The English Commercial Court has again been tasked with resolving a dispute over the meaning of the phrase “all supporting documents”, a term that is commonly encountered in demurrage time bar clauses, writes William Stansfield, Senior Associate, CJC London.

We reported on the decision in The Amalie Essberger [2019] EWHC 3402 (Comm) in the April edition of CJC Currents.

A similar point has now arisen in The MTM Hong Kong [2020] EWHC 700 (Comm) where the English Commercial Court has again been tasked with resolving a dispute over the meaning of the phrase “all supporting documents”, a term that is commonly encountered in demurrage time bar clauses.  

As the name suggests, demurrage time bar clauses are clauses which require a demurrage claim with supporting documents to be presented within the pre-agreed number of days, failing which the claim will be time barred.  The courts recognise that demurrage time bar clauses can assist with processing demurrage claims quickly and efficiently whilst the facts are still fresh in everyone’s mind.

This latest decision will be of interest to the market generally. The case arises out of the situation where simultaneous cargo operations are taking place, thereby triggering the pro-rating of laytime and demurrage provisions in clause 10 of ASBATANKVOY (a charterparty form in common use in the tanker trade).

Clause 10 of ASBATANKVOY provides:

"Laytime/Demurrage

 … …

(e) If load or discharge is done simultaneously with other parcels then laytime to be applied prorate between the parcels.

…

(g) In the event of Vessel being delayed in berthing and the Vessel has to load and / or discharge at the port(s) for the account of others, then such delay and/or waiting time and /or demurrage, if incurred, to be prorated according to the Bill of Lading quantities.”

The time bar clause was in a rider clause which reads:

Charterer shall be discharged and released from all liability in respect of any claim/invoice the Owner may have/send to Charterer under this Charter Party unless a claim/invoice in writing and all supporting documents have been received by Charterer within [90] days after completion of discharge of the cargo covered by this Charter Party or after other termination of the voyage, whichever occurs first. Any claim/invoice which Owner may have under this Charter Party shall be waived and absolutely barred, if claim/invoice and all supporting documents are not received by Charterer before the time bar".

The vessel was fixed to carry liquid cargoes from Antwerp to Houston. At Houston, a second parcel of cargo was discharged at the same berth.  This meant that laytime was to be pro-rated between the parcels, in accordance with clause 10(e) of ASBATANKVOY.  Clause 10(g) of ASBATANKVOY says that delay, waiting time, and demurrage is to be pro-rated according to bill of lading quantities.  

Whilst clause 10(e) does not expressly refer to pro-rating laytime by reference to bill of lading quantities, it was accepted that the effect of clauses 10(e) and (g) taken together meant that laytime and time on demurrage were both to be pro-rated in accordance with bill of lading quantities.

After completion of discharge, the owners presented a demurrage claim and supporting documents to the charterers. However, the bills of lading (for both the charterers’ parcel and the second parcel) were not included.  The bill of lading quantities were mentioned on the statement of facts, but the charterers argued that the omission to include the actual bills of lading meant that the claim was time barred.

A London arbitration tribunal concluded that the owners’ claim was not time barred.  The charterers were granted permission to appeal on the following question of law:

"Where a charterparty requires demurrage to be calculated by reference to bill of lading quantities, and contains a demurrage time bar which requires provision of all supporting documents, will a claim for demurrage be time-barred if the vessel owner fails to provide copies of the bills of lading?"

The court answered this question in the affirmative, and ruled that the owners' failure to produce bills of lading in support of their demurrage claim barred the entire claim.

The court’s reasoning was essentially one of contractual interpretation – in particular the court placed emphasis on the express provisions of clause 10(g) of ASBATANKVOY that pro-rating of time is to be done by reference to bill of lading quantities, and on the requirement to provide “all” supporting documents with a claim.

The court stressed at the end of its judgment that the decision was based on these particular clauses, and the court also said that the position might be different if bills of lading were not available for whatever reason. A differently worded clause could have produced a different result.

Nonetheless, an owner should now ensure that whenever laytime and demurrage is calculated by reference to bill of lading quantities, copies of the actual bills of lading (for all parcels carried) should be included as part of the claim.  Relying on bill of lading figures printed on other documents may not be sufficient to comply with a demurrage time bar clause. 

William Stansfield, Senior Associate, CJC London