The Court Of Appeal Considers Demurrage Claims And Time Bar Clauses

National Shipping Company of Saudi Arabia v. BP Oil Supply Company (The Abqaiq) [2011] EWCA Civ 1127

In the January 2011 edition of our e-brief, we reported on the decision of the Commercial Court in The Abqaiq. There, the court examined (a) when payment of a demurrage claim may amount to a settlement of any and all demurrage disputes and (b) whether a claim put forward on one basis within a stipulated time limit will be time-barred when it is subsequently (out of time) re-presented as a demurrage claim.

The Commercial Court ruled in favour of the charterers. The judge said that the demurrage claim was time-barred.

The case has since reached the Court of Appeal. The Court of Appeal has reversed the first instance decision and ruled that the demurrage claim was NOT time-barred.

The background facts

The Abqaiq was voyage chartered for a voyage from the Bahamas to Singapore on an amended BPVOY4 (1998 Edition) Form. The vessel arrived at the load port of Freeport on 6 February 2008 and completed loading on 18 February. As the vessel was too large for her intended berth, she had to shift to another berth before loading could commence. The vessel arrived at the discharge port of Singapore on 22 March and completed discharge on 30 March.

After the completion of the voyage, the owners issued an invoice for "time consumed" and "bunkers consumed" in carrying out the second berthing at Freeport (referred to in the judgment as the "Time & Bunkers Invoice"). The owners attached to this invoice a statement of facts signed by the master certifying the time and bunkers used for the second berthing and also a bunker invoice evidencing the price of the bunkers supplied prior to the arrival at the load port.

Subsequently, the owners issued another invoice entitled "demurrage invoice". This invoice attached (1) demurrage reports for the load port and the discharge port; (2) notice of readiness, port log, statement of facts, letters of protest for the load port; and, (3) notice of readiness, statement of facts, discharging log, letters of protest and the pumping log for the discharge port. The demurrage invoice covered laytime running at both the load port and the discharge port and showed that demurrage was payable for the period 25 March to 30 March (i.e. only for time at Singapore). The owners and charterers negotiated the demurrage invoice, following which an agreed demurrage invoice was issued on 04 June (the "Agreed Demurrage Invoice"). The Agreed...