Voyage Charter - Sellers' Claim for Demurrage

December 2001

(Sea Venture Volume 20)

Voyage charterparties often contain clauses which qualify an owner’s right to claim demurrage. Not only must owners present their claims within a specified time period, but they must also do so with specified supporting documents. They same is true of any other party seeking an indemnity in respect of the owner’s claim for demurrage.

The "Obo Venture" (discussed in "Sea Venture" Vol.19) involved a claim for demurrage between owner and charterer. In that case, the court held that it was essential that a signed copy of the charterparty be presented in support of the demurrage claim within 90 days, as specified in a clause of the charterparty, because it meant that the charterers would be assured that the claim was proceeding on the basis of the commonly accepted wording.

A dispute relating to such a clause was also considered in the "Yellow Star": Sellers brought a claim in respect of demurrage against buyers under en "ex ship" contract, clause 13 of which provided:

"Any demurrage is due provided owners actually claim it. Pro rata quantity loaded, if part cargo. Rata [Rate] as per c/p. Rata [Rate] AFRA to apply if vessel owned or t/c. Any claim barred if not notified duly supported by relevant documents (whereof copy of c/p and copy of owner’s demurrage claim and invoice) within 90 days from b/l date."

Within 90 days of the bill of lading date sellers had presented a demurrage claim supported by the following documents: Notice of readiness, statement of facts, master’s letter of protest, the charterparty and the sellers’ demurrage invoice. However, there was no document evidencing the owners’ demurrage claim or invoice.

The Court was asked to decide whether the sellers’ claim was barred as a result of their failure to present the owners’ demurrage invoice in time. Judge Hallgarten Q.C. held that it was.

In reaching this decision the judge drew attention to the first line of clause 13 which showed that the sellers’ right to demurrage was not free-standing but was intended to operate on an indemnity basis (i.e. the sellers’ right to claim demurrage was dependant on the owners having first done so). For that reason, the owners’ invoice was unquestionably a document which should have accompanied the sellers’ notification of claim.

The sellers had argued that the part of clause 13 which stated "(whereof copy of c/p and copy of owner’s demurrage claim and invoice)" was illustrative rather than prescriptive. They submitted that the owners’ invoice was the sort of supporting document that could be presented, but that it need not actually be presented. The judge found against the sellers on this point. He added that he was not convinced that the sellers’ position would even be improved by categorising the list as illustrative; if so, he said, it was "illustrative of precisely the sort of document which in the case of a voyage charter-party would be a relevant document to support a claim based upon an indemnity".

This line of reasoning demonstrates the rigidity with which the courts apply these clauses. The documents mentioned in these clauses are unlikely to be construed as mere examples. The omission of one listed document is not likely to be overlooked even if all of the others have been included.

A further issue was that the owners had brought a demurrage claim but had not raised an invoice. This, however, did not excuse the sellers from submitting such a document to the buyers as it was in the sellers’ power to request that owners provide such an invoice. Therefore, unless a demurrage claimant is incapable of obtaining or procuring a specified document, he risks his demurrage claim being time barred if he fails to submit all specified documents within the relevant time period.

The sellers’ right to demurrage under the contract in the "Yellow Star" was on an indemnity basis. As such, it was essential for the buyers to be able to verify that in making their claim the sellers were "passing on" the demurrage claim made by the owners against them.

It is clear that both owners and charterers, presenting demurrage claims to charterers and buyers respectively, should ensure that the requirements as regards supporting documentation specified in time bar clauses are complied with to the letter.

¹ [1999] 2 Lloyd’s Rep. 101
² [2000] 2 Lloyd’s Rep. 637