Strike Clauses and Laytime Disputes- a 2024 LMAA Award
- Prokopios Krikris
- Mar 31
- 2 min read
This summary pertains to an arbitration award under the LMAA Terms 2021.
Following the Respondents' failure to appoint an arbitrator, Mr. X accepted appointment as sole arbitrator in accordance with clause 10 of the LMAA Terms.
The relevant charter party, an amended Norgrain form, contained, inter alia, provisions stipulating that it was to be governed by English law, with any disputes arising thereunder to be referred to arbitration in London. It further provided that such arbitration was to be conducted in accordance with “the LMAA rules”, which was construed as a reference to the LMAA Terms.
Notably, discrepancies arose between the respective calculations at the loading port of Toledo and one of the discharging ports, Rio Haina.
For the loading port, the difference was attributable to the fact that the Charterers had only counted time from 0800 hours on 23rd October to 0700 hours on 30th October at a 50% rate.
Loading port
As the arbitrator found, the Charterers must establish why laytime should not run and/or demurrage should not accrue at a 100% rate, and they had chosen not to serve any submissions justifying their calculations. Very fairly, Owners mentioned that in exchanges between the parties, the Charterers had purported to rely on clause 71 of the charterparty. However, clause 71 dealt exclusively with the effect of strikes at a port of discharge; it had no bearing on the effect of strikes at the port of loading. Once the vessel came on demurrage at the port of loading, the Owners correctly calculated that demurrage accrued at 100% rate except that they suspended the accrual of demurrage while the vessel shifted and while a draft check was carried out. Therefore, the Owners' calculation was correctly carried out in accordance with the provisions of the charterparty and the documentary evidence.
Discharging port
At Rio Haina the Owners calculated that laytime started running at 1835 hours on 13th November 2023, which was when discharging commenced. They calculated that the vessel was on demurrage for 11 hours and 58 minutes, giving rise to a demurrage claim of US$8,227.08. The Charterers' laytime calculation, however, showed that they had only counted time from 0800 hours on 14th November 2023 which meant that despatch in the amount of US$497.65 had accrued. However, as was validly pointed out on behalf of the Owners, the Charterers' calculation overlooked the provision in clause 7 of the recapitulation email, which read: "shinc tendering at disch port and time to start counting 12 hrs after NOR Tendered unless sooner commenced". Therefore, the Owners' calculation was correct.
Observations
It is noteworthy that parties often overlook the precise wording to be adopted in the governing law and arbitration clause. The reference to the “LMAA Rules” in the present matter illustrates this point, as it appears to have been intended as a reference to the LMAA Terms.
This underscores the importance of clarity in contractual drafting if the intention is the strike-related time exclusions to apply to both loading and discharging ports.
It is somewhat surprising that certain periods in question could have been adequately assessed in the laytime calculations and potentially resolved prior to the matter being brought before the tribunal, thereby avoiding the need for formal determination.
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