Astir Holdings, Inc. v. Xcoal Energy & Resources (The “Lacon”) – SMA No.4438, 25 February 2022

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Xcoal Energy & Resources chartered Astir Holdings Inc. for carriage of coal from Mobile to one safe berth at Jingtang.  While en route, the charterer used a clause in the charterparty to change its discharging port from Jingtang to Lanshan, asserting they were entitled credit (for excess steaming time and bunkers) since Lanshan was closer to the vessel’s next port.

The owner approved the charterer’s request to unload at two discharging berths instead of the one that was contractually agreed upon. Whether the charterer’s exceptions to laytime and demurrage would apply at the second berth was not discussed at the time

The vessel was subjected to a quarantine inspection at the second berth at Lanshan and discharging was not able to take place for 12H 15m. 

Relevant charterparty provision:

Clause 38

At both the load and discharge port(s) any time used or lost during or due to any/all of the following reasons (or operations) shall not count as laytime or time on demurrage, unless specifically specified otherwise:… Time lost due to prohibition of . . . loading [or] discharging by Government Authorities or acts of Authority, whether lawful or unlawful. Time lost or used waiting for, or for vessel inspections . . . and/or Free Pratique….stoppage (of whatever nature) of the loading appliance/equipment which prevents or delays the loading/discharge transfer operation.

Arbitration took place to decide whether the charterer’s exceptions to time counting as demurrage should apply for the period at the second discharging berth.

The owner claimed that the time awaiting quarantine inspection should count as demurrage because Clause 38 of the charter only provided for one discharging berth. It was also argued that since demurrage started before the delay, then the principle “once on demurrage, always on demurrage” should apply.

The owner also deniedthe charterer should receive an eliminated balance of freight claimed as a “repositioning” credit. This was because the charter did not provide for a differential credit in respect of savings costs of performance. New York arbitrators had previously used this to settle a similar case stating that the claim was too speculative to be recoverable (The PROGRESS , SMA No. 3343[1997]). The owner also stated that at the time the charter ended, they had not yet arranged the location for the vessel’s next employment.

The charterer’s counter argument was that the exceptions to demurrage in clause 38 were not specific to a particular berth, and the owner did not specify that they were when the owner agreed to proceed to the second berth. The charterer also claimed that  The PROGRESS , SMA No. 3343[1997] cited by the owner was too different from the current arbitration. The previous case claim was too speculative because of new employment by the owner, whereas this case was not speculative because Lanshan was “objectively” closer to Singapore than Jingtang. Lastly, the charterer refused to pay for the owner’s legal fees because there was no contractual provision concerning these costs provided in the charter.

Denied:  Demurrage at Second Berth  Regarding the demurrage claim, the panel ruled that the owner was not entitled to their claim for a balance because there was no amendment to the charter stating that the exceptions to demurrage in clause 38 would only apply to one discharging berth.  The time spent at the second berth when discharging was suspended pending completion of a quarantine inspection, did not count as time on demurrage.

Upheld: Freight Balance  In terms of the repositioning credit, the panel ruled that since the charter gave the charterer an option of discharge port with no mention of any differential falling after the completion at the final discharge port, the owner was entitled to claim the full balance of freight. The panel recognized a supporting declaration for the charterer stating, “that when an owner is fixing its ship on new employment, it estimates the costs of performance of the potential new charter including the costs of performing the ballast leg to the intended load port.” However, the panel also recognized that the estimated cost for new potential employment does not apply to a previous charter.

Denied: Legal Fees and Expenses  Finally, the panel declined the owner’s claim to its legal fees since the charterer did not claim an award for its legal fees.  In addition, the current arbitration clause did not grant the panel authority to award a recovery of legal fees to the prevailing party.

The panel fees were found to be a joint liability of the parties, but the owner had a right to full recovery for any portion paid.