Requirements in A Bill of Lading for Presenting a Claim Must be Strictly Construed

Summary
The High Court in the United Kingdom allowed the appeal of Tricon Energy Ltd (the Charterer) on a question of law under section 69 of the Arbitration Act 1996 of the United Kingdom. The High Court held that Owners’ demurrage claim was time-barred because “all supporting documents” had to be presented in time to the Charterers, but copies of the bills of lading had not been included despite the requirement to calculate the claim by reference to the bill of lading quantities.

Background
The Charterers voyage chartered-in the chemical tanker “MTM Hong Kong” from MTM Trading LLC (the Owners) for a laden voyage carrying a part cargo from Antwerp, Belgium to Houston, Texas. The charter was on an amended ASBATANKVOY form and included, amongst others, the following rider clauses:

Rider Clause 10:

“Laytime/Demurrage...
(e) If load or discharge is done simultaneously with other parcels then laytime to be applied prorate between the parcels...

(g) In the event of Vessel being delayed in berthing and the Vessel has to load and or discharge at the port(s) for the account of others, then such delay and/or waiting time and/or demurrage, if incurred, to be prorated according to the Bill of Lading quantities.”

Rider Clause 38:

“Time Bar Clause
Charterer shall be discharged and released from all liability in respect of any claim/invoice the Owner may have/send to Charterer under this Charter Party unless a claim/invoice in writing and all supporting documents have been received by Charterer within [90] days after completion of discharge of the cargo covered by this Charter Party or after other termination of the voyage, whichever occurs first. Any claim/invoice which Owner may have under this Charter Party shall be waived and absolutely barred, if claim/invoice and all supporting documents are not received by Charterer before the time bar.”

As a second parcel of cargo, in addition to Charterers’ parcel, was discharged at the same berth in Houston, rider clause 10, became relevant.

The Owners’ claim for demurrage of USD55,841.16 was presented to the Charterers in time supported by the demurrage invoice, laytime/demurrage calculations, NOR, vessel timesheet/statement of facts, hourly rate/pressure logs and various letters of protest. The claim did not include copies of the bills of lading for the two parcels of cargo. The statement of facts did not accurately record the bill of lading quantities, insofar as Charterers’ parcel was concerned.

The Charterers’ case was that Owners did not provide “all supporting documents” in accordance with clause 38 because copies of the bills of lading were not included, as required to determine if the demurrage claim was well-founded.

The Owners’ case was that their claim was sufficiently documented for the purposes of clause 38 by the statement of facts and, in any event, the bill of lading for the second parcel was not an available document for the purposes of clause 38.

The question of law in dispute before the arbitral tribunal was:

“Where a charterparty requires demurrage to be calculated by reference to bill of lading quantities, and contains a demurrage time bar which requires provision of all supporting documents, will a claim for demurrage be time-barred if the vessel owner fails to provide copies of the bills of lading?”

The arbitral tribunal answered the question “no” on the basis that the presentation of the statement of facts was sufficient. The Charterers appealed the question of law in dispute to the High Court.

Held
The judge did not accept the Owners’ proposition that when “primary” or “essential” documents (as limited by the Owners’ own definition) were provided, the Owners were not required to provide further documents that duplicate the information. The Owners’ proposition was founded on the premise that the parties were most unlikely to have intended to impose such a documentary requirement, because it was inefficient or wasteful.

In accepting the Charterers’ view, the judge instead noted rider clause 10(e) “made it clear” (as the arbitral tribunal had stated) that pro-rating for demurrage purposes had to be calculated by reference to the bill of lading quantities. Furthermore, the charter referred not simply to “supporting documents” but to “all” such documents. The judge considered that these circumstances made it impossible to treat the bills of lading as falling outside the requirements of rider clause 38.

The judge did not see the Owners’ practical concerns – the difficulties they might encounter in producing copies of the bills of lading and their potentially confidential nature - as an answer. There was no evidence that the bills of lading were unavailable here and any sensitive information in those bills, which would not itself include the quantities, could very easily be redacted.
The judge, therefore, allowed Charterers’ appeal on the afore-mentioned basis.

Our comment
This judgment adds to the recent cases in which shipowners have been caught out by claims presentation time bars, where the need to include a specific type of document may not have been immediately obvious, unless the circumstances of the particular claim were considered carefully with a critical eye to detail.

This case underscores the importance of carefully considering the terms of a contract, especially one concerning a bill of lading, because a court will be strictly bound by the terms of the contract between the parties. The rationale for this, is that in a contract involving two or more jurisdictions, a court must give effect to the intention of the parties as expressed in their contract especially where the parties have provided time limits for presenting their claims for determination.

The decision is available on http://www.okadvocates.com/blog/wp-content/uploads/2020/06/Tricon-Energy-Ltd.-vs-MTM-Trading-LLC.pdf