Owners chartered the vessel to charterers for 3 consecutive voyages. The additional terms included an arbitration clause based on the Centrocon Arbitration clause amended to state that a claim would be time-barred unless the claimant’s arbitrator was appointed “within 12 months of final discharge or termination of the charterparty”
Discharge of cargo in respect of the first voyage was completed on 8 February 2008. Discharge under the last voyage was completed on 18 May 2008. As the balance of freight fell due on 14 June 2008, it was agreed that this was the date of termination of the charterparty. Owners claimed demurrage of US$376,086.03 in respect of the first voyage and commenced arbitration on 23 February 2009, i.e. 12 months and 15 days after completion of discharge on that voyage.
Not surprisingly, charterers said the claim was time barred because (i) final discharge meant discharge on the voyage in respect of which the claim arose and (ii) the clause required an arbitrator to be appointed within 12 months of whichever was the earlier: final discharge or termination of the charterparty.
In contrast owners’ position was that there were two starting points for the giving of notice; either the date of final discharge or the date of termination of the charterparty and that because arbitration had been started within 12 months of the latter the claim was in time.
The court had to consider the meaning of the arbitration clause.
The judge referred to established authorities The “Simonburn” (1973), The “Himmerland” (1965) and The “Aristokratis” (1976) for the meaning of “final discharge”. In The “Simonburn” the Court of Appeal held that these words, in the context of a consecutive voyage, meant final discharge of the cargo on the voyage in respect of which the claim arises. The judge considered that this was generally accepted and held that, in the present case, the trigger point for “the 12 months from final discharge” was the discharge of the first cargo. Had this been only the trigger point, then owners’ claim would have been time barred. The claim was, however, brought in time under the second part of the clause, i.e. within 12 months of “termination” of the charterparty which was not included in the time bar provision considered in The “Simonburn”.
Charterers argued that the clause was not a standard clause and thus, in the event of ambiguity, should be construed “contra proferentem” whilst at the same time, being a time-bar clause, ought to be construed strictly. They argued that the clause required an arbitrator to be appointed within 12 months of whichever was the earlier: final discharge or termination of the charterparty.
Mr Justice Burton agreed the principles of construction argued by charterers. However, he did not deviate from decision established in The “Simonburn”. He agreed with owners’ submissions that the interpretation of the clause should be considered without any addition, i.e. “whichever is earlier”, although accepted that it would be open to the court to introduce words which the parties did not use in order to construe the agreement.
He concluded that the meaning of the clause was that there were two trigger points from which time runs, namely final discharge and termination of the charterparty, and that owners’ claim was in time if it complied with either deadline.
This decision is based on interpretation of a specific clause, however it serves as a reminder to us all that strict compliance with time bar clauses should always be observed. Where the clause refers to two trigger points, it would be prudent to protect time from earliest date; this of course would not apply where clear wording “whichever is later” or “whichever is earlier” is added.
Article by Anna Yudaevda
