Saturday, September 23, 2023

Asbatankvoy- Consequential delays and demurrage claims

Owners sought a Partial Final Award for outstanding demurrage of $694,443.58 plus interest, fees and costs, under an ASBATANKVOY charter party for one voyage from Uruguay to Chile.

The issue in this arbitration, under the SMA Rules, was whether the owner was entitled to a Partial Final Award for outstanding demurrage incurred during two periods 2 and 3, without first hearing evidence and determining whether the alleged unseaworthiness or fault of the vessel or owner caused or contributed to her collision with the supply vessel and resulting delays incurred during Period 1 at La Paloma.

This was essentially a burden of proof dispute. As found, the owner carried its burden for its demurrage claims, whereas the charterer did not.

The background

The vessel tendered NOR on March 11, 2014, at 0130 at La Paloma, Uruguay, two days beyond her cancelling date, which the charterer accepted at 0642. She was to load in a ship-to-ship operation, but at about 0630, a supply vessel collided with her. Charterers reported this incident to the receivers, who stated that it is essential for the vessel to arrive and receive the cargo within the loading window to maintain their commercial commitments.

The vessel underwent permanent repairs at a local shipyard and re-tendered NOR on March 21 at 0230, which the charterers accepted. On the same date, the receivers wrote to charterers that the cargo would arrive considerably late and the vessel’s arrival at the discharge port would be treated as outside the delivery window.

Upon completion of loading on March 26 at 0654, the Master protested for delays between March 21 at 0230 and the commencement of loading due to the low average rate of 5,373.23 compared to the vessel’s maximum requested loading rate which was up to 9,480 cubic meters per hour.

On April 5 at 1510, the vessel arrived at Quintera and tendered NOR, which was not accepted until May 3 at 1255. The Master protested and noted that only two hoses of 10 inches bore were connected while the vessel’s manifolds were 3 x 16 inches and the maximum requested pressure 6 kgr/cm2 at the ship’s rail. Discharging began on May 3, 1606 and was completed on May 4, 1930 hours.

The parties’ contentions


The owners’ demurrage claims related to three periods:

Period 1 —From March 11, 2014, at 0130 that NOR tendered until NOR re-tendered on March 21 at 0230.

Period 2 — From March 21 at 0230 until completion of loading on March 26 at 0654.

Period 3 — From arrival and tendering NOR at Quintera, Chile on April 5 at 1510 until completion of discharging on May 4, 2014, at 1918.

Owners dispute that the collision with the supply vessel was due to unseaworthiness or the masters’ negligence or fault. Given that the charterer would dispute the first period, the owners sought a partial final award only for periods 2 and 3, which were said to be unrelated and unaffected by any delays due to the collision. Further, the charterer utterly unexplained period 2 delay at La Paloma. Concerning the delays during period 3, from April 5 due to “documentation issues of cargo receivers”, these were resolved on April 16, and the vessel moved to the anchorage. However, delays occurred from April 14 while awaiting the arrival of the other STS Vessel until she arrived at Quintera on April 30.

The owners’ case was that the charterers, receivers, or agents provided no evidence to explain these delays, and the charterers failed to carry their burden of proof with respect to explaining the delays during periods 2 and 3. Therefore, it is appropriate to have a Partial Final Award in its favour.


Charterers contend that owners’ request for a Partial Final Award should be denied because the demurrage claims for periods 2 and 3 are related to facts and issues arising from the collision. First, the collision delays prevented the vessel from loading during the loading window, and the owners’ claims were premature and not ripe for determination. Second, the collision was caused by the vessel’s unseaworthiness and/or the Master’s negligence resulting in delays at loading and discharging ports. Third, the collision was the proximate cause of the vessel missing her delivery window at Quintera, resulting in delays beyond the charterers’ control. Lastly, the owners’ demurrage calculations were inaccurate, and the owners’ claim for attorney’s fees should be denied as the SMA Rules are inapplicable to this proceeding.

Discussion and decision

The law is well-established concerning the issues of an owner’s obligation to present its vessel within her laycan, a charterer’s reciprocal right to cancel should the vessel be presented beyond her laycan, and the parties’ respective burdens of proof in demurrage disputes.

The owner was obligated to proceed to the loading port with all “convenient dispatch”, and if the vessel was not ready to load on the cancelling date, the charterer had the option of either cancelling by giving timely and unequivocal notice or accepting the vessel. Without an effective notice of cancellation, the Charter remained in effect. The charterer may also have a right to damages if the owner breached its obligations to proceed with dispatch or, in relatively rare cases, its conduct was unreasonable and/or deceptive. The owner has the initial burden of proving its prima facie claim for demurrage by establishing through notices of readiness, port logs, vessel logs and laytime calculations that time consumed in loading and discharging the cargo exceeded the agreed laytime. The charterer is liable to pay demurrage for excess laydays except 1) where a specific provision of a charter party exonerates the charterer from liability; 2) where the delay is the fault of the owner or those for whom it is responsible; and 3) where the delay is caused by vis major.

The owners and charterers were experienced and sophisticated players, and a “time is of the essence” provision for the loading/discharging windows at La Paloma and Quintera could have been easily inserted into their Charter. However, it was not, and it was undisputed that this “timeliness” was never brought to the owner’s attention and remained strictly between the charterer and its receiver.

The only “timeliness” provision in the Charter was the laycan dates of March 8-9. The vessel was presented at La Paloma beyond these dates on March 11 (two days into the loading window discussed only between charterer and receiver) and was unconditionally accepted. The charterer could have exercised its cancellation rights under Clause 5 of the Charter, but freely chose not to do so and thereby waived its rights in this respect.

The charterer had not explained that the collision on March 11 proximately caused all delays or rebutted the owners’ submissions.

Accordingly, the majority awarded the owners their demurrage claims of $694,443.58 plus interest $13,839.96. In addition, the owners were entitled to a reasonable allowance for attorney’s fees and costs based on Clause 24, which would be addressed in the Final Award.

Partial Final Award, 27 March 2015.

This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundi awards mostly come into the public domain through enforcement under the NYC 1958.

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