National Shipping Company of Saudi Arabia v BP Oil Supply Company
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Sir Mark Potter,Lord Justice Ward |
| Judgment Date | 12 October 2011 |
| Neutral Citation | [2011] EWCA Civ 1127 |
| Docket Number | Case No: A3/2010/2894 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 October 2011 |
[2011] EWCA Civ 1127
Lord Justice Ward
Lord Justice Tomlinson
and
Sir Mark Potter
Case No: A3/2010/2894
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Field
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Timothy Young QC (instructed by Holman Fenwick Willan LLP) for the Appellant
Mr Henry Byam-Cook (instructed by Hill Dickinson LLP) for the Respondent
Hearing dates : 20/21 July 2011
Introduction
This is a case about demurrage. More accurately, it is about a claim for damages for a period of detention which at the time the Owners did not think counted as either laytime or demurrage, but which in fact did. Two questions arise on the appeal. The first is whether by agreeing to a demurrage calculation in respect of time which they did recognise counted towards laytime and demurrage, Owners precluded themselves from recovering demurrage in respect of the period which they had mischaracterised. The second is whether as a result of misdescribing or mislabelling their claim Owners failed to comply with the Claims Time Bar clause in the BPVOY4 form of charterparty so that their claim, if not otherwise precluded, is in any event time-barred.
Field J on a summary judgment application in the Commercial Court resolved both of these issues against the Owners, although strictly the second did not arise. It is not in dispute that in consequence the Owners have been deprived of damages for detention of in excess of US$ 500,000, which is payable unless either the Owners inadvertently deprived themselves of the ability to recover it as demurrage by agreeing to accept a payment for demurrage in a lesser amount or the claim is time-barred because not initially correctly presented with all relevant supporting documents. It is further not in dispute that the Charterers in fact received from the Owners within the 90 days prescribed by the Claims Time Bar clause all of the supporting documentation required to substantiate each and every part of what is now recognised to be a claim for demurrage. If Field J is right the Owners have been deprived of a very substantial part of the agreed remuneration for the voyage. The compensatable delays all occurred as a result of matters for which the Charterers were contractually responsible, including their failure to have cargo ready to load. In the circumstances the agreed remuneration for the performance of the voyage was US$ 3.5M freight and over US$ 800,000 demurrage. There is thus a shortfall of nearly 12%.
This no doubt explains why in the correspondence which followed performance of the voyage the Owners expressed their increasing frustration that, in spite of the long-standing excellent relationship between themselves and the Charterers, BP, their claim remained unmet. I have to confess that I have found the Charterers' approach to this claim as surprising as it is unattractive. I have little doubt that it has come about as a result of the decision-maker not being in possession of the full facts. However that may be, if the Charterers are right in law, they are entitled to succeed, and Field J concluded that they are. It is against that conclusion that the Owners appeal.
The parties
The Appellants are the National Shipping Company of Saudi Arabia and I shall call them "the Owners". Pursuant to a charterparty on BPVOY4 form dated 29 January 2008 the Owners agreed with the Respondents, BP Oil Supply Company, whom I shall call "the Charterers", to perform with their vessel "Abqaiq" a single cargo carrying voyage from, in the event, Freeport Bahamas to Singapore. Abqaiq is a tanker of over 300,000 tonnes deadweight. The cargo was to be dirty petroleum products – in the event heavy sulphur fuel oil.
The charterparty
The fixture was concluded by a single intermediary broker, Poten and Partners and is recorded in a Final Recap sent by email from the broker to both parties.
The recap reads as follows under the heading FINANCIAL:
FREIGHT RATE: FOLL BASIS 1/1
LUMPSUM USD 3.5 MILLION
IF ADDITIONAL LOAD/DISPORT, VITOL
INTERIM PORT CLAUSE TO APPLY
DEMURRAGE RATE: USD 70,000 PDPR
OVERAGE: N/A
LAYTIME: 96 HOURS
PORT CHARGES: ALL PORT CHARGES TO BE FOR
CHART'S ACCOUNT
The freight rate agreed was thus on the basis of one loadport and one discharge port, although the Charterers were in fact at liberty both to load and to discharge at one or two ports within the loading and discharging range. The documentation for the appeal did not include the Vitol Interim Port Clause, but the judge set it out in his judgment:—
"Charterer shall pay for any interim load/discharge port(s) at cost. Time for additional steaming, which exceeds direct route from first loadport to furthest discharge port, shall be paid at the demurrage rate plus bunkers consumed, plus actual port costs, if any. The reasonable, estimated costs will be payable as an on account payment together with freight, followed by final invoice plus all supporting documents as soon as possible but not later than ninety (90) days after completion of this voyage."
Other relevant clauses in Part 2 of the standard BPVOY4 form include, in relevant part:—
"5.2 Charterers shall have the option of instruction owners to load the Vessel at more than one berth at each loading port and to discharge at more than one berth at each discharge port in which event Owners shall, in the first instance, pay expenses arising from any of the following movements of the Vessel:—
5.2.1 unmooring at, and pilotage and towage off, the first loading or discharge berth;
5.2.2 mooring and unmooring at, and pilotage and towage onto and off, any intermediate or discharge berth; and
5.2.3. mooring at, and pilotage and towage onto, the last loading or discharge berth.
Charterers shall reimburse Owners in respect of expenses properly incurred arising from any of the aforementioned movements, upon presentation by Owners of all supporting invoices evidencing prior payments by Owners.
5.3 Charterers shall reimburse Owners in respect of any djues and/or other charges incurred in excess of those which would have been incurred if all the cargo required to be loaded or discharged at the particular port had been loaded or discharged at the first berth only. Time used on account of shifting shall count as laytime or, if the Vessel is on demurrage, as demurrage, except as otherwise provided in Clauses 17 and 18.2.
…
6.3 Notwithstanding tender of a valid NOR by the Vessel such NOR shall not be effective or become effective for the purposes of calculating laytime, or if the Vessel is on demurrage, demurrage unless and until the following conditions have been met:—
…
6.3.2 In the case of the Vessel not berthing upon arrival and being instructed to anchor, she has completed anchoring at an anchorage where vessels of her type customarily anchor at the port or, if she has been instructed to wait, she has reached the area within the port where vessels of her type customarily wait;
…
7.3.2 Laytime or, if the Vessel is on demurrage, demurrage, shall commence, at each loading and each discharge port, upon the expiry of six (6) hours after a valid NOR has become effective as determined under Clause 6.3, berth or no berth, or when the Vessel commences loading, or discharging, whichever first occurs.
7.3.3 Laytime or, if the Vessel is on demurrage, demurrage shall run until the cargo hoses have been finally disconnected upon completion of loading or discharging, and the Master shall procure that hose disconnection is effected promptly…
7.4 Charterers shall pay demurrage at the rate stated in Section J of PART 1 per running day, and pro rata for part of a running day, for all time that loading and discharging and any other time counting as laytime exceeds laytime under this Clause 7. If, however, demurrage is incurred by reason of the causes specified in Clause 17, the rate of demurrage shall be reduced to one-half of the rate stated in Section J of PART 1 per running day, or pro rata for part of a running day, for demurrage so incurred.
…
20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which Owners may have under this Charter unless a claim in writing has been presented to Charterers, together with all supporting documentation substantiating each and every constituent part of the claim, with ninety (90) days of the completion of discharge of the cargo carried hereunder.
20.2 Any other claim against Charterers for any and all other amounts which are alleged to be for Charterers' account under this Charter shall be extinguished, and Charterers shall be discharged from all liability whatsoever in respect thereof, unless such claim is presented to Charterers, together with full supporting documentation substantiating each and every constituent part of the claim, within one hundred and eighty (180) days of the completion of discharge of the cargo carried hereunder."
…
32. Charterers shall deduct 1.25% address commission from freight, (including fixed and variable freight differentials), and any dead freight and demurrage payable under this charter."
The facts
The judge summarised the events of the voyage and I gratefully adopt his account given at paragraphs 5, 6, 7 and 8 of his judgment:—
"5. I turn to the factual background. The vessel arrived at Freeport, the nominated loadport, and tendered notice of readiness at 0930 1 on 6 February 2008. She berthed at berth...
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