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Gencon-liability for delay and force majeure

The charterers have failed to discharge the burden of proof of the allegations made against the demurrage claim. The delay in loading was due to the temporary unavailability of the transshipment vessel. The unavailability of cargo was not intended to be an additional force majeure event. It would only be an exception to laytime running and demurrage accruing if it was the result of a force majeure event, as listed in clause 45.

The subject vessel was chartered on an amended Gencon 1976 to load 205,395 mt iron ore from Panaji anchorage, Goa, to Rizhao port, China. Disputes arose about the loading port accrued demurrage USD 509,826.03 and referred to a sole arbitrator under the LMAA Terms 2006. By way of counterclaim, the charterers sought to recover an overpayment of demurrage and despatch money accrued at the discharge port. In the alternative, the charterers sought a declaration that their liability to pay demurrage was no more than USD 18,245.34.

The disputes centred on the proper construction of the force majeure clause 45 and the charterers’ lack of proper evidence to support their submissions.

The facts

The vessel tendered NOR at 01.30 hours on 14 February 2010, and laytime commenced at 01.30 hours on 15 February 2010. The vessel’s loading from the transshipment vessel took place from 14.24 hours on 6 March 2010 to 07.36 hours on 15 March 2010, and iron ore fines took place from 08.12 hours on 15 March 2010 to 07.30 hours on 24 March 2010. The owners submitted that laytime expired at 21.36 hours on 27 February 2010, and the vessel remained on demurrage until completion of loading, namely at 07.30 hours on 24 March 2010, totaling 24.020833 days.

The charterers’ main argument was that the running of laytime was interrupted by an event beyond the control of the charterers, which was irresistible, unforeseeable, and the direct and proven cause of delay to loading, as listed in clause 45. In particular, without evidence (even after a peremptory order), the charterers argued that these interruptions took place:

a. From 01.30 on 15 February 2010 (the commencement of laytime) to 10.55 on 6 March 2010 on account of the unavailability of cargo for loading, given temporary imposition of Government prohibition on the issue of mineral dispatch permits for the transportation of iron ore export;

b. Further periods totaling 55 hours 13 minutes on account of the unavailability of cargo on board the vessel used for transshipping the cargo as a result of the unavailability and/or insufficiency of feeder barges

c. Weather delays pursuant to PWWD exception; surveys under clause 34.

The issues

The main issue in this reference was whether or not the unavailability of cargo, or unavailability and/or insufficiency of feeder barges, and/or a Government prohibition amount to a force majeure event within the meaning of clause 45 on which the charterers relied to disclaim liability for the total balance of the demurrage claimed.

The owners’ case was that neither unavailability of cargo nor the unavailability of feeder barges was a force majeure event within the meaning of clause 45.

Held,

The charterers have failed to discharge the burden of proof of the allegations made against the demurrage claim in both the main and in their alternative case. On the basis of the documents, the delay in loading was due to the temporary unavailability of the transshipment vessel. The unavailability of cargo was not intended to be an additional force majeure event. It would only be an exception to laytime running and demurrage accruing if it was the result of a force majeure event, as listed in clause 45.

Charterers provided no such evidence. Moreover, the alleged Government prohibition, even if proven – which was not – was not one of the force majeure events listed, and so even if such alleged prohibition had caused unavailability of cargo resulting in delay in loading, this would not have availed the charterers under clause 45. Also, there was no proof that there was unavailability of cargo; it may have been unavailability of feeder barges for the delay of the vessel to commence transshipment, which was not mentioned in clause 45 as a force majeure event.

The tribunal expressed the view that clause 45 was badly drafted, with missing words and grammatical errors. The tribunal added that while keeping in mind the intention of the parties and taking into account the surrounding circumstances, the clause would need to be redrafted by adding the missing words, as shown in brackets below, which were required to give meaning to the clause in the English language and to give effect to the intention of the parties:

Charterers shall not be liable, if [a] force majeure [event], including acts of god, war, hostilities revolution, insurrection, acts of public enemy, sabotage, fires, floods, earth quakes, storms, landslides, bore tides, explosions, strikes, embargoes, blockage, [is the] direct and proven cause [of] . and-delay in loading or discharging including unavailability of cargo, whether in whole or [in] part.

For the readers’ easy reference, clause 45 (FORCE MAJEURE) read as follows:

“Charterers shall not be liable, if force majeure including acts of god, war, hostilities revolution, insurrection, acts of public enemy, sabotage, fires, floods, earth quakes, storms, landslides, bore tides, explosions, strikes, embargoes, blockage, direct and proven cause and delay in loading or discharging including unavailability of cargo, whether in whole or part”.

The interpretation of the clause was restricted to the words used as force majeure events, because the word whatsoever was missing, and as an exception clause, any ambiguity would be interpreted against the party in whose favour the clause was intended.

Accordingly, the charterers were liable to pay the demurrage as claimed, along with interest and costs.

Final Award, 25 August 2011

Note: for more LMAA published awards dealing with similar disputes, check this free guidebook:https://charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage/

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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