Amalie Essberger Tankreederei v Marubeni Corporation - The Amalie Essberger

DMC/SandT/20/05

England

'Essberger Tankreederei GmbH & Co KG v Marubeni Corporation (The “Amalie Essberger”)

English Commercial Court: Peter MacDonald Eggers QC (sitting as a Deputy Judge of the High Court): [2019] EWHC 3402 (Comm): 11 December 2019

Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2019/3402.html

Alex Carless (instructed by Ince Gordon Dadds LLP) for AE (Owners)

John Robb (instructed by Holman Fenwick Willan LLP) for MC (Charterers)

VOYAGE CHARTERPARTY: DEMURRAGE CLAIMS PRESENTATION TIME BAR CLAUSE: OWNERS OBLIGED TO PRESENT CLAIM WITH SUPPORTING DOCUMENT WITHIN 90 DAYS OF CARGO DISCHARGE COMPLETION: OWNERS PROVIDED PUMPING LOGS AND LETTER OF PROTEST FROM THE LOADING PORT EARLY TO CHARTERERS TO COMPLY WITH ANOTHER CLAUSE: WHETHER CLAIM TIME BARRED FOR WANT OF PRESENTATION OF THOSE TWO DOCUMENTS AT THE SAME TIME AS LATER DEMURRAGE CLAIM: APPLICATION FOR SUMMARY JUDGMENT UNDER CPR RULE 24.2

Summary

In dismissing Charterers’ application, seeking a summary judgment on the basis that Owners’ claim had no real prospect of succeeding, the High Court held that rider clause 5 of the charter, which mandatorily required certain defined documents to be presented in support of a demurrage claim, meant no more than that the claim and the supporting documents must be received by Charterers before the expiry of the 90-day period prescribed by the claims presentation time bar. Accordingly, it did not impose an obligation for the supporting documents to be presented at one time and at the same time as the demurrage claim itself to Charterers.

Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor of England & Wales, LMAA Supporting Member and International Contributor to DMC’s Case Notes

Background

MC (“Charterers”) voyage chartered-in the tanker “Amalie Essberger” from AE (“Owners”) for a laden voyage carrying Cyclohexane from Rotterdam, The Netherlands to Castellon, Spain. The charter was on an amended ASBATANKVOY form and included, amongst others, the following two additional clauses:

“5) TIME BAR

[1] Any claim for demurrage, deadfreight, shifting expenses or other charges or invoices shall be considered waived unless received by the Charterer or Charterer's broker in writing with all supporting calculations and documents, within sixty (60) 90 days after completion of discharge of the last parcel of Charterer’s cargo (es). [2] Demurrage, if any, must be submitted in a single claim at that time, and the claim must be supported by the following documents: [Sentence numbers inserted for ease of reference]

A. Vessel and/or terminal time logs;

B. Notices of Readiness;

C. Pumping Logs; and

D. Letters of Protest …”

“23) DOCUMENTATION CLAUSE

For any load/discharge operation owner must provide charterer with a complete sets of cargo documents including:

• NOR

• SOF

• Dead freight claim (If issued)

• Any letter of protest issued/received in connection with cargo operations

• Vessels cargo calculations after loading/prior discharge

• Empty tank certificate

• Vessel pumping Logs … and Letter of Protest against high back pressure/any shore limitations which must be duly signed by Master and responsible shore personnel.

• Nitrogen log, if any nitrogen purging being carried out on cargo.

• Temperature log, if any cargo heating.

These documents should be forwarded to charterers within 7 banking days after completion of loading or discharge. Faxed copies will be accepted provided readable …”

The vessel completed loading and sailed on 1 December 2017. She completed discharge of her cargo on 21 December 2017 and Owners submitted their demurrage claim (for USD154,875) to Charterers the next day.

The demurrage claim included the documents required by rider clause 5 except for (a) the vessel’s pumping log at Rotterdam, and (b) a letter of protest issued by the Master on 30 November 2017 about Charterers’ and shippers’ surveyor not providing the vessel with sealed cargo samples on completion of loading (the “Disputed Documents”).

However, the Disputed Documents had been provided to Charterers on 1 December 2017, in compliance with rider clause 23. Charterers took the position that all the supporting documents had to be provided at one and the same time as that at which the demurrage claim was submitted. As such, Charterers applied for summary judgment, which Owners resisted on the basis that such stricture was not required by rider clause 5.

Judgment

The judge first summarised the material facts (above), referred to the relevant voyage charter rider clauses (above), set out the issues to be addressed (above), and considered the approach to construing demurrage time bar provisions: First, the provision of a demurrage claim and supporting calculations and documents within a relatively short period of time is designed to allow the recipient of the demurrage claim, Charterers, to investigate and verify or dispute the claim, soon after the events giving rise to the claim, having regard to both Owners’ formulation of the claim and the factual material supporting the claim.

Second, demurrage time bar provisions should be construed with the object of clarity and certainty to ensure that Owners are able to know what they are required to do to comply with the time requirements of the provisions; this will also enable Charterers to understand what documentation they might legitimately expect to be provided in support of a demurrage claim.

Third, given that the demurrage time bar provision has the potential to bar the making of an otherwise valid claim, if not presented in accordance with the provision, both the time bar and the conditions for the application of the time bar must be clearly stated. In the event that there is any genuine ambiguity in the meaning of the provision, it should be construed restrictively against Charterers. However, this principle of construction should be applied as a last resort, meaning that there must be a real ambiguity which remains after the analysis of the language, the commercial purpose and factual background, and should be applied less rigorously than if it were a full exemption clause.

The judge next identified that there were four issues to be addressed in considering Charterers’ application, as follows:

Issue 1: Must the supporting documents include the Disputed Documents?

Having heard the parties’ respective submissions and considered the authorities, the judge noted that the first issue in fact consisted of two questions:

(1) What does the phrase "all supporting … documents" mean in the first sentence of rider clause 5?

(2) What is the effect of the second sentence of rider clause 5 in listing the four specified categories of documents, including the Disputed Documents?

As to the first question, the judge was of the view that the relevant words, "all supporting … documents" in the context of a demurrage claim, required Owners to submit documents on which they relied in support of their demurrage claim, or the submission of documents which, taken at face value, established the validity of the demurrage claim.

The judge considered that such documents would almost invariably include documents which evidenced the time used by the vessel in berthing, loading, and discharging operations and the interruptions and stoppages in such operations, including the notice of readiness and the statement of facts or time logs. This construction, stated the judge, was in accordance with the requirement of certainty and would not impose a burdensome obligation on Owners, who would readily and easily be able to identify and provide the documents on which they relied or which objectively established the validity of their claim.

As to the second question, the judge was of the view that the relevant words, “… the claim must be supported by the following documents …” which then listed four categories of documents, were clear from their mandatory language (“must be supported”) that the four listed categories of documents had to be provided in support of the demurrage claim referred to in rider clause 5, even if they were strictly irrelevant to the demurrage claim.

Accordingly, although an exception might be applicable to excuse the provision of a “supporting” document that was insignificant (de minimis) in the first sentence of rider clause 5, the judge did not consider that such an exception was applicable to the requirements in the second sentence.

Therefore, in answer to issue 1, the judge held that the Disputed Documents were required to be submitted in support of the demurrage claim within the 90 day time period referred to in rider clause 5.

Issues 2 & 3: Must the supporting documents accompany the demurrage claim?

In the opinion of the judge, there was no express requirement in the language of rider clause 5 that the supporting documents must be provided at one time and at the same time as the demurrage claim for the following reasons:

(1) The word "Demurrage" at the beginning of the second sentence was to be construed as a reference to the demurrage claimed and not as a reference to the demurrage claim and supporting documents, because if it had been intended that the supporting documents must be provided "in a single claim at that time", rider clause 5 would have been expected to have so stated.

(2) The requirement that the demurrage claim "with" all supporting documentation must be received by Charterers within 90 days after the completion of discharge meant no more than that the claim and supporting documents must be received before the expiry of the 90-day period. As Tomlinson, LJ had said in The “Abqaiq” (fn.1), "the words ‘together with’ import no requirement other than that both presentations, that of the claim and that of the supporting documentation, must have been achieved within the 90-day period".

(3) The demurrage claim was to be submitted in "a single claim at that time". The reference to a "single claim" meant that only one claim could be submitted. In other words, separate demurrage claims, for example at loadport or at each discharge port, were not permitted. The words "at that time" referred to the submission of a claim within the 90-day period referred to in the first sentence.

(4) The commercial purpose of rider clause 5 did not require the simultaneous submission of the demurrage claim and the supporting documents, such that, as stated above, the provision merely required the submission of the claim and the supporting documents before the end of the 90-day period, and nothing more.

The more substantial question, however, in the judge’s view was whether the Disputed Documents, as provided to Charterers on 1 December 2017, were readily understood by Charterers as being “supporting documents” within the meaning of rider clause 5.

The Disputed Documents, noted the judge, were also documents which were to be provided in accordance with rider clause 23 within seven banking days of the completion of loading. Accordingly, when the Disputed Documents were provided on 1 December 2017, 21 days before the date of the submission of the demurrage claim, it should have been obvious to Charterers that the Disputed Documents – the pumping log and the letter of protest both from the loading port – were already in their possession and that they were documents deemed to be supporting documents within the meaning of rider clause 5.

In those circumstances, the judge did not consider that Owners were obliged to draw attention to the fact that the Disputed Documents already in the possession of Charterers were documents required in accordance with rider clause 5. Therefore, the fact that the email submitting Owners’ demurrage claim did not refer to the Disputed Documents did not detract from the fact that Owners had provided the documents which were required to be provided in accordance with rider clause 5 in order to avoid the application of the time bar in that clause, and which Charterers would have known were required to be submitted in support of the demurrage claim.

Issue 4: What are the consequences of non-compliance with rider clause 5?

In view of his decision on issues 2 and 3, issue 4 did not, strictly speaking, need to be decided. However, the judge briefly expressed his views.

The language of rider clause 5 was such that if there had been a failure to provide the Disputed Documents, the whole demurrage claim would have been time-barred. Otherwise, this would be contrary to the plain intention of rider clause 5, which:

(a) contemplated only a single claim being made for demurrage (the laytime allowance was for both the loadport and the disport); and

(b) listed categories of documents to be submitted (which included the Disputed Documents).

In conclusion, the judge dismissed Charterers’ application for summary judgment, because Owners had presented the supporting documents required.

Comment

This helpful judgment, which went further than strictly required to determine the application at hand, very much turns on two key points:

First, the language of rider clause 5 mandated that certain defined documents had to be presented in support of the demurrage claim, such that the defined documents were deemed to be supportive. As a result, a failure to present any one of those defined documents in time would have been fatal to the owners’ claim, irrespective of whether or not a defined document that was not presented was in fact supportive.

Second, the language of rider clause 5 was not such that a stricter meaning had to be applied, as the words used did not necessitate a once and only presentation of each and every supporting document at the precise same time as the demurrage claim itself. This very much followed from guidance laid down by the Court of Appeal in The “Abqaiq”.

There is, commercially speaking, a preference for a complete bundle of all demurrage claim papers to be presented at one and the same time, as a matter of practical expediency. This is reflective of how banks operate in examining documents under letters of credit, where the expectation is for a complete and authoratative bundle to be handed over at one time. At that point, the reviewer ought then to be confident that everything required for a one-time assessment to be made is immediately to hand, without the need for additional searches or requests for more documents to be made.

This also reflects that charterers, particularly those in larger trading houses, often separate functions, such that specialist demurrage analysts may work in different teams and locations from the chartering and operations departments. As such, there is a genuine potential for a breakdown in communication to occur, as the analyst does not necessarily have access to, or time to review, the larger operational correspondence records, to check whether something had been presented separately at an earlier stage.

Nevertheless, the judgment makes clear that, if that level of precision needs to be achieved for charterers’ practical commercial reasons, then the language adopted in the claims presentation time bar clause would have to be far more explicit in expressing that expectation clearly. Otherwise, ambiguity in the language could see charterers make an unknowingly invalid rejection of a claim that was in fact presented in time, which could have serious adverse costs consequences later.

The judgment also gives some reasonably clear guidance, in the context of the typical accounting exercise that supporting documents address for demurrage claims, about what supporting documents are considered to be in general terms. However, this point was not strictly necessary to determine the application, and so is not binding on London arbitrators. That said, one could, nevertheless, expect London arbitrators to treat the judge’s view with deference given its helpfulness in considering the now more commonly used “all supporting documents” claims presentation time bar wordings.

Footnote 1: [2011] EWCA Civ 1127, [2012] 1 Lloyd’s Rep 18, at [62]