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Claims for demurrage and loss of profits after cancellation

Introduction

Loading and the supply of cargo was being delayed because of complications with opening a Letter of Credit for the purchase of the intended cargo, which Charterer stated it was working to put in place. In addition to the demurrage due, Owner asserted a claim for profits that it would have earned had Charterers performed its obligations under the charter party.

Notice of Readiness

Owners did not submit a copy of a Notice Readiness (NOR) that Owner states was tendered upon vessel’s arrival at the Southwest Pass anchorage. However, Owner’s chartering manager, in a signed Declaration stated the NOR was given at 1110 on February 14, that laytime began 12 hours later at 2310 that day and that the vessel went on demurrage at 0640 on February 16. In a statement dated March 6, 2014, signed both by Mr. X and Owner’s CEO, Mr. Y, Owner confirmed the same times for the NOR and commencement of laytime. Owner’s Amended Submission also states that time on demurrage began at 0640 on February 16. Owner’s laytime calculations and demurrage invoices, however, record time on demurrage beginning 24 minutes later, at 0704 on February l6. This latter calculation reflected allowed laytime based on a cargo intake of 31,900 MT. Given that the charter provided for a cargo of 31,500 MT, 10% more or less in Owner’s option, the panel accepted as correct, the calculation of allowed laytime based on an assumed intake 31,900 and. therefore, accepts that demurrage began at 0704 on February 16, as reflected in Owner’s laytime statement. The panel also accepted that an NOR was tendered at 1110 on February 14, given the numerous references to it in documents sent to Charterers in the period before the charter cancellation, none of which Charterer disputed.

Demurrage ends

The panel did not accept that the vessel remained on demurrage following Owner’s cancellation of the charter. Neither the provisions of the charter nor any applicable principles concerning the computation of demurrage known to the panel, justify the continuation of demurrage beyond the cancellation of the contract.

Loss of profits

The panel found that Owner’s claim for lost profits in the amount of $225,574 was insufficiently supported to warrant an award. The panel accepted that Charterer’s failure to supply a cargo was a fundamental breach of the charter party and that this breach gave Owners the right to claim for damages reasonably owing from this act by Charterer. Based upon the documents submitted, the panel was unable to conclude what would have been the specific amount of profit, if any, that Owner would have made if the charter party had been properly performed. The panel did not find the data on voyage costs, such as the time charter hire payable to the head owner, or port disbursements, bunker costs, etc., detailed enough to calculate whether or not the voyage would have been profitable. In addition, details on the ballast voyage expenses were not provided, which the panel needed to appraise the total commercial undertaking. As a consequence, the panel could not calculate the specifics of Owner’s claim and thus was unable to determine whether Owners indeed would have made a profit had the cargo been supplied and the voyage been performed.

New York-Three arbitrators 2014

Comment

It demonstrates how the panel addressed the issue of the missing NOR and their reasoning behind accepting that the NOR was submitted at 11:10 AM on February 14. The lack of adequate evidence and explanation was detrimental to the Owners’ loss of profit claim. Regarding the termination point of demurrage, a similar perspective has been adopted by other tribunals in London.

Please note: Readers are encouraged to visit Jus Mundi (https://jusmundi.com/en) for further information and a comprehensive understanding of the tribunal’s decision.

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