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CONTRACTS AND CLAUSES | LLOYDS LAW November 2017 aRBitRation (2017) 979 LMLN 4 Extra-contractual services remuneration London Arbitration 18/17 Charterparty Voyage charter Owners complying with charterers orders not to load cargo Whether owners entitled to recover expenses incurred in complying with orders Whether accord and satisfaction Whether owners entitled to remuneration for performing extra-contractual service Whether vessel at customary anchorage Rate of remuneration The subject vessel was chartered on an amended Stemmor 83 form of charterparty for the carriage of a cargo of 20,000 mt calcined petcoke from Port Arthur, USA, to Matanzas, Venezuela. Disputes arose under the charter. The owners claimed reimbursement of additional load port expenses of US$34,352.60. They also claimed remuneration for performing extra contractual services at the discharge port, amounting to US$156,231.45, alternatively damages. Additional load port expenses US$34,352.60 On 20 August, as the vessel was proceeding in ballast to the loading port, the charterers advised the owners that no cargo was to be loaded until the charterers had given their written approval. That was because there were several unresolved issues still pending with the purchasers of the cargo. The vessel ended her sea passage at 06.00 on 22 August. After obtaining USCG clearance she berthed, and all holds were passed by 07.00 on 23 August. Loading then took place between 10.05 and 10.20. When, later the same day, the charterers became aware that the vessel had proceeded to berth and commenced loading, they instructed the vessel to stop loading. Loading recommenced at 14.30 on 27 August and was completed on 30 August. The owners claimed additional dockage, security and guards expenses totalling US$34,352.60 which they said they had incurred as a result of the interruption in loading. Held, that the owners claimed to recover such expenses on various grounds. First, they said that the charterers instructions not to load cargo were uncontractual and an impediment to the owners performance of their contractual obligations. However, that submission would be rejected. By their orders of 20 August the charterers were not preventing the owners from performing their charterparty obligations. Rather, they were exercising their right to use the allowed laytime as they saw fit and were entitled to delay the commencement of loading once laytime had begun (see Petersen v Dunn & Co (1895) 1 Com Cas 8 and The Ulyanovsk [1990] 1 Lloyds Rep 425). The owners further said that they were entitled to be indemnified in respect of the expenses incurred in complying with charterers orders, under the principle in The Island Archon [1994] 2 Lloyds Rep 227 and The Marie H [1998] 2 Lloyds Rep 71. The charterers disputed that they had given any orders to commence loading the cargo. To the contrary, the loading commenced as a direct result of owners actions in disregard of charterers instructions. In the tribunals view, the decision to commence loading must have come from the shore ie charterers side. For all the master knew, circumstances might have altered since the 20 August prohibition. Moreover, it was on charterers orders that loading ceased at 10.20 on 23 August thereby confirming the analysis that the starting and stopping of loading was under charterers control. Photo: Danny Cornelissen at However, the question remained as to the allocation of the additional expenses incurred during the hiatus in loading, which expenses were ordinarily for owners account under the charterparty terms. The tribunal acknowledged that The Island Archon and The Marie H established that owners were entitled to be indemnified for expenses incurred as a result of following charterers orders. However, those were time charter cases and did not assist in the present case of a voyage charter. As far as the tribunal was aware there was no authority on the point, but since charterers were entitled to use the laytime as they wished, then it followed that associated expenses had to lie where they fell in the present case on the owners. Finally, the owners had submitted that they were entitled to recover the expenses on the basis of an oral agreement made during a telephone conversation on 23 August between the parties agents whereby the charterers confirmed their agreement to pay the owners invoice in full, which invoice included the additional port expenses. Although the charterers disputed that such a conversation ever took place the tribunal was satisfied on the balance of probabilities that it did. In the circumstances, the parties concluded a collateral agreement whereby the charterers agreed to pay for the additional expenses liability for which was legally unclear. That amounted to an accord and satisfaction which the owners were entitled to enforce. Accordingly the owners would be awarded the US$34,352.60 claimed for the additional expenses pursuant to the accord and satisfaction. Owners remuneration for performing an extra-contractual service US$134,380.35 The owners second claim arose from delay to the vessel off the discharge port while the charterers considered whether to discharge at an alternative discharge port. The owners said that they were entitled to a reasonable daily remuneration based on a fair commercial rate for the service provided by the vessel, ie the use of the vessel as a floating warehouse (see The Saronikos [1986] 2 Lloyds Rep 277). The owners said that the vessel anchored on 8 September at sea buoy 0.1 in compliance with charterers orders not to berth nor tender NOR nor discharge any cargo at port in Matanzas, Venezuela until charterers give written approval to do so. That place was not the customary anchorage for a vessel waiting to transit the Orinoco river to Matanzas. Accordingly, a valid notice of readiness could not be tendered there, and laytime did not commence. Thus damages, not demurrage, was the correct basis for calculating the quantum of the owners claim. According to the BHSI (Baltic Exchange Handysize Index) average for 9 September the daily rate available for the vessel at the time the voyage was interrupted was US$11,700 and that was the figure that should be applied when calculating the remuneration. The charterers submitted that it was the owners decision to anchor where they did, and in any event buoy 0.1 was the customary waiting place, and owners did accordingly tender a valid NOR. Thus, the charterers were only liable for demurrage at the charterparty rate of US$8,500 per day, which amounted to US$87,266. Alternatively, if owners were entitled to damages, the correct daily figure, was US$9,507, based on the charterers expert evidence. The charterers expert considered that the owners claimed daily rate of US$11,700 was too high because it did not account for: (i) the fact that the vessel was smaller than the standard BHSI type vessel; (ii) the fact that index hire rates were calculated assuming a 5 per cent commission; or (iii) the fact that the average BHSI index rate over the period 8 to 19 September was lower than the index rate for the initial day. Held, that on the evidence, the wait at sea buoy 0.1 was not at the customary anchorage for Matanzas from which a valid NOR could be tendered. Moreover, the charterers were aware of where the vessel was anchored and had raised no objection. It was clearly to the charterers advantage that the vessel should not go further at that juncture while they investigated, for whatever reason, other possible discharge ports. The charterers had also argued that the owners should bear the risk for delays arising from the unavailability of pilots at the port to which the owners were ordered to discharge the cargo. The tribunal accepted the owners submission that it might be owners responsibility to order and wait for a pilot in the normal course of events once they had orders to proceed to berth, but that did not mean time spent waiting for an undetermined term for the pilot was for owners account. Under the terms of the charterparty the vessel was to sail directly to the discharge port where she could tender NOR and laytime could commence. The charterers extra-contractual orders prevented the vessel from proceeding to such a position and damages were payable to owners for the entire period of delay to the vessel in reaching the position where the vessel could tender an NOR. Accordingly, the owners were entitled to damages rather than demurrage. As to the rate of remuneration, there was force in the charterers experts analysis. The tribunal accordingly based its own calculations on the figure of US$9,507 daily rather than US$11,115 proposed by the owners. On the evidence, the delay lasted for 12.07 days which, at a daily rate of US$9,507 per day, amounted to US$114,749.49. In addition, following The Saronikos, the owners were entitled to the bunkers consumed while waiting, which amounted to US$21,851.10. Accordingly, the owners were entitled to an award of US$34,352.60, plus US$114,749.49, plus US$21,851.10, a total of US$170,953.19, together with interest at the usual compounded rate of 5 per cent. Jun 8 2017 Connect with BIMCO Facebook Twitter Linkedin YouTube