NOR was valid at CJK anchorage, and shifting time was excluded even on demurrage. However, any delays due to enforced lien for unpaid freight are for charterers’ account.
The background
The vessel was chartered on an amended BEIZAI form for a voyage from Eureka, USA, to Changshu, PRC, to carry a cargo of logs. Disputes arose between the parties about owners’ demurrage claim accrued at Eureka, mainly due to cargo shortage, of US$471,787.98 and demurrage accrued at Changshu (or damages), of US$289,400.11.
For NOR issues at Chinese ports, check this post:https://charterpartydisputes.com/chinese-ports-nor-evidence-and-interpretation-issues/
The matter was referred to arbitration, and absent any response by the charterers to owners’ notices to either agree [X] to act as a sole arbitrator or charterers appoint their arbitrator, the arbitrator accepted the appointment as a sole arbitrator under section 17(2) of the AA 1996 and the current LMAA Terms. Owners served their Claim Submissions with supporting documents, copying the charterers, and charterers did not submit their Defence. Thus, the arbitrator advised the parties that he would proceed to an award based on the submissions and documents before him.
The respondent made no application to challenge the arbitrator’s jurisdiction, as the clause stated, “Maritime Arbitration Rules of the United Kingdom,”. However, on balance, the parties must have intended to conduct the reference under the LMAA Terms.
The award
The charter provided for total laytime for loading and discharging 16 days for all purposes per WWD SHEX unless used. Also, NOR is to be tendered WWWW upon the vessel’s arrival. If the vessel is on demurrage by the time it arrives at the next port, then time on demurrage continues on vessels considered arrival.
Loading port
The arbitrator found the owners’ laytime calculations correct. In short, the vessel arrived at 12.00 on 28th July and completed loading on 17th September. Save some interruptions; the vessel exceeded the allowed 16 days all purposes by 32.16 days. The arbitrator awarded owners their loading port demurrage claim of US$471,787.98.
Discharging port
One delay resulted from charterers’ failure to pay freight as per charter party terms, i.e., within three banking days after completion of loading. Charterers failed to pay freight and loading port demurrage until the vessel arrived at the discharging port. Further, owners became aware that other unauthorised and/or fraudulent set of Bills of Lading was being circulated. Then, owners warned the charterers to exercise their rights of lien over the cargo unless charterers paid the outstanding freight and load port demurrage.
The tribunal made these points:
Charterers are responsible for the delays that occurred during discharge due to their failure to pay the freight as per charter party terms.
The tribunal disagreed with the owners’ calculation that did not exclude the shifting time from anchorage to the berth, even if the vessel was on demurrage.The tribunal construed these words broadly “Shifting from .. loading or discharging berth to be for Owners’ account and time not to count”, and held, “There was no indication in that clause that time not to count only applied to laytime and it must therefore also suspend time on demurrage”. Thus, the tribunal excluded the shifting time even if the vessel was on demurrage.
The tribunal disagreed with the owners’ calculations that reflected the completion of discharge on 24th 1430 hours. This seems to be a typo error on the owners’ part as the discharging was completed on 23rd 14.30 instead of 24th 1430 hours.
Comment
The tribunal seems to have accepted the validity of the NOR tendered upon the vessel’s arrival at CJK anchorage on 8th October, 07.45 hours. This is hotly debated sometimes between the parties (https://charterpartydisputes.com/chinese-ports-nor-evidence-and-interpretation-issues/).
There are some published arbitration awards in favour and some against the tribunal’s reasoning concerning the meaning of “time not to count”. In some awards, reference to “time” was treated as “laytime” and not “time on demurrage” (the maxim “once on demurrage always on demurrage” applied). In some other awards, even on demurrage, the shifting time was excluded when the wording of the clause referred to “shifting time not to count”. Therefore, the words were given a narrow or wider interpretation in different cases- [I prefer to not comment on this].
In practice, the author has at least encountered similar arguments in hundreds of cases related to “shifting” or other laytime interruptions under a similar wording, “Owners’ account and time” or at “owners’ cost”. In some awards, different interpretation was given to the words “owners’ account or cost”; either accepted to interrupt laytime or not for draft survey or shifting time or time spent lashing cargo, etc. Therefore, it is suggested to clearly state if this applies to laytime or demurrage, e.g., shifting time to be for the Owners’ account and time not to count as laytime or time on demurrage or similar wording. Especially for river ports where shifting time may be considerable, it will affect the laytime or demurrage calculations.
More awards related to “shifting time” or “owners’ account and time” and delays (damages) due to lien can be found in this free published guidebook: https://www.charterpartydisputes.com/a-snapshot-guide-to-laytime-demurrage-a-tribute-to-maritime-arbitrators-prokopios-krikris
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/conflict-checker. These awards mostly come into the public domain through enforcement under the NYC 1958; the operative provisions of the Convention have been transposed into the law of England and Wales by Part III of the Arbitration Act 1996.