Tuesday, December 5, 2023

Excess redelivery bunkers & insufficient redelivery notices

In London Arbitration 13/22, the tribunal decided on two issues about quantification of loss due to:(i) excess redelivery bunker quantities; and (ii) insufficient redelivery notices tendered by Charterers to head Owners.

This practice area cites practical observations on similar cases settled in practice. This is not a commentary on the published summary.

General comments- observations

It is common for the parties to disagree on issues related to the bunker quantities on redelivery (and prices) and the proper way to quantify the loss. Some charter parties address this matter, but again disputes may arise.

In a previous case that was resolved commercially, it was argued that Owners could sell the excess bunkers at better prices to the next charterers and suffer no loss. But, even if this approach is adopted, the Charterers benefit from their wrongdoing (breach of contract) because they sell the excess bunkers at higher than CP prices to Owners. So, the issue centred on the damages’ principles to apply.

Further, an argument advanced was ‘The Alghussein’ overrides ‘The Good Helmsman’  because the principle is a long-established rule of construction under English law and “The Alghussein” is a House of Lord’s case and thus a higher authority.  But, to my knowledge, ‘The Alghussein’ has never been tested in the context of a bunker redelivery claim. Simply applying the market prices is an easy reference point to calculate damages; otherwise, the whole exercise becomes artificial, and damages may be too remote.

The author’s previous article on MRI and I-Law includes some of the common arguments presented by the parties when the matter arises (operationally- wise) to defend their position before the case escalates. London Arbitration 13/22 supports some of the arguments stated in the article that was published before the award (See: Redelivery bunker quantities remain a topic of heated debate – Maritime Risk International (maritime-risk-intl.com)

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