Poten & Partners, Inc. v. MTM Trading, LLC. (MTM “Gibralter”) – SMA No. 4445, 16 May 2022
The MTM Gibraltar was chartered to voyage from Houston to Tuxpan with an option of one or two consecutive voyages allowed in the charter. The first voyage was completed after discharge in Tuxpan on June 4, 2020, and the MTM Gibraltar proceeded to a second agreed upon voyage. The charter was amended to include this second voyage, and clauses 6, 7, 17, and 18 which governed how to calculate laytime and demurrage in connection with loading and discharging cargo, remained unchanged.
Relevant charterparty provisions included:
Recap (“Commission Clause”)
COMMISSION: 2.50 PCT ADDRESS COMMISSION ON FRT/DEADFRT/DEM AND 2.50 PCT BROKERAGE COMMISSION ON FRT/DEADFRT/DEM TO [.
Clause 22.2.3 (“Waiting Orders Clause”)
“Charterers have the option to require the vessel to wait for orders at a safe place at Master’s discretion. All time from arrival at anchorage until departure to be paid at the demurrage rate PDPR, together with the freight plus extra bunkers consumed (fuel oil for maintaining cargo temperature and diesel oil).
Should it be necessary for the vessel to steam whilst at the anchorage area then time and additional bunkers consumed in this respect to be for Charterer’s account and to be paid as above against Owners telexed invoice….”
The MTM Gibraltar arrived at Houston for the second voyage and completed loading cargo on June 29. However, instead of continuing directly to Tuxpan, the charterer, Laurel Shipping, instructed the vessel to wait off of Houston for further orders. The MTM Gibraltar did not proceed to Tuxpan until October 23 (117 days later) and did not complete discharge until December 3.
The charter broker, Poten & Partners, claimed that the owner, MTM, owed them a commission of 2.5% (US$57,035.50) of the waiting time off of Houston. They claimed that waiting time qualified as demurrage, so they were owed a fee according to the charter.
MTM claimed that waiting orders time was not demurrage, and the Waiting Orders Clause and the Commission Clause did not conflict.
Poten admitted that demurrage is typically interpreted as liquidated damages for a delay in loading or discharging but contended that the waiting time should count as a delay in discharging. MTM countered that demurrage should only apply strictly to its definition.
The panel agreed with MTM that the waiting time did not count as demurrage. They declared that the charter required an NOR to initiate demurrage, and demurrage was finished upon the completion of either loading or discharging. The panel found that no exceptions mentioned in the charter applied in this case.
Since the waiting time did not count as demurrage, the panel held that MTM did not owe Poten commission on the waiting time. The panel decided this because maritime arbitrators in New York interpret broker commission clauses strictly, and they cited Unimarine Bulk Transport v. Fujiwara Line Co., SMA 2692 (1990). The charter did not provide for broker commission on anything other than freight, deadfreight, or demurrage. The panel also cited in their decision that Poten did not invoice MTM for any waiting time from the first voyage.