and released from all liability in respect of any claim/invoice the Owner may have/send to Charterer under this Charter Party unless a claim/invoice in writing and all supporting documents have been received by Charterer within 90 (ninety) days after completion of discharge of the cargo covered by this Charter Party or after other termination of the voyage, whichever occurs first. Any claim/invoice which Owner may have under this Charter Party shall be waived and absolutely barred, if claim/invoice and all supporting documents are not received by Charterer before the time bar”.

b. The Parties’ Case

The Charterers’ case was that the Owners had failed to provide “all supporting documents” in accordance with clause 38 because copies of the bills of lading were not provided.

The Owners’ case was that their claim was sufficiently documented for the purpose of clause 38 by the statements of facts and, in any event, the bill of lading for the second parcel was not an available document for the purposes of clause 38.

c. The Arbitration Award

The tribunal answered the question in the negative, on the basis that the provision of the statement of facts was sufficient.

The tribunal reasoned:
“The statement of facts which records the bill of lading figure is in reality all that Charterers need to check that the apportionment of waiting and discharging time has been correctly calculated.”

The tribunal added:
“We were not persuaded by the Charterers’ argument that they needed to see the bill of lading to satisfy themselves that the cargo quantity figures recorded in the statements of facts had been calculated on the same basis, namely measured in air or in a vacuum; since the statements of facts were prepared by ship’s officers in the knowledge that they would be required to pro-rate discharging time, they would have used the cargo quantity figure recorded by the same method in each bill of lading.”

The tribunal recorded that to the best of its recollection in disputes involving the discharge of different parcels of cargo, parties to those disputes have “only ever adduced in evidence statements of facts and never any bills of lading”. It also had “very real doubts whether an owner could properly forward a copy of a bill of lading to a third party in an unconnected transaction without the permission of the holder of that bill of lading”.

d. The Legal Question on the Appeal

“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 bills of lading?”

e.English High Court Conclusion

Yes. only on the basis of an interpretation of the particular clauses in this case, and without suggesting that there is a requirement to provide bills of lading where these are not available in a particular case.”