PCL (Shipping) Pte. Ltd., v Triorient LLC, (The M/V “Glorious Sawara”) – SMA 4401, 16 Sep 2020

FORCE MAJEURE – DEMURRAGE – DISPONENT OWNER – LOSS OF EARNINGS

The arbitration was the result of a claim filed by PCL (Shipping) Pte. Ltd. (hereinafter “PCL,” “Claimant,” or “Owner”) as the despondent owner of the M/V GLORIOUS SAWARA (hereinafter “Vessel”). The claim was for breach of a voyage charter by charterer Triorient LLC (hereinafter referred to as “Triorient,” “Respondent,” or “Charterer”). PCL sought $ 1,348,098.56 in damages, plus a reasonable amount for PCL’s fees, costs, and interest, as well as all arbitration fees and expenses. Triorient made no counterclaims and no formal submission in support of their interests.

The parties agreed to a voyage charter on August 22, 2019. The Vessel was chartered to transport a full cargo of manganese ore in bulk from Vila do Conde, Brazil, to Qinzhao, China. The agreed-upon loading laydays were September 25 – October 12, 2019, but the Claimant later narrowed them to September 25 – October 5. 

On September 26, the Vessel arrived at the load port and tendered its NOR at 1545 LT. The same day, the Vessel anchored at 1836 LT, awaiting berthing instructions. By October 4, the allowed loading laytime had been exhausted, and the Vessel remained at anchor on demurrage.

On October 10, while the Vessel was still waiting for a berth, Triorient notified PCL that it did not have any cargo to transport. As a result, it attempted to halt its performance under the charterparty. Triorient’s message read:

“Yesterday we were informed by Midship that the agent for this Vessel told your master that the material was going to start to be delivered and it would be available in 15 days. Under the contract… the producer has told us that this is not the case. We hereby notify you… that due to a force majeure event delivery of the Product is delayed.

…The delay is beyond our control. Please be assured… it is our intention to fulfill the delivery of the Product as soon as possible and we are working diligently… to resolve the delay… [P]lease accept this as our force majeure notice under the CP…

We will notify you immediately once the force majeure conditions abate.”

PCL repeatedly asked for assurances that the cargo was forthcoming; however its requests were met with silence from Triorient. On October 23, PCL hired a protective agent to investigate. The agent discovered there was only 2,500 MT of manganese cargo at the stockyard and said it had heard the Port Authority might bypass the GLORIOUS SAWARA with other vessels waiting to berth due to lack of cargo readiness.

By October 25, the protective agent advised PCL that the cargo was not proceeding to the load port, berthing prospects were declining, and rumors circulated of an earlier unresolved quality claim between Triorient and its supplier. Accordingly, PCL forwarded an interim demurrage invoice to Triorient for $ 462,460.00. Triorient did not acknowledge receipt of the invoice.

On November 11, 2019, 46 days after arrival at the load port, PCL notified Triorient it was terminating the charter party. 

Triorient’s participation in the subsequent arbitration was minimal. The Panel asserted Triorient failed to address PCL’s claims, forcing the Panel to determine the case solely on the documentation provided, most of which was from PCL. The Panel concluded that the PCL’s submissions established a strong argument that Triorient had a contractual obligation to deliver the stipulated cargo to the M/V GLORIOUS SAWARA, which it failed to do.

Triorient’s claims of a force majeure occurrence lacked evidence and were unconvincing to the Panel; in addition, the Panel noted that Triorient was aware of financial and credit problems with its Supplier before the Vessel arrived at the load port.  Those problems were caused primarily by Triorient’s cargo quality dispute with the Supplier. Triorient’s reluctance to pay the entire price for a previous shipment did not qualify as a force majeure incident.

The Panel concluded Triorient had breached the charter. The Panel reviewed the Claimant’s submissions to calculate damages and concluded PCL was entitled to the expected voyage results but for the breach. The calculations included three factors: demurrage/detention due to PCL while waiting at Vila do Conde with no loading ($ 684,218.75), loss of earnings from the intended voyage less actual earnings from mitigation voyages ($ 557,922.33), and additional costs incurred due to the breach of contract ($ 105,957.48).

The Panel determined the total damages to be $1,348,098.56, plus interest, for the Claimant.