Liability For Demurrage Under A 'Liner Out' Voyage Charter: Construing The Provisions Of A Voyage Charterparty

London Arbitration 1/12, LMLN 3 August 2012

This arbitration concerned owners' claim for loss of time due to delay in obtaining a berth at the port of discharge.

The background facts

The parties had entered into a voyage charter for the carriage of steel bars from Poland to Luanda in Angola. En route, the vessel also picked up a part cargo in Scotland. When the vessel dropped anchor in Luanda, a notice of readiness (NOR) was tendered. Shortly thereafter, the Scottish cargo was discharged at a private jetty. The vessel then had to wait some 11 days before a suitable berth became available, so that the cargo carried under the present charter could be discharged. Once at the berth, discharging was also delayed for a total of 10 hours waiting for trucks for the cargo. The owners claimed that the time spent waiting for the berth after completion of discharge of the Scottish cargo, together with the time lost waiting for the trucks during discharging, was for the charterers' account.

The charterparty was contained in a recap and the charterers' executed Gencon 94 pro forma. The dispute hinged on the fact that the terms of the recap were apparently at odds with the terms of the pro forma. The recap contained the provision "Freight eur 72,50 - pmt free in lsd/liner out under hook" (our emphasis). "Liner out" generally means that the freight rate includes the cost of discharging at the port of discharge. "Under hook", in the context of discharging, means that the owners/shipper will arrange for discharge over the ship's side.

The tribunal's decision

The tribunal found that there was a "fundamental conflict" between the provisions of the recap and the charterers' executed Gencon pro forma. On the one hand, the recap contained provisions for the counting of laytime and demurrage at the loading port, but no such provisions for the discharge port. That position, in addition to the "liner out" provision, clearly indicated that the owners should undertake responsibility for discharging, including time involved in waiting for berth, although not during the discharging operation. On the other hand, the Gencon pro forma indicated there should be a NOR and laytime at the discharging port, thereby imposing obligations on the charterers in those respects and giving rise to a liability for damages (i.e. demurrage) if they were breached.

The tribunal could see no way of reconciling the conflicting provisions. They found that the only sensible way to interpret the...