Stolt Tankers B.V. v. Tricon Energy Limited (The “Stolt Lotus”) – SMA No. 4442, 11 April 2022

Stolt Tankers was chartered by Tricon Energy Limited for shipments of mono ethylene glycol (MEG) from Baton Rouge and Houston to Antwerp. During the voyage on September 28, 2018, the owner advised the charterer’s broker that part of the cargo loaded in Baton Rouge would be transshipped to barges at Antwerp for delivery to BASF at Antwerp upon owner’s approval. The transshipment was allowed under clause 17 of the charterparty. 

When the cargo reached BASF at Antwerp aboard two barges, both shipments were rejected by the receivers as not matching their purchase specifications. After extensive investigation by multiple inspectors, it was discovered that there was a difference in the purchase and sale specifications. BASF required a minimum of 95T at 275nm, however the Tricon cargo from Baton Rouge was 93.7T at 275nm.   Tricon informed Stolt that the sale was canceled and they would be looking for other buyers. In the meantime, Tricon attempted but failed to find suitable shoretank storage.  The cargo was finally sold and both barges completed discharge on October 24, 2018.

Stolt submitted an invoice to Tricon on February 11, 2019. In both attachments of this invoice, the word storage was used multiple times but appeared in a different typeface than the rest of the document. It was discovered that the original “Demurrage” invoices that were submitted to the owner for delivery to the charterer had the word “demurrage” replaced by the word “storage” in the documents sent to the charterer.  

Relevant charterparty clauses include:

Clause 17(a)

“Charterer has the option to load/discharge any portion of this cargo as specified in Charter Party from/into coastal vessel/barge upon Owners agreement, not to be unreasonably withheld. Owner is not allowed to transship cargo without Charterer’s approval. If owner transships it will be at Owner’s time, risk and expense and coaster demurrage rates to apply.” 

Clause 37

“Charterers shall be discharged and released from any demurrage liability in respect of any invoice Owners may submit to Charterers under this Contract unless an invoice in writing with supporting documents has been submitted to Charterers within ninety (90) days after completion of discharge of the subject cargo or after other termination of the voyage, whichever occurs first.”

Clause 37 of the charterparty includes a time bar after 90 days for the submission of a demurrage claim, which would have ended in late January 2019.

Majority Decision

The panel unanimously upheld the time bar clause as enforceable as it was known to both parties and is common in the industry. The panel then ruled that the barge time which constituted the basis of the invoices were validly demurrage, not storage.

Stolt argued that the delay before the sale of the cargo was detention and therefore was not covered by clause 37. The panel stated that since it was not intentional nor egregious, it was demurrage and not detention. Furthermore, the liabilities claimed by the owner were for “demurrage liability” and “demurrage” within the meaning of and covered by clause 37. The failure of the owner to submit invoices for demurrage within the 90 days after discharge nullified the owner’s claim.

The claim was dismissed, and Stolt was ordered to pay Tricon’s legal and arbitration fees.

Dissenting Opinion

Mr. Allan G. Bowdery’s dissent was grounded in his interpretation of demurrage and laytime under Asbatankvoy.  Relevant clauses included:

Clause 7 “The number of running hours specified as laytime in Part 1 shall be permitted the charterer for loading and discharging cargo…”

Clause 8 “Charter shall pay demurrage per running hour and pro rata for a part thereof at the rate specified in Part 1 for all time that loading and discharging and used laytime as elsewhere herein proved exceed the allowed laytime…”

Mr. Bowdery asserted that the key terms in both clauses were “loading and discharging cargo” and believed that demurrage was only payable for the time used for these operations when laytime has been exceeded.

Further, he stated that under Asbatankvoy, laytime and demurrage do not run for any and all delays, and cited examples such as when a charterer has not procured cargo for loading or purposely fails to give discharge orders and delays the discharge operations.  

Common sense and basic commercial logic, in Mr. Bowdery’s opinion, dictate that demurrage is the stipulated compensation beyond laytime that can reasonably be foreseen (such as port congestion) or may occur due to unanticipated events beyond the parties’ control, as listed in clause 8.

Finally, Mr. Bowdy argued that Intentional acts within the scope of the parties’ control seemed to him to be outside of what the creators of Asbatankvoy intended demurrage to cover.  Therefore, BASF’s rejection of the MEG cargo from Baton Rouge was something that Tricon should have anticipated and was foreseeable. 

Tricon chose to keep the cargo on the barges when BASF demanded a price reduction for the off-spec cargo.  This was, in his opinion, an informed and conscious decision by Tricon to change the barges from transporting cargo to floating storage.  He concluded the time allocated to this storage function should not have been classified nor billed as demurrage, and thus would not have been subject to the demurrage time bar.