2024 Maritime Digest of Arbitration Awards and Court Rulings
ASBATANKVOY -- DEADLINE MISSED FOR LIFTING SUBJECTS -- DAMAGES FOR HIGHER FREIGHT ON SUBSTITUTE CHARTER -- Owner Award
Incurred during a volatile and rising market, this dispute hinges on whether Charterer can prove subjects were lifted prior to the deadline. As Charterer had no written proof subjects had been lifted and with Charterer’s broker claiming subjects were lifted prior to the deadline and Owner’s broker claiming time had run out, the Panel weighed various testimony concluding that Charterer did not fulfill their burden.
ASBATANKVOY -- PRODUCTION PROBLEM -- INABILITY TO PROVIDE CARGO -- FORCE MAJEURE -- DEADFREIGHT -- Owner Award
When problems in the plant caused the supplier to fail to provide a cargo of CAN, Charterer notified Owner and attempted to locate an alternative supply. A week later when it was apparent additional cargo would not be located, Charterer formally declared force majeure. In awarding Owner deadfreight, the Panel majority held that Charterer had failed to promptly provide the force majeure notice, failed to alert Owner as to the extent or duration of the delay (as contractually required), and failed to prevent or minimize the effects of the force majeure event.
GENCON -- FAILURE TO PROVIDE CARGO -- REPUDIATION OF CHARTER -- DETENTION -- DAMAGES -- Owner Award
Having awaited cargo at the load port for 40 days without proper assurance that same was forthcoming, Owner repudiated the Charter Party and fixed a voyage with another Charterer to mitigate damages. The Panel awarded Owner the freight differential between the repudiated Charter and the mitigating Charter and 40 days of detention at the demurrage rate. Owner’s claims for bottom cleaning, time loss due to slow steaming and over consumption of bunkers on the mitigating voyage, all allegedly due to bottom fouling itself a result of the prolonged stay at load port, failed due to a general lack of documentation.
SALES CONTRACT -- FORCE MAJEURE -- TERMINAL EXPLOSION AND FIRE -- NEGLIGENCE -- Seller Award
In the earlier Partial Final Award, SMA No. 4073, the Panel determined Buyer was responsible for cargo in shoretanks destroyed by an explosion whilst Vessel was discharging. The Panel held off in determining whether Buyer’s force majeure defense applied to the cargo remaining onboard the Vessel until after the cause of the explosion was determined. In this Final Award, SMA No. 4083, the Panel concluded that the cause of the explosion was due to human negligence and, as such, is not within the scope of force majeure. Buyer is responsible for the extra expense in disposing of remaining product.
NYPE 1946 -- TIME CHARTER -- OPTION TO ADD OFF-HIRE PERIOD TO CHARTER PERIOD -- OPTION NOT DECLARED -- VESSEL NOT DELIVERED WITHIN INITIAL CHARTER PERIOD -- Charterer Award
During the initial time charter period the Vessel was off-hire for 159 days with the charter party giving Charterer the option to add the off-hire to the charter period. Charterer, without formally advising Owner that they were exercising this option delivered the Vessel two months after the initial period. The Panel determined that either there was no need for Charterer to formally advise Owner of Charterer exercising the option or, even if there was a need, Charterer’s actions leading up to the initial redelivery date and when continuing to trade the Vessel after the initial redelivery date was Charterer advising Owner that off-hire would be added to the initial charter period.
FOB SALES CONTRACT -- REPUDIATORY BREACH -- TIME BAR --ASSESSMENT OF DAMAGES -- MITIGATION OF LOSS -- Buyer Award
When the FOB Seller failed to deliver a cargo of oil, the Court awarded Buyer damages representing the difference between the contract price and the value of the oil on the date when it should have been delivered less Buyer’s reduced hedging loss when Buyer closed out its position early due to non-delivery of the oil. The Court also ruled Buyer’s claim was not deemed time barred as there was no time bar clause in the 2007 NNPC Terms.
SEAWORTHINESS -- LOST PROFITS -- OBLIGATION TO MITIGATE DAMAGES -- Owner Award
Owner breached the contract when ship was deemed unseaworthy. Court of Appeal ruled that when mitigating damages, the aggrieved party must take all reasonable steps in order to mitigate the loss caused by the breach. The aggrieved party cannot recover damages which resulted from its unreasonable action or inaction or which were avoidable, however, the aggrieved party need not greatly inconvenience itself or incur extraordinary expenses in order to mitigate losses. And, unless the communication is impractical, the aggrieved party should inform the defaulting party of the steps being taken to mitigate damages.
NYPE -- VOYAGE CHARTER OR TIME CHARTER TRIP -- OVERTURNING ARBITRATION AWARD -- REMOTENESS OF DAMAGES -- Owner Award
In upholding the arbitration award, the Court discussed whether the Charter was a Voyage Charter or Time Charter Trip, whether Owner obtaining a Rule B attachment in New York breached the London arbitration clause and whether the arbitration Panel properly applied the "assumption of responsibility" test in regards to remoteness of damage. Damages were awarded Owner basis the minimum duration of the repudiated time charter trip.
When determining the validity of a vessel's notice of readiness (NOR), one must consider the terms of the contract and the facts surrounding the event. In the first instance, the fundamental requirement of a valid Notice of Readiness is that the Vessel must be ready in all respects to work the cargo i.e. legally, physically and geographically. The basis of our discussion herein will focus on what constitutes the Vessel fulfilling the geographic readiness obligation, including the nuances of calling at river ports.
FOSFO -- HAZARDOUS CARGO -- REPUDIATION OF CHARTER PARTY -- DEADFREIGHT -- DETENTION -- Owner Award
Vessel’s inoperable smoke detection system caused Charterer to refuse to load cargo of bulk sulphur citing OSHA’s claiming the cargo to be hazardous (subsequently requiring a smoke detector system) despite IMO, SOLAS, USCG, Charterer’s supplier and LLOYD’s deeming the cargo to not be hazardous nor requiring the Vessel to have smoke detectors. Owner repudiated the charter and was awarded deadfreight (less savings from not performing the voyage). Owner was not awarded detention basis an express term stipulating damages for non-performance will be "proven damages not exceeding the estimated amount of freight." Panel had already awarded the value of the freight.
