Ardmore MR Pool LLC (Ardmore Shipping) v Orient Source (HK) Ltd. (The “Ardmore Sealancer”) – SMA No. 4372, 22 Jul 2019

The following specially negotiated Freight and Demurrage departures from the standard ASBATANKVOY payment terms were agreed upon:

a) Full freight to be paid prior to loading. Incurred and estimated demurrage to be paid before breaking bulk, calculated based upon agent’s estimates.

b) Demurrage: USD 22,000 pd/pr (payable every 7 days if stays longer, undisputed demurrage to be paid with no delay)

 In accordance with the charter party, the ship sailed from Chengxi Shipyard to Vladivostok Port at 0330 on July 3, 2018. The ship tendered NOR just outside of Vladivostok at 12:00 hrs. on July 6, 2018. The NOR was received and confirmed by Orient Source as Charterer but Orient Source never provided the cargo, nor paid the advanced lumpsum freight and the accruing demurrage. The explanations for the non-provision of cargo are not entirely clear. Orient implies the non-provision was linked to restrictions against loading a “foreign flag” at the port of Vladivostok.  Simultaneously, the non-provision could have simply been due to supplier issues.

Ardmore as Owner provided Orient with two options: if the shipment changed to obtainable, Option A was to consider STS transfers through the port of Vladivostok on Orient’s cost. Option B: change into a settlement to permit Orient to cancel the C/P, and pay a discounted freight of $375,000.00, plus any demurrage owed. Orient decided on Option B. Even with the cancellation agreement and continued promises to pay, no payment was ever made by Orient. 

Ardmore advised Orient of its intention to proceed with arbitration at New York in accordance with the charter party’s arbitration clause. Orient did not appoint an arbitrator nor submit any exhibits but did appear “pro se” in this proceeding through the writings of Mr. Alistair Sean Jeffries, Legal at Orient-Source and Operations at Orient-Source. Ardmore claims that it should be awarded its claim of $636,234,72 (consisting of its proposed reduced freight of $375,000 and demurrage of $261,234.72), plus interest, attorneys’ fees, and expenses, and that the costs of this proceeding should be assessed entirely against Orient.

 The Owner submitted a declaration from a member of its chartering team, and accompanying documents in support of its claim. In its ruling, the Panel seemed to stress that the fixture not only identified the MN ARDMORE SEALANCER as the performing vessel but also named Vladivostok and “Vlad Port Terminal, berth No.11” as the port and berth at which the contracted cargo was to be loaded. This, in conjunction with the Q88 as provided within the fixture and within which the Vessel’s flag was noted as Marshall Islands, should have alerted Charterer to any load restrictions basis flag.  The Panel further noted NOR was not tendered from the customary anchorage as required by ASBATANKVOY but did not broach the NOR’s validity as Orient had accepted the NOR without caveat.  Further, Vessel’s inability to obtain free pratique upon arrival was not deemed relevant as per the Panel, Vessel did nothing to prevent itself from obtaining free pratique.

To conclude, Orient had through its actions accepted Option B and on numerous occasions promised payment.  Thus, the Panel did not have any grounds to consider Orient’s requests for relief from the Owner’s claimed damages, but did note that the fixture provides for a 1.25% Address Commission and thus, payment of the deadfreight and demurrage was to exclude the Address Commission. The Panel unanimously directed Orient-Source (HK) Limited to pay Ardmore MR Pool LLC (d/b/a Ardmore Shipping) the sum of $696,879.91.