Tuesday, December 5, 2023

Agents arrested the vessel due to unpaid disbursements at Rosario- Owners claiming unpaid hire, bunkers and expenses

In this arbitration, under the LMAA Terms, various disputes arose under an amended SHELLTIME 4 CP. The Owners submitted that the Charterers had specifically, wrongly and in breach of the Charter Party failed: a) to pay hire as and when due following the 4th hire instalment in breach of Clause 8, and b) to provide and pay for bunkers resulting in the Owners having to bunker the vessel in Santos at a cost to the Owners of US$143,498.36 in breach of Clause 7(a); and c) to pay for disbursements at Rosario resulting in the Owners being required to pay US$61,370.00 to obtain the vessel’s release from arrest at New Orleans in breach of Clause 7(a).

[Author’s Comment: The charterers did not participate in arbitration despite being given every opportunity to do so. Therefore,  a Tribunal will proceed to its Award on the Claimant’s Submissions and Documents alone (providing a case has been made out) if the Respondents refuse or fail to participate in the arbitration procedure. However, the arbitrator has a duty to carefully consider the documents and calculations accompanying the Claimant’s Submissions before issuing any Award.]

Payment of hire

Owners submitted that the Charterers failed to pay hire as and when due and therefore exercised their right of lien over sub-freights to obtain payments direct from sub-charters. These totalled US$1,466,319.75, and credits for the various amounts were shown in the Hire Statement.

The owners adduced copies of all supporting documentation. The tribunal was satisfied that the Charterers had persistently failed to pay hire as and when it became due; therefore, the Charterers were clearly in breach of Clause 8 of the Charter Party due to these failures.

Payment of bunkers

Clause 7(a) of the Charter Party provided for the Charterers to pay for bunkers, which was the usual practice under a time charter such as this. However, the Owners submitted that, whilst in Santos, the Charterers failed to stem and pay for bunkers advising the Owners that they had financial problems preventing payment from being made. The tribunal held that such actions again clearly placed the Charterers in breach of Clause 7(a), and the Owners were entitled to reimbursement of the full amount being claimed for bunkers at Santos.

Payment for release of vessel from arrest

In compliance with the Charterers’ orders, the vessel called at Dock Sud and Rosario, incurring disbursements at each port. The Owners contended that the Charterers did not pay the agents. Subsequently, on 15 July, the agents demanded US$59,869.00, advising that if they did not receive payment by 17 July, they would take legal action, which may include the vessel’s arrest.

The Owners contended that the Charterers made no payment to the various demands. Accordingly, the vessel was arrested in New Orleans on behalf of the agents pursuing their claim, which was by then US$60,574.16. From that moment, additional fees of US$30.00 per hour were incurred in respect of the fees of the Appointment of Custodian. In the event that the vessel was released at 1309 on 24 July, the owners had paid the sum of US$61,370.00, and they adduced full supporting documentation.

The tribunal held that Clause 7(a) provides for the Charterers to settle the agents’ account for various items which were always for the account of the Charterers under a time charter, and it was no different in this case. The fees had been incurred, and the Charterers had failed to pay the amount called for, which resulted in the vessel being arrested in New Orleans.

The tribunal held that the Charterers’ failure to settle the agents’ account at Dock Sud and Rosario was a clear breach of Clause 7(a), which directly resulted in the vessel being arrested. Consequently, the Owners must be entitled to repayment of the sum of US$61,370.00, which amount was caused as a direct result of the Charterers’ failure to pay the agents for the disbursement account following the vessel’s call at those ports.

Consequently, the owners’ application for an Interim Award of US$1,631,833.82 succeeded, and costs followed the event in the usual way.

Note: This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundihttps://jusmundi.com/en/.These awards mostly come into the public domain through enforcement under the NYC 1958.

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