Demurrage disputes - the bigger picture
Demurrage disputes - the bigger picture
Demurrage disputes mostly involve contests on the validity of tender of NOR, consideration of an SOF, exceptions to time counting, WWDs, WIPON, WIBON and so on, force majeure, and wrangles over claims - and the adequacy of supporting documents - within deadlines set by completion of discharge.
Even when, as in Men of Straw? and Casablanca, and back, posted respectively on 9 January and 28 November 2019, the context is the voyage or related operational matters, the focus is generally on construction of the fixture according to events at the loadport or disport. It can be forgotten that substantial demurrage may depend on what happened in transit, and to something surprisingly seldom mentioned - the cargo.
Alianca Navegacao e Logistica Ltda v Ameropa SA (The Santa Isabella) ( EWHC 3152 (Comm)) is a reminder that matters like this can greatly affect what happens at the disport(s), and present complex and interrelated issues where demurrage liability may depend on who is to blame.
Here, the key (and agreed) legal principle was that, though demurrage seems due, charterers are not liable if delivery of the cargo could not happen, or was delayed, due to owners’ fault.
Disponent owners Alianca chartered the vessel to Ameropa, on an amended Synacomex form which incorporated the Hague-Visby Rules, for carriage of about 44,000 tonnes of white corn/maize from Topolobampo, on Mexico’s Gulf of California, to Durban and Richards Bay.
On arrival at Durban after a 39 day voyage the cargo was found to have suffered extensive moisture damage. There was lengthy delay at both disports and owners claimed over $797,433 in demurrage. In describing this as “a relatively modest amount of money”, the judge was perhaps attempting rueful comparison with the total legal and other costs involved.
Charterers countered that the damage, and hence the delay at both Durban and Richards Bay, were caused by owners having taken the Cape Horn rather than the Panama Canal route, and having failed (i) to ventilate the cargo in accordance with a sound system (ii) adequately to de-infest following loading and later further fumigation (iii) to make the warranted speed on passage to Durban.
Evidence and law
A huge amount of documents will have been involved, and during a six day trial the judge heard factual and expert witnesses from each side.
There was extensive evidence and argument on routeing, speed, fumigation, quarantine and the discharge process, and as to what actually happened, what should have happened and the legal effect of that. For example, failure to take the appropriate route is deviation, and so a breach of contract for whose consequences owners will be liable, and acts, omissions and feasibility as regards ventilation and de-infesting are key to the duty to take proper care of the cargo under Article III rule 2 of the Hague-Visby Rules.
Having considered all the factual and expert evidence in the context of the relevant law, the judge ruled that:
owners were not in breach of charterparty in taking the Cape Horn route - so there was no contractual deviation; however
1. the vessel did not make its warranted fixture speed in transit to Durban; though
2. as a matter of causation it was not possible to attribute any particular loss or damage to that; but
3. the cargo was not properly and carefully ventilated, in accordance with a sound system;
4. that was a breach of owners’ duty to properly care for the cargo; and
5. it was the cause of the extensive damage to the cargo, which would otherwise have arrived at Durban with damage confined to about a foot depth atop each stow;
6. that was the cause of long delays at Durban; and furthermore
7. owners were also in breach of duty to properly care for the cargo by failing adequately to clean the vessel’s topsides after loading, and also after additional fumigation in Durban; and
8. that was the likely cause of (re)infestation and thus of discharge delay at Richards Bay.
Overall, in comparing the actual timeline with what would otherwise have happened (i.e. if owners had not been in breach of contract) the judge decided that the Durban discharge would have taken 3.7 days more than the remaining laytime there, and that at Richards Bay would have happened within the allowed laytime.
The precise numerical result is not given, but it seems that owners therefore lost about $768,000 of their demurrage claim.
This case shows that, as well as often substantial claims under the Bill of Lading contract(s), many charterparty issues can arise from damage to the cargo. Owner liability here can greatly curtail recovery of demurrage, and due to issues which are most certainly not confined to loadport and disport.