London Arbitration 19/18
This arbitration concerned a contract of affreightment (COA) for a series of voyages performed by two vessels carrying fuel oil/bitumen mix, chartered on an amended Asbatankvoy form. The dispute arose over unpaid demurrage in relation to eight of 87 total voyages, with the charter containing two relevant time bar provisions—one in Part I requiring demurrage claims and supporting documents within 30 days of discharge, and Clause 40 stipulating a 21-day limit.
Owners claimed a total of US$319,296.40 in respect of the eight disputed voyages. They submitted claim documents to a broker (referred to as “D”) whom they asserted was acting as agent for the charterers. The documents were not passed to charterers within the contractual time limits. The charterers argued that D was not their agent and that the claims were therefore time-barred.
Clause 49 of the charter specified that commission of 1.25% was to be paid to D by the owners. Owners argued D was either the charterers’ agent, clothed with ostensible authority, or an intermediate whose receipt of documents had previously been sufficient for payment—thus creating a promissory estoppel or estoppel by convention.
Held, D was not the charterers’ agent. The tribunal found that four brokers were involved in the fixture:
- A (owners’ in-house brokers)
- B (independent but sided with owners)
- C (charterers’ brokers)
- D (status disputed)
On review of commercial practice and commission structures, the tribunal held that payment of commission by owners did not prove D was their agent. Rather, the inclusion of Clause 49 to provide for commission payment to D suggested D was an intermediate broker, not aligned with either party—consistent with the ITIC model of brokerage chains in multi-party fixtures.
As such, D’s receipt of demurrage claims could not constitute valid service on the charterers or their actual agents. Owners failed to establish that D had actual or ostensible authority to accept claims on behalf of the charterers.
Owners alternatively argued that charterers were estopped—by prior conduct and payment patterns—from asserting the time bar. They claimed charterers had previously paid claims sent to D within the time limit, even when D had delayed onward transmission.
The tribunal rejected both promissory estoppel and estoppel by convention. Payment of past claims did not evidence reliance on a mutual assumption that D’s receipt equated to charterers’ receipt. Only one prior case arguably supported this view—and even that payment was made on a “without prejudice” basis, insufficient to establish estoppel.
The tribunal also found no express or implied representation by the charterers that D had authority to accept claims. The burden to establish such authority rested with the owners and had not been discharged.
Accordingly, the owners’ demurrage claims for the seven time-barred voyages failed.
One voyage involved no time bar issue, but rather a disagreement over US$4,468.77 in demurrage. After loading, the vessel experienced a nine-day delay due to engine problems. While owners did not claim demurrage for that delay, they asserted the knock-on effect at the discharge port should still count as laytime.
Charterers relied on Clause 30, which excluded laytime for delays “resulting from or connected with any vessel equipment breakdown”.
Under the doctrine of fault, delay had to be co-extensive with fault. Clause 30 did not extend to consequential delays unconnected in time or causation. The tribunal found the delay at the discharge port was not disqualified under the charter.
The owners’ demurrage claim for this voyage succeeded in full for US$4,468.77.