Voyage Charter – Demurrage Time Bar Provisions

August 2000

(Sea Venture Volume 19)

Voyage charterparties frequently provide that the owners' right to demurrage will be lost if the owners fail to comply with certain specified conditions. Some of these cases have been discussed in ''Sea Venture'' Vol.s 14 and 15. In order to protect their interests, owners must act with care and diligence. A recent English High Court decision serves to illustrate this point.

In the ''Obo Venture''¹, Colman J was asked to consider an appeal from an interim arbitration award made by London maritime arbitrators.

The fixture had been made on the Asbatankvoy form and further stated, under additional clause 30, that charterers:

''shall be discharged and released from all liabilities in respect of claim Owners may have under this Charter Party … unless claim has been presented in writing with all legible available supporting documents … within 90 days from completion of discharge under this Charter Party. In all cases Owners shall provide supporting documentation duly signed by Shippers (including signed copy of Charter Party provided correctly issued and submitted by Charterers broker latest 5 days after completion of discharge) respectively Receivers, or Agents provided obtainable.''

Owners did not provide charterers with a copy of the charterparty signed by owners within 90 days of completion of discharge. Charterers said this meant that claims for demurrage at both loading and discharge ports were time barred.

Owners contended that a ''signed copy of the Charter Party'' in clause 30 meant a copy signed by both parties. Before the vessel had started loading, the charterers' broker had sent two originals and one copy charterparty with a request that owners sign and return both originals for charterers' signature. The owners had not done so. The issue before the Court was whether ''signed copy of the Charter Party'' meant that the owners had to provide a copy of the charterparty signed not only by them, but also by charterers. The arbitrators had concluded by a majority that this was the effect.

Colman J, allowing charterers' appeal, found that a signed copy of the charterparty meant a copy which the owners had signed, regardless of whether it had been first signed by or on behalf of charterers. Given that clause 30 specified not only the period of time within which the Owner was to receive the charter, but also the requirement that it should be correctly issued, it was likely that any requirements for the charterparty to be signed by the charterers would also have been expressly specified. This had not been done.

In reaching his decision, Colman J made a number of observations on such time bar clauses, which are helpful in demonstrating the way in which the courts approach them.

1. ''The provision of documentary evidence in addition to notice has the triple purpose of enabling the charterers to evaluate the substance of the claim as early as possible, to begin to obtain evidence at an early stage and to take any steps which may be open to them to pass on the claim to third parties, such as sub-charterers or shippers or receivers. Those functions are thus exclusively for the charterers' benefit.''

2. On this basis the purpose of including a signed copy of the charterparty among the supporting documents was to assure charterers that the claim was proceeding on the basis of the commonly accepted wording. If the owners did not accept the accuracy of the charterparty terms, an additional issue would arise which would have to be resolved before the validity of the owners' claim could be asserted.

3. In this situation, the ''signed copy of Charter Party provided correctly issued (i.e. accurately evidencing the terms of the fixture as already agreed) and submitted by Charterers brokers'' only needed the signature of the owners. The terms of the fixture would be known to the charterers from the moment when they approved it as communicated to them by their broker. Consequently their own signature or that of their broker would add nothing of value to their knowledge of the basis on which the owners advanced their claim.

Since owners had failed to provide a copy of the charterparty signed by themselves, their claim for demurrage was barred. The case underlies the need, once again, for owners to be vigilant in protecting their interests.

¹[1999] 2 Lloyd's Rep 101