ASBATANKVOY -- CARGO CONTAMINATION -- BURDEN OF PROOF -- DEMURRAGE CLAIM WITH RESPECT TO DELAYS -- Owner Award The first, second, and third foot samples of ULSD cargo were off-spec with respect to flashpoint (a key commercial criterion for this cargo) resulting in offloading and further Vessel cleaning. Although there was a dedicated line from the shore tank to the terminal manifold, an additive was injected at the terminal manifold (from bulk containers and drums) which could have affected the ULSD flashpoint. Thus, Charterer failed in proving by a preponderance of credible evidence that the Vessel’s tanks were the cause of the cargo damage. Furthermore, the burden is on the Charterer to prove that the Vessel did not exercise due diligence in tank preparation which he failed to do.
SALES CONTRACT -- FORCE MAJEURE -- EXPLOSION -- CUSTODY TRANSFER -- DEMURRAGE -- Partial Final Seller Award During discharge, an apparent shoretank leak at Buyer's facility caused an explosion which destroyed storage tanks inclusive of cargo being discharged and cargo discharged during previous deliveries not yet paid for by Buyer. The Buyer declared force majeure and contends that it is excused from paying for all cargo destroyed in the shoretanks, cargo remaining onboard the Cape Bruny yet to be discharged and the resultant demurrage.
NYPE -- SAILING ORDERS -- OFF-HIRE -- Owner Award Charterer's choice of language in giving a Vessel orders to sail must be clear.
GENCON -- LAYTIME DURING PERIODS OF HEAVY SWELL -- WEATHER WORKING DAYS -- RESULTING SHIFTING EXPENSES -- SAFE BERTH -- Charterer Award Basis a charter party stipulating cargo to be discharged at an average rate "per weather working day" the Panel determined laytime was not to count during a period of port closure due to Ressac swells. The Owner was responsible for the cost of unberthing and reberthing during the port closure as Charterer had not breached their safe berth warranty as the port closure was at the direction of the harbormaster and the Vessel was able to unberth and reberth safely.
TIME CHARTER -- TIME CHARTER PREMATURELY ENDED -- WHETHER TERMINATION JUSTIFIED -- Owner Award The Panel ruled that Charterer had prematurely ended a time charter when Charterer relied upon a dispute regarding another vessel in the same management.
NYPE 1946 -- VESSEL REJECTED DUE TO LACK OF COFR (CERTIFICATE OF FINANCIAL RESPONSIBILITY) -- CALCULATION OF DAMAGES -- Owner and Disponent Owner Award When Owner failed to provide the COFR, Sub-Charterer and subsequently Charterer cancelled the Time Charter (hereinafter, "Charter"). Given that the applicable clause in the Charter and Sub-Charter provides a remedy for delay due to not having the COFR and said remedy does not include cancelling the Charter (or Sub-Charter as the case may be), Panel rules in favor of Owner and subsequently Charterer (also referred as “Disponent Owner”) with the party wronged to be put into the position they would have been in had the Charter and Sub-Charter been fulfilled. The damages to be awarded are basis the market rate versus the Charter and Sub-Charter rates, respectively.
NYPE -- TIME CHARTER -- HOLDS REJECTED UPON DELIVERY -- COST OF CLEANING -- CAUSATION OF WAITING TIME -- Part Owner Award, Part Charterer Award Upon delivery the Vessel’s holds were rejected which subsequently took 6 days for cleaning and approval, followed by 4 days spent waiting to berth. The Panel ruled that Charterer was to be reimbursed by Owner for the cost of the cleaning and that only the delay specifically related to the holds failing inspection was to be for Owner’s account. Charterer was responsible for the berth occupancy upon the Vessel’s arrival and the berth occupancy once the Vessel’s holds were approved yet another vessel was brought in.
SHELLVOY 5 -- NOTICE OF READINESS -- FAILURE TO OBTAIN FREE PRATIQUE WITHIN 6 HOURS -- TIME-BAR -- Charterer Award In overturning the High Court judgment, the Court of Appeal ruled that the Vessel’s original NOR was invalid since free pratique was not granted within 6 hours as stipulated in the amended Shellvoy 5. The Vessel’s subsequent NOR tendered via email (after receipt of free pratique) was deemed valid, however, Owner’s alternative demurrage was barred since the valid NOR document, considered "an essential document of every demurrage claim", was not submitted timely with the claim.
SHELLTIME 3 -- TIME CHARTER -- UNPAID HIRE -- WITHDRAWAL OF VESSEL FOR UNPAID HIRE -- DETENTION OF VESSEL -- CONSUMPTION OF BUNKERS -- SECURITY -- Partial Charterer Award Partially overturning the High Court’s ruling, the Court of Appeal held that absent an express or implied agreement, Owner is not due remuneration during the period that the Vessel was withdrawn from Charterer’s service for failure to pay hire. Then, having been directed by Charterer to discharge the cargo, Owner was reimbursed for cost of bunkers used for the cargo operations as that fell within the scope of care of the cargo; however, bunkers consumed during the Vessel’s withdrawal period were not recoverable. The Court of Appeal agreed with the judge that the Owner was entitled to costs for the security guarantee.
Contracts are negotiated by parties to suit their individual commercial purposes and should be written with a keen eye to avoid ambiguity that could give rise to disputes down the road. Not only must each clause be clearly drafted but all the terms of the contract must be considered in their entirety and be capable of working harmoniously together in order to give meaning and effect to all the terms. Despite this being widely recognized, it is not always accomplished. And, inadvertently, contracts can be silent on some points subsequently triggering disputes.