Author: Haugen Consulting

DEMURRAGE – BPVOY4 – CLAUSE 13 INDEMNITY – VESSEL FREE OF LEGAL ISSUES – CARGO ON VESSEL ARRESTED – DELAY TO LOAD AT SECOND LOADPORT – INCREASE IN PURCHASING COSTS DUE TO DELAY – INDEMNITY AND WARRANTY CLAUSES – ASSUMPTION OF RESPONSIBILITY BY OWNERS – CAN CHARTERERS’ “GAINS” FROM INTERNAL HEDGING ARRANGEMENTS BE USED TO OFFSET OWNERS’ BREACH OF CHARTER CLAIM – REMOTENESS OF LOSS RULES FOR BREACH OF CONTRACT

Disponent Owners chartered the tanker “Dijilah” from West Africa to China, then faced legal issues over sanction compliance by the commercial operator/owner. Property seizure by financiers caused delays, leading Charterers to pay an extra USD 3.7 million for cargo, but they gained USD 2.9 million internally. Disputes ensued as Owners claimed demurrage charges, countered by Charterers citing losses from the delay.

BREACH OF CHARTERPARTY – DISCHARGING CARGO WITH A LIEN – VIOLATION OF CHARTERER’S ORDERS FOR DISCHARGING CARGO
In London Arbitration 4/23, a dispute arose between charterers and owners regarding cargo discharge instructions leading to this counterclaim. The charterers asserted that they instructed the owners not to unload cargo, for they were exercising a lien on the cargo to recover $3,705,033 owed by sub-charterers. Owners proceeded to unload the cargo, which charterers claimed invalidated the lien. Charterers claimed a breach of the charter and sought damages equal to the lien amount.

BREACH OF CONTRACT – NOT RE-BERTHING VESSEL TO LOAD CARGO – INDEMNITY FOR LOSSES INCURRED EARLIER – CHAIN OF CONTRACTS – REMOTENESS – ERROR OF LAW – ARBITRATION ACT 1996, SECTION 69
In May 2012, Mitsui agreed to sell 60,000 metric tons of Brazilian soybeans to DGO. The cargo was to be delivered to the Santos port by July 31, 2012, with payment through a letter of credit. While loading, the vessel broke its moorings, caused damage to the port equipment, and was detained with the remaining cargo onboard. DGO claimed contract termination, which Mitsui initially contested but later accepted in January 2013. A complex chain of sales and purchases was involved, leading to arbitration. The FOSFA Board of Appeal found DGO breached the contract by not re-berthing a vessel, awarding damages of US$7,007,430 to Mitsui. However, Mitsui’s claims for indemnity and losses suffered in the sales chain were rejected due to perceived remoteness. Mitsui appealed, alleging errors in the law regarding remoteness and citing Clause 29 of the Arbitration Act 1996.

APPEAL – UNDERWATER CLEANING “ALWAYS AT CHARTERERS’ TIME AND EXPENSE” – ON-HIRE RATES FOR CLEANING AFTER EXPIRY OF CHARTERPARTY – HULL FOULING – NYPE FORM – SECTION 69 OF THE ARBITRATION ACT 1996
Langlois (Owners) chartered the vessel, MV Globe Danae, to Smart Gain (Charterers) for a trip from India to Brazil carrying metallurgical coke. The dispute arose from clause (86) in the charterparty regarding hull fouling. Langlois claimed compensation for time spent on cleaning, based on clause 86, while Smart Gain argued cleaning obligations ceased upon redelivery. This was an appeal of a partial arbitration award from October 2022.

TIME CHARTER – LATE REDELIVERY – IMO 2020 FUEL REGULATIONS – LIABILITY FOR DE-BUNKERING OF HSFO – DETERMINING VALUE OF HSFO – DISTRESSED SALE OF HSFO – HULL CLEANING – APPORTIONMENT OF COSTS – NYPE
A dispute arose between disponent owners and charterers over a charterparty formed in May 2019. The charterparty was written based on the impending IMO 2020 fuel regulations. The vessel’s redelivery was delayed due to cargo payment issues, causing it to have excess HSFO onboard after the regulation’s deadline. Owners claimed losses, including voyage expenses, de-bunkering costs, HSFO value, cleaning expenses, port charges, and an outstanding hire balance. Charterers contested responsibility for late redelivery, arguing the contract did not explicitly cover HSFO-related issues and implying the owners were aware of the risks.

DAMAGES FOR REPUDIATORY BREACH – FIXING A SUBSTITUTE VESSEL BEFORE THE SUBJECT CHARTER– DETERMINING MARKET RATES FOR LOSSES – LOSSES RELATED TO STORAGE CHARGES AND PENALTIES DUE TO SWITCHING VESSELS
A vessel was chartered for the transport of bulk wheat from a Black Sea port to a Turkish port under an amended SYNACOMEX 2000 form. A disagreement arose due to the charterers’ failure to fulfill the contractual voyage, leading the charterers to claim US$90,829.99 in damages for a repudiatory breach.

TIME CHARTER – BALANCE ON FINAL HIRE ACCOUNTS – SPEED AND CONSUMPTION COUNTERCLAIM– CONDITIONS TO TIME-BAR COUNTERCLAIM – JURISDICTION OF ARBITRATOR OVER COUNTERCLAIM – REFERRAL OF COUNTERCLAIM TO WEATHER ROUTING COMPANY
After a vessel completed a voyage under a time-charter, disputes arose regarding the final hire accounts. The arbitration was referred to a sole arbitrator under the LMAA Small Claims Procedure 2017 (SCP). The owners claimed a balance of hire totaling US$49,423.30. The charterers maintained that they were owed damages of US$62,876.66 due to a speed and consumption issue and counterclaimed for the difference of US$16,170.82.

TIME CHARTER – DAMAGE TO VESSEL DURING DISCHARGE – REPAIRS REQUIRED AFTER DISCHARGE – CHANGE OF REDELIVERY – REIMBURSEMENT OF WAR-RISK BONUS TO CREW – DAMAGES FOR LOSS OF FOLLOW-ON FIXTURE
A vessel was chartered on the NYPE form with amendments for a time charter to transport bulk coal from Richards Bay in South Africa to one safe port, India or Pakistan, as per the charterers’ choice. The arbitration centered on the charterers’ failure to redeliver the vessel at the agreed location. Claims related to crew war-risk bonuses, lost earnings from a follow-on fixture, and waiting time were also put forward.