Prax Petroleum Ltd. and Harvest Energy Ltd., v. Tricon Energy Ltd, (The “Stena Conquest” & “Silver Gwen”) – SMA 4417, 8 Feb 2021

SALES CONTRACT – DEMURRAGE – PUBLIC DOCK CLAUSE – COMMENCEMENT OF LAYTIME

The disputes before the Panel arose from two contracts for the sale of Brazilian gasoline. Both contracts were identical. One agreement, dated March 8, 2017, involved Prax Petroleum Ltd and Tricon Energy Ltd. The other, dated March 14, 2017, existed between Prax and its subsidiary, Harvest Energy Ltd. The disputes included Prax’s claims for demurrage resulting from delays experienced by the vessels STENA CONQUEST and SILVER GWEN.

Under one of the Contracts, Prax chartered the STENA CONQUEST to deliver the gasoline purchased by Tricon to the port of Santos, Brazil. Under the second Contract, Prax hired the SILVER GWEN to transport Tricon’s fuel to the Brazilian ports of Itaqui, Suape, and Aratti.

The Contracts had separate confirmations that specified the contract dates, the parties’ identities, the nature, quality, quantity of the product sold, and delivery terms. Included in the Confirmations were the Philipps 66 Company Non-Crude Oil Products Marine Provisions dated May 1, 2013 (the “Marine Provisions”).  

The disputes in question concerned demurrage claims by Prax for delays encountered by the vessels chartered to deliver the gasoline to Tricon. The two ships were forced to wait for prolonged periods before berthing. The parties took issue as to whether time commenced counting while the vessels waited for a berth or only when all fast at the berth. The “Public Dock Clause” (PDC) in the Marine Provisions was critical to their arguments.

The clauses of the Charters considered pertinent were in relevant part:

15. Laytime

Upon arrival at the discharging port, the Master or its representative shall tender Notice of Readiness (“NOR”) to Buyer or Buyer’s representative, berth or no berth…

The term “berth” in this contract means any berth, wharf, dock, anchorage, submarine line, a position alongside any vessel or lighter or any other discharging point whatsoever.

Laytime shall commence berth or no berth six (6) hours after NOR has been tendered at first discharge port or when the Vessel is all fast in berth at the first discharge port whichever occurs first…

The Marine Provisions contained the following clauses in relevant part:

X) Ocean Tanker

A) Notice of Readiness

ii. If an Ocean Tanker tenders NOR within the agreed Delivery Window, then laytime shall commence, berth or nor berth, six (6) hours after the tender of NOR, or when All Fast, whichever occurs first.

XVII) Demurrage

F) Public Dock Clause.

Vessels loading or discharging at a public dock are accepted on a first come, first served basis.

Therefore, laytime at a public dock commences only when the Vessel is All Fast at the nominated berth.

XVIII) Miscellaneous.

C) In the case of any conflict in the various provisions of the Contract, terms shall prevail in the following order: the Confirmation, the scheduler’s nomination, these Marine Provisions and the General Terms and Conditions…”

Both the STENA CONQUEST and the SILVER GWEN encountered delays at their respective ports, resulting in Prax’s demurrage claim. Tricon insisted that time waiting for berths did not count, and basis the PDC, time should have started counting after the Vessels’ gangway was secured.

Two arbitrators ruled in favor of Prax, with the third arbitrator submitting a dissenting opinion.  The majority ruling was made based on the laytime clause in the Confirmations, which stated laytime commenced six hours after NOR had been tendered, berth or no berth. 

The majority decided the Confirmations superseded the Maritime Provisions; therefore, it was not required to render a decision on the definition of a public dock or its application to these claims.

Tricon Energy Ltd. was directed to pay the sums of $ 800,661.34 to Prax Petroleum Ltd. and $324,861.63 to Harvest Energy Ltd. (combined total of $ 1,125,522.97).