Maritima del Pacifico SAP.I. de C.V. v. Aerovolte SA de C.V. and Cal-lxa Aggregates LLC, (The “PATAGONMAN”) – SMA No. 4498 – 3 February 2025

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This maritime arbitration resolved claims brought by Linea Maritima del Pacifico SAP.I. de C.V. (“Claimant” or “Owner”) against Aerovolte SA de C.V. (“Aerovolte” or “Charterer”) and Cal-lxa Aggregates LLC (“Cal-lxa” or “Guarantor”) under a Contract of Affreightment (COA) dated November 3, 2023.

Background Facts

The COA encompassed the lifting of 160,000 metric tons of aggregate from Veracruz to Progreso, Mexico, over a series of 12 to 14 voyages, with a minimum cargo commitment of 130,000 metric tons. To perform the contract, Claimant had time chartered the MV PATAGONMAN. The dispute arose when Aerovolte failed to provide cargo. The vessel arrived at Veracruz on December 27, 2023, tendered notice of readiness, and waited through January 7, 2024, without any cargo being made available. Claimant subsequently undertook two mitigation voyages outside the COA before re-delivering the vessel to its head owners.

Claimant commenced arbitration, seeking damages in the amount of $672,388. This amount included $694,939.44 in anticipated profits from the COA (based on 11.94 planned voyages), $141,000 in demurrage/detention charges for the period the vessel waited at Veracruz, and a deduction of $163,551 earned from the two substitute mitigation voyages.

Throughout the proceeding, Aerovolte failed to appear or respond. Cal-lxa made a limited appearance, asserting it was not bound by the arbitration clause, but did not otherwise participate or contest the merits. The panel found that both Respondents were properly notified and had ample opportunity to appear, raise objections, or assert counterclaims but chose not to do so. The panel emphasized that neither Respondent made any contemporaneous objection to Claimant’s termination of the COA or re-delivery of the vessel, and that the first time any alleged breach by Claimant was raised occurred months later, in April 2024.

The panel concluded it had jurisdiction over both Aerovolte and Cal-lxa. The COA included a broad arbitration clause covering any dispute arising out of the charter, and it explicitly required New York arbitration under SMA Rules. Cal-lxa, despite its late procedural objection, had been involved in the negotiations and execution of the COA, had responded to the arbitration demand, and had acted throughout in concert with Aerovolte. The panel determined that Cal-lxa considered itself bound to arbitrate and was directly involved in all material aspects of the transaction.

On the merits, the panel found that Respondents had breached the COA. Claimant was justified in concluding by mid-January 2024 that no cargo would be forthcoming, based on multiple unanswered inquiries and the complete absence of performance from Respondents. Their agreement to allow the vessel to perform out-of-contract voyages further confirmed that the cargo was unavailable. The panel held that Claimant’s termination of the COA and decision to re-deliver the vessel was entirely reasonable under the circumstances.

Decision / Awards

In assessing damages, the panel reviewed Claimant’s submission in detail and found the anticipated profit calculation to be reasonable. The Claimant conservatively based its projections on the minimum cargo volume required under the COA and did not factor in potential demurrage from the mitigation voyages, even though such voyages in fact proved more profitable. Demurrage/detention was also awarded, though the panel adjusted the amount downward to $87,898.50, based on a more accurate calculation that excluded time prior to the expiration of laytime and after the parties had agreed to the mitigation voyages. After deducting $163,551 in mitigation earnings, the panel awarded Claimant a total of $619,286.94 in damages.

The panel also awarded pre-award interest in the amount of $42,798.67, accruing from April 1, 2024, which it deemed an appropriate date based on the projected end of the final notional voyage under the COA. Additionally, Claimant was awarded $50,163.64 in attorneys’ fees and expenses, which were supported by affidavit and uncontested by Respondents. The panel found this amount to be reasonable and justified, especially in light of Respondents’ total failure to explain their non-performance. The arbitrators’ fees, which had been advanced in full by Claimant, were also ordered to be reimbursed in their entirety.

Finally, the panel denied Claimant’s prior application for security in the amount of $800,000 as moot in light of the issuance of a final award.

In conclusion, the panel awarded Linea Maritima del Pacifico SAP.I. de C.V. the total sum of $732,249.25 against Aerovolte SA de C.V. and/or Cal-lxa Aggregates LLC. This amount reflects anticipated profits lost due to Respondents’ breach, adjusted demurrage, mitigation earnings, accrued interest, attorneys’ fees, and panel costs.