Euronav N V v Repsol Trading - The Maria

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DMC/SandT/21/15

England

Euronav N.V. v Repsol Trading S.A. (The “Maria”)

English Commercial Court: Henshaw J: [2021] EWHC 2565 (Comm): 24 September 2021

Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2021/2565.html

Richard Sarll (instructed by Lax & Co LLP) for Euronav (Owners)

Michael Coburn QC (instructed by Meana Green Maura & Asociados S.L.P.) for Repsol (Charterers)

VOYAGE CHARTER: DEMURRAGE: SHELLVOY 6 FORM: CLAUSE 15(3) REQUIREMENT TO GIVE NOTIFICATION OF DEMURRAGE CLAIM TO CHARTERERS “WITHIN 30 DAYS AFTER COMPLETION OF DISCHARGING” FAILING WHICH CLAIM BECOMES TIME-BARRED: BASIS ON WHICH DATE OF COMPLETION OF DISCHARGE SHOULD BE ASCERTAINED: WHETHER OWNERS’ DEMURRAGE CLAIM TIME-BARRED: SUMMARY JUDGMENT

Summary

The High Court, in finding for Charterers and granting summary judgment in their favour, held that, for the purposes of clause 15(3) of the Shellvoy 6 form, the date of final discharge of the cargo should be determined using local time at the place of discharge, with the result, on the facts, that Owners’ notification was out of time by one day, and so Owners’ demurrage claim was time-barred.

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

Background

Euronav (“Owners”) of Antwerp, Belgium voyage chartered their motor tanker “Maria” to Repsol (“Charterers”) of Madrid, Spain on an amended Shellvoy 6 form evidenced by a recap mail dated 23 October 2019 for the carriage of crude oil from Brazil to the US West Coast.

The charter was governed by English law and provided for the exclusive jurisdiction of the English High Court. It also provided for the Hague-Visby or Hague Rules to apply to cargo claims, contained no general provision regarding dates and time, and by clause 15(3) provided that:

"Owners shall notify Charterers within 30 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully and correctly documented and received by Charterers, within 90 days after completion. If Owners fail to give notice of or to submit any such claim with Documentation provided available, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished."

In the event, the vessel loaded at Santos, Brazil and final discharge of the cargo was completed at Long Beach, California, as a result of which 151 hours and 48 minutes of time on demurrage was spent, equating to USD487,183.12, as per Owners’ demurrage invoice.

The vessel disconnected cargo hoses at 2154 hours local time, Pacific Standard Time, on 24 December 2019, as noted in the statement of facts. At that time, it was 0654 hours on 25 December, Central European Time, in which time zone both Owners and Charterers were based, equating to nine hours’ difference between time zones.

On 24 January 2020, Owners sent and Charterers received via brokers an email timed at 1242 hours, Central European Time, stating that demurrage had been incurred on the voyage and that the email was to be taken as notice of demurrage.

A dispute arose about whether the notice had been sent in time. Charterers’ position was that the notice had been sent out of time, as discharge was completed on 24 December 2019, so that the last day for notification was 23 January 2020, being ‘day 30’ counting from 25 December 2019 as ‘day 1’. Owners’ position was that discharge was completed on 25 December 2019, based on Central European Time, being the time zone in which the parties were based, so that the notification made on 24 January 2020 was therefore in time, being ‘day 30’ counting from 26 December 2019 as ‘day 1’.

As the essential facts were not disputed and the outcome of the dispute essentially turned on a short point of law or contract construction, the parties both applied for summary judgment, or alternatively the striking out of the other parties claim or defence, as the case may be, in which case the Court should “grasp the nettle and decide it” (fn.1).

Judgment

The Judge first outlined the facts (above) and then, before determining the issue in light of the parties’ respective contentions, set out the correct approach to determining the true meaning of a contract.

In essence, as the Judge identified, the Court must ascertain what a reasonable person, who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of contracting, would have understood the contracting parties to have meant by the language used (fn.2).

In relation to charterparties generally, the Judge highlighted “the paramount desirability for certainty” as a guiding influence in their construction, such that the Court “should adopt a construction which favours certainty and avoids unnecessary expense and inquiries” (fn.3).

In relation to demurrage time bars in particular, the Judge pointed to recent authority that set out the relevant principles in this context, noting, amongst other things, the need for clarity and certainty so that owners are in a position to know what is required of them and – where the potential result is the barring of an otherwise valid claim - requiring both the time bar and the conditions for its application to be clearly stated. If owners were to escape their application, there must be a real ambiguity in the wording which remains after the analysis of the language, commercial purpose and factual background (fn.4).

The Judge finally noted that it was common ground between the parties that the 30 days given by clause 15(3) would only begin to count from the day after the day on which discharge had completed, such that the day of discharge was to be counted as ‘day 0’. Further, absent contrary indication, a ‘day’ means a calendar day, i.e. the period of twenty-fours hours beginning and ending at midnight, not merely a period of twenty-four consecutive hours of ‘elapsed time’.

In considering the parties submissions, the Judge noted there is some historical authority that supports the view that time is an essentially local concept to be determined using the time zone of the place where the event in question occurred. In the specific context of charterparties, the Judge pointed out that the textbooks favour a local time approach in relation to events such as delivery of the vessel and payment of hire, absent any express terms to the contrary (fn.5). That was also supported in a more recent and diverse situation where, in considering the date of filing and validity of a patent application, the Court of Appeal considered it obvious that the date of filing should be determined using the time zone of the place of filing (fn.6).

As to Owners’ broader point about the use of GMT or UTC as an international or nautical time, it appeared to the Judge that express contractual agreement would be required in order to depart from the natural starting point that events should be timed in accordance with local time. Otherwise, for example, notices might have to be served or payments made in countries west of the UK many hours earlier than would otherwise be the case, which would be surprising to impute as an intention to contracting parties absent clear agreement.

The Judge was equally unimpressed by Owners’ point that dating completion of discharge using local time in California had the effect of shortening the first day of the 30-day notification period, which made ‘day 1’ shorter by 9 hours, thus eroding the entitlement to a 30-day period to serve notice. As he pointed out, the requirement to serve notice within 30 calendar days naturally equated to a number of hours more or less than 30x24 hours of ‘elapsed time’, depending on where the notice needs to be served compared to the place of discharge. That was simply a feature, rather than erosion, of a notice period framed in terms of calendar days. At worse, the period would not be shortened by more than 23 hours, and that did not fundamentally alter the entitlement in the context of a 30-day notice period.

Accordingly, the Judge held that the date of final discharge of the cargo should be determined, for the purpose of clause 15(3), using local time at the place of discharge. The result, on the facts, was that Owners’ notification was out of time, and so Owners’ demurrage claim was therefore time-barred.

Comment

This judgment provides an interesting and helpful consideration of how times, days and dates are to be considered in the context of charterparties which, by their nature, are ordinarily contracts of an international nature, in terms of the locations of the parties, the brokers, the vessel and bank accounts.

The guidance provided is helpful because it is not uncommon to find provisions in charterparties that do not spell out the manner in which the mechanics of addressing time related matters are to be addressed, which can be a recipe for uncertainty when there is not exact or closely analogous case law on point.

The use of local time at the place of the discharge gives rise to a single, clear and easily ascertainable date and time of completion of discharge, which tends to promote certainty and reduce the risk of confusion, as it is referable to a tangible physical event at a specific location and particular time zone.

That same consideration would, accordingly, apply in relation to the 90-day period for service of the supporting documents for the demurrage claim under clause 15(3) too, and is also generally the starting point for the time limit under the Hague-Visby and Hague Rules for cargo claims.

The lesson to learn is that, given it is inherent in a date based system that different time zones may apply to the events which define the start and end of the period, when different locations and parties based in different countries are involved, it is important to diarise notice periods with great care.


Footnote 1: Easyair v Opal Telecom [2009] EWHC 339 (Ch), [15].

Footnote 2: Financial Conduct Authority v Arch Insurance [2021] UKSC 1, [47], with reference to Wood v Capita Insurance [2017] UKSC 24, [62]-[66].

Footnote 3: Carver on Charterparties (2nd Ed.), par. 2-088.

Footnote 4: The “Amalie Essberger” [2019] EWHC 3402 (Comm), [10], [13]-[15].

Footnote 5: Carver on Charterparties (2nd Ed.), par. 7-015 and Time Charters (7th Ed.), par. 16.22.

Footnote 6: Unwired Planet v Huawei Technologies [2017] EWCA Civ 266, [156].