Saturday, June 22, 2024

Tribunal found Laytime calculations wrongly excluded rain and strike periods

By a voyage charter party, on an amended Gencon 1994 form, the Owners chartered their vessel to the Charterers to load bagged bentonite jumbo bags at Mundra, India, for discharge at Sagunto, Spain. Owners claimed demurrage of US $181,057.20. The Charterers disagreed with the Owners’ calculation but admitted a lesser amount of US $88,538.44. Charterers had made no payment.  

Consequently, the parties referred the dispute to arbitration in London and each party appointed an arbitrator, both were LMAA Full Members. English Solicitors represented owners. English Solicitors initially represented charterers, but following a peremptory order, they advised the tribunal that they had no instructions to serve Defence submissions. Therefore, the tribunal determined the issues based on the documents and written submissions before them. The tribunal awarded Owners the amount claimed of US$181,057.20, together with interest and costs.

The issue in this arbitration concerned the calculation of demurrage. Owners claimed the Vessel exceeded the laytime allowed and was on demurrage for 18.57 days. Owners claim US$181,057.20 is due after calculating demurrage. Charterers denied the full amount but admitted to a lesser amount of US$88,538.44. However, Charterers made no payment. The contract included the “General Strike Clause” and loading/discharging rates pwwd.

The facts

The Vessel arrived at the Outer Anchorage Tuna Buoy Mundra at 2112 on 21 September 2006, and NOR tendered. NOR was accepted at 0900 on 22 September. Laytime started to count as from 1400 on 22 September. The Vessel berthed at 1515 on 1 October 2006 for loading jumbo bags only. Loading commenced at 1805 on 1 October and completed at 0630 on 2 October. The vessel then shifted to the anchorage. She berthed again at 0435 on 3 October and commenced loading the bulk part of her cargo at 0600. That completed at 0230 on 4 October and the vessel shifted back to the anchorage at 0315. The vessel re-berthed at 2250 on 4th October and commenced loading the bagged cargo, which completed at 0855 on 6th October. The documentation was completed at 1015 and the vessel sailed. Owners submitted an invoice claiming demurrage of US $117,800.00 for the load port. The Vessel arrived at Sagunto at 0030 hours on 4 November 2006 and tendered NOR. Discharged commenced at 0800 on 9 November and completed at 2045 on 13 November 2006. Owners allowed a 50% demurrage rate due to strike action between 0800 on 6 November and 0800 on 8 November. Owners submitted an invoice claiming demurrage of US $67,900.00 for the discharge port.

The dispute

Charterers disputed Owner’s calculations and submitted their own laytime statements, arriving at a demurrage of 4.71987 days or US$ 47,198.71 for the load port and 4.13397 days or US$41,339. 73 for the discharge port. They did not, however, provide any explanation as to why they considered the Owners calculations to be wrong and just attached their calculations. However despite their own assessment, Charterers failed to pay to Owners even their own calculated demurrage in the sum of US $88,538.44.

General Strike Clause
(a) If there is a strike or lock-out affecting or preventing the actual loading of the cargo, or any part of it, when the Vessel is ready to proceed from her last port or at any time during the voyage to the port or ports of loading or after her arrival there, the Master or the Owners may ask the Charterers to declare, that they agree to reckon the laydays as if there were no strike or lock-out. Unless the Charterers have given such declaration in writing (by telegram, if necessary) within 24 hours, the Owners shall have the
option of cancelling this Charter Party. If part cargo has already been loaded, the Owners must proceed with same, (freight payable on loaded quantity only) having liberty to complete with other cargo on the way for their own account.
(b) If there is a strike or lock-our affecting or preventing the actual discharging of the cargo on or after the Vessel’s arrival at or off port of discharge and same has not been settled within 48 hours, the Charterers shall have the option of keeping the Vessel waiting until such strike or lock-out is at an end against paying half demurrage after expiration of the time provided for discharging until the strike or lock-out terminates and thereafter full demurrage shall be payable until the completion of discharging,

(c) Except for the obligations described above, neither the Charterers nor the Owners shall be responsible for the consequences of any strikes or lock-outs preventing or affecting the actual loading or discharging of the cargo.

Laytime calculations

According to the owners’ load port calculations, laytime commenced at 1400 on 22 September and expired at 0536 on 24 September, when the Vessel came on demurrage. Shifting time was not counted.

Charterers’ laytime calculations allowed laytime at only 50% for waiting time but there was no justification for this. The tribunal found no obvious errors in Owners’ calculation and allowed demurrage as claimed.

At the discharge port, laytime began to run at 1400 on 4 November. A strike, of which Charterers had prior notice, started at 0800 on 6 November and ended at 0800 on 8 November. According to Owners’ calculations laytime was only claimed at 50% whilst the strike continued. The Vessel came on demurrage at 0130 on 7 November. Although the strike ended at 0800 on 8 November, rain did not permit discharge. Owners’ statement correctly shows demurrage as running during the rain period. Charterers, on the other hand, did not allow any time for the strike and they disallowed the period of the rain stop on 8 November. According to Clause 16 (b), The General Strike Clause, time counts until the expiration of the stipulated time allowed for discharge and thereafter at half demurrage until the strike terminates. Notwithstanding Owners’ entitlement to claim in full during the laytime period, they only claimed at 50%. Once again, the tribunal found no obvious errors in Owners’ calculation and allowed demurrage as claimed.


As the Owners were successful, they were entitled to their recoverable costs to be assessed on the standard basis in accordance with Section 63(5) of the Arbitration Act 1996.

The tribunal reserved jurisdiction to assess recoverable costs should the parties not agree.

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