London Arbitration 06/08 – 722 LMLN 3, 21.05.08
In this arbitration, Owners successfully recovered demurrage from Charterers who were unable to rely on defences that the condition of the vessel’s gear caused delays during loading, or that Owners should be responsible for delays due to the incompetence of stevedores who were under the Master’s direction and control.
This arbitration concerned a charter on an amended Gencon Form which threw up a number of issues.
Firstly, Charterers complained that the derrick serving one of the holds was not working properly, reducing the capacity to load/discharge the Vessel. The Charterparty provided that where insufficient power prevented the efficient working of cargo gear, “time thereby lost” should be deducted from laytime. The Tribunal held that “time” generally meant “laytime” and that this clause applied prior to the expiry of laytime, but only where there was a causal connection between the loss of efficiency and an actual loss of time.
On the other hand, once laytime had expired and the Vessel was on demurrage, if there was an inefficiency or breakdown of the cargo gear, that amounted to a default on the part of the Owners, this could provide a defence to Owners’ demurrage claim. This was provided that the Charterers could demonstrate a causal connection between the Owners’ default (ie the breakdown/ inefficiency) and an actual loss.
Charterers asserted that they ought to be allowed to count time on a pro-rated basis, having made an assessment of the partial inefficiency. This was however deemed artificial and unsustainable because Charterers had not, under general principles of damages, demonstrated that they had suffered an actual loss.
The second issue concerned stowage of the cargo. The handling of the cargo by the stevedores caused further delays at the loading port and there were problems stowing the cargo, which was in jumbo bags. There were subsequent delays caused by the need to replace damaged jumbo bags at the discharge ports. The Charterers relied on a clause of the charterparty providing that the stevedores were under the direction and control of the Master, who was to be responsible for the proper loading, stowage, discharging and seaworthiness of the vessel. Charterers said that the Owners were therefore responsible for time lost due to bad stowage. Owners said in return that the stevedores were incompetent and that this negated the Clause. Owners relied on clause 5 of the Gencon charter which provided that cargo shall be stowed trimmed, tallied and lashed by Charterers, free of risk, liability or expense to the Owners.
The Tribunal held that the obligation on Charterers was to employ a firm of stevedores whose workers were not only competent but who were properly equipped. It was obvious on the facts that heavy forklifts would be needed to shift the cargo to make proper use of the available space in the holds. The Tribunal considered that the lack of proper equipment (i.e. forklifts) was sufficient to demonstrate incompetency on the part of the stevedores and therefore the Master could not be held responsible for the delays due to bad stowage. Charterers also had no separate defence to demurrage based on default on the part of Owners/their servants. Charterers were further estopped from relying on any delay caused by re-bagging the cargo by the terms of an LOI they had given which indemnified Owners in respect of any liability due to torn and damaged bags and re-bagging.
The Tribunal also considered a clause in the Charterparty providing that laytime was fully reversible in the Charterers’ option. The Tribunal found that, on the basis that the reversibility of laytime was an option, it only took effect if exercised. The Charterers failed to exercise their option and the fact that reversibility was mentioned in their final submissions in the arbitration did not amount to an exercise of the option.
As to the end of demurrage, it was found that, where Charterers ordered the vessel to remain at port pending loading of further cargo, which was not in fact loaded, laytime/time on demurrage continued to run after actual loading had completed and until the Vessel was ordered to proceed.
Finally, Owners were also found to have a valid claim for deadfreight where Charterers produced no evidence that an additional quantity of cargo could not have been loaded.