The below analysis is based on the published London Maritime Arbitration awards cited in the guidebook: Prokopios Krikris, A Snapshot Guide to Laytime & Demurrage,2021.
Part A: BULK CARRIERS
Figure 1: The BIMCO GENCON form leads
Figure 2: Sophisticated bargains causing concern
Figure 3: Owners’ fault as a usual defence to demurrage claim.
Figure 4: The key issues relating to NOR.
Part B: TANKERS
PartB: TANKER
Figure 5: The ASBATANKVOY form leads.
Figure 6: Issues of interpretation and when time starts are leading.
Part C: COMPARISON BETWEEN BULKERS AND TANKERS
Figure 7: The awards and issues involved per category – bulkers lead.
Part D: BRIEF REMARKS
The sample used is not large. However, from personal experience, the results appear to be realistic. Disputes related to: draft survey, shifting time, excluded periods when the CP is silent on this, excluded periods from laytime or time on demurrage when the CP refers to ‘Owners’ cost or time’, rejection of holds (always invalidates the NOR?), legal readiness (formalities), weather delays and when laytime (or demurrage) ends are usually found in practice. It should be no surprise that there are so many published summaries of awards on these issues. In some cases, inconsistent or vague terms were at the heart of the problem. So, precise drafting (both text and context) will assist the parties in reducing disputes.
The published summaries on sale contracts are limited in number.
Some published summaries do not mention the charter form. That will have an impact on the results shown in figure1.
Most of the summaries contain the authorities, including the previous awards; the tribunal was referred to, e.g. case law and excerpts from leading law textbooks. Case law and prior awards have been considered in some cases, and either distinguished on the facts or followed.
The wording of the clause was open to question: terms agreed upon either during the formation of the contract or after the contract was made, e.g. special agreements, addendum, etc. The disputes usually fall under these categories: charter party, when time starts, and when time ends. The principles of contractual interpretation & construction were applied: ejusdem generis, contra proferentem, specific terms to prevail over general terms, reading the contract as a whole, and whether to imply terms or duties- implied terms rejected when served as to re-write the contract for the parties. Extrinsic evidence to qualify the terms of the contract has usually been denied.
The above raise issues of interpretation or construction, several which are complex and costly to resolve. However, the disputes related to SOF usually create low-value claims, especially if the weather delays happened during the excepted periods.
The majority of ‘SOF cases’ concerning weather delays. In most cases, the tribunal decided the issue in favour of the Owners.
But it depends on the facts of each case, with cases falling on either side of the line. Some cases were decided based on where the burden of proof lies (distinguishing between exception and interruption) and whether the burden was properly discharged. As found, the parties submitted conflicting evidence: logs, weather reports, SOF from various parties, etc. The threat of weather or anticipation of bad weather is not itself bad weather (case law considered). Some extreme weather events were considered: typhoons, hurricane, tropical storm warnings, floods etc., as a weather exceptions or interruption.
Holiday: the parties submitted conflicting (or lacked) evidence to prove their case. In some cases, the tribunal found favor of the Owners on the evidence provided and the time counted. This also happened with delays due to strikes or declared force majeure events. Periods of “holiday, strike, and Force majeure” were not permanently excluded from laytime. Some issues raised mixed points of fact and law.
The Charterers’ usual defence to the Owners’ demurrage (or detention) claim was that the delay was caused due to the Owners’ or the vessels’ fault. In some cases, the concurrent events that contributed to the delay were considered, including the consequential delays. In many cases, the tribunal decided in favour of the Owners on the evidence and the facts presented.
Whether Owners are entitled to a detention claim for delays before loading, after loading, before, or after discharging were considered in a number of cases under different factual matrix. The exercise of a lien for unpaid freight was commonly discussed. Also, who is liable for any delay in signing the cargo documents upon the completion of loading because the parties disagreed on whether the master is allowed to put some remarks in the BL, e.g. damaged or contaminated cargo, etc. The tribunal considered the contractual scheme and the reasonableness of the parties conduct, and decided either in favour of the Owners or the Charterers.
The commencement of laytime (NOR validity) is a frequent dispute between the parties. The allegations of waiver and estoppel were most frequently raised and considered in several cases. Depending on the facts of the case and whether the relevant ingredients of waiver or estoppel were established, the tribunal decided either in favour of the Owners or the Charterers. Whether ‘free pratique’ is a mere formality or a precondition to tender the NOR was considered many times. In some cases, it was found not to be a mere formality, e.g. in times of SARS and flu epidemics; thus being a precondition to tender the NOR. In some other cases, the time taken to inspect by the authorities was considered in deciding the matter.
Slow pumping claims are decided on the factual matrix of each case. Expert opinion is adduced in some cases.
The holds rejection does not always invalidate the NOR (physical readiness). This is another point that causes debate between Owners and Charterers regularly. One of the parties in the string of contracts might say that the declaration of the vessel’s readiness was not given in ‘good faith’ given the poor condition of the holds. In some cases, the tribunal considered the usual practice to re-tender NOR ‘without prejudice to the previous NOR’ during various stages before commencing operation.
For bulkers, the published summaries of awards are almost double in number compared to tankers. Also, the issues included in the reference are about four times more than that of the tankers. This means that, on average, one point decided in one award for tankers and four issues determined in one award for bulkers. This could have potentially rendered onerous the parties’ submissions in the reference in the case of bulkers.
As a side note, I should emphasize that the published summaries of the recent awards are more detailed than those of the previous years. The editors of the LMLN are endeavoring to provide the relevant facts needed to understand the issues of law involved and to discern the tribunal’s reasoning. Indeed, this is very useful.