London Arbitration 17/23

Disputes emerged in a time charter agreement concerning cargo claims, off-hire, and reimbursement of crew bonuses. The vessel also encountered cargo shortage claims after discharging to multiple receivers and was detained by receivers. The time charter was written under an amended NYPE 1946 form for the transport of wheat from the Ukraine to an East African Port.  Owners sought $227,628.11 in unpaid hire fees, while charterers disputed this and counterclaimed $31,272.08.  Both parties also sought interest and reimbursement for arbitration costs.

Background Facts

The situation involved loading 37,200 metric tons of wheat in Ukraine and then simultaneously discharging it to three different receivers at an East African port. The vessel’s master raised concerns about verifying the quantity discharged to each receiver because the cargo was unsegregated and co-mingled. After discharge, a difference was found between the vessel’s measurement and the figure provided by the receivers’ surveyor.

The receivers of 27,000 metric tons claimed a shortage of 370.20 metric tons based on the shore measurement. They requested a guarantee of $80,000 to prevent the vessel from leaving the port until resolved. The owners’ local P&I representatives arranged the guarantee, allowing the vessel to depart after completing discharge.

Relevant Clauses

The charterparty contained a modified version of clause 8 of the NYPE form and a clause confirming that cargo claims would be settled in accordance with the Inter-Club Agreement (ICA).

Clause 38 headed “Arrest” provided that if the vessel was arrested during the charter, time while the vessel was out of operations would be considered as off-hire.

Clause 50, headed “Insurance”, provided that any additional war risk insurance, including crew war bonus, was to be for the charterers’ account.

Clause 54 headed “Off-Hire”, provided that the vessel would be off-Hire for time actually lost during detention by any authority, including arrest.

Clause 63 provided as follows:

“Cargo(es) which have been loaded in vessel’s holds without separation and more than 1(one) Bill of Lading have been issued with more than 1 port of delivery, Owners/Master/Vessel will not be responsible to deliver cargo bill of Lading by Bill of Lading to different consignees and different port(s)/berth(s) but only for the total quantity on board the vessel.”

Cargo claims

During arbitration, owners sought to recover $88,925.44 from charterers for a cargo shortage claim and related costs. Owners argued that charterers were responsible for any shortages from discharge arrangements. They relied on Merit Shipping Co Inc v T K Boesen A/S (The Goodpal) [2000] 1 Lloyd’s Rep 638 in which the arbitral tribunal and Commercial Court rejected the shipowners’ argument that the charterers under an NYPE form of charter were liable for short delivery where the vessel had over-discharged cargo to the first receiver. 

Charterers claimed the owners were responsible for ensuring the correct cargo delivery. The arbitrator considered draft surveys, shore scale figures, and discharge operations. It was noted that simultaneous discharge increased the possibility of the claims, but there was no clear evidence of over-discharge. The discrepancy suggested a paper shortage. The arbitrator split the cargo claim 50/50, as neither party’s fault was clear. The distinction between discharge and delivery responsibilities was discussed, concluding charterers’ discharge method didn’t shift delivery responsibility to owners.

Off-Hire Claims

Charterers claimed the vessel was off-hire while waiting for port clearance after discharge, citing clauses 38 and 54. They considered port agents as an “authority” under the off-hire clause due to their monopoly control. Owners disagreed, stating delays were the charterers’ responsibility, and the vessel remained operational. The ruling clarified no vessel arrest occurred; it was delayed due to agents’ commercial pressure, not considered an authority. Additionally, no issues or faults on the owners’ part were found, so the vessel wasn’t off-hire while awaiting clearance.

Crew Bonuses 

The owners claimed a crew bonus under the Piracy Clause but were denied as the vessel didn’t enter hazardous zones or war-like areas as specified in the route taken. 

Award 

Owners were awarded $44,462.72 for cargo claims and costs, plus a $21,854.58 balance of hire with interest. Since they only partially succeeded, they received half of the recoverable costs, £2,500, and £4,000 for award costs with interest.