Demurrage and documents done again - the “AMALIE ESSBERGER”
Introduction
It is almost certain that a voyage charterparty will invalidate demurrage and perhaps other claims unless they are presented within a set period that usually starts on completion of discharge. The idea is to allow things to be checked before the paper trail becomes too faint to follow, though such notions usually come a poor second behind the glee in avoiding what may be a substantial payment.
Owners’ commercial operators need to be on their guard, because (amid great variety in such clauses) the main theme is that claims must come with “[the]/[all] supporting documents]/[the]/[all] documents supporting [all parts]/[each and every [constituent] part] of the claim”. It is also increasingly common for fixtures to list certain documents, or types of document, that must always be sent.
Issues
Disputes usually focus on the nature of owners’ claim - and so whether the barring clause applies - or on the adequacy of the documents provided. It was the latter in the recent English High Court decision of the “AMALIE ESSBERGER” [2019] EWHC 3402 (Comm). There, on a summary judgment application, the court addressed:
1. what is meant by “supporting documents” or similar wording;
2. whether owners must produce all listed (i.e. stipulated) documents;
3. whether one single claim had to be made, or owners could in effect make several attempts at consummating their claim;
4. what happened if charterers already had some of the required documents, either from owners or (though this particular issue did not arise) perhaps from elsewhere.
Terms
The relevant one was that:
“Any claim for demurrage … [was] waived unless received ... in writing with all supporting calculations and documents, within 90 days [of] discharge … . Demurrage … must be submitted in a single claim at that time [which] must be supported by [various documents, listed A-D]”.
The facts
Before the deadline, and claiming about $155,000, on 22 December owners emailed their “demurrage invoice ... with ... laytime calculation and support documents".
Charterers later argued that the claim was waived (or barred) because some of A-D were not sent with it. But owners had already sent charterers that material (which the judge called “the Disputed Documents”) on 1 December.
The previous cases
As well as considering the “ETERNITY” [2008] EWHC 2480 (Comm), the “ADVENTURE” [2015] EWHC 318 (Comm) and the “OCEAN NEPTUNE” [2018] EWHC 163 (Comm), the judge not surprisingly distilled the “OLTENIA” [1982] 1 Lloyd's Rep 448, the “SABREWING” [2007] EWHC 2482 (Comm), the “EAGLE VALENCIA” [2010] EWCA Civ 713 and the “ABQAIQ” [2011] EWCA Civ 1127.
Decision
Supporting documents
The judge first recorded the courts’ focus on clarity and certainty, rather than strictness and technicality, such that owners see what is needed and charterers understand what can validly be expected, and what is provided allows them “to investigate … the claim, soon after the ... events”.
Having reviewed previous decisions, the judge said that “all supporting ... documents” did not mean that owners had to produce all material that was relevant. Instead, they had to “submit documents [relied on] in support of their ... claim or … which ... at face value [established its] ... validity”.
That created certainty, was not burdensome on owners and would allow charterers to assess the claim’s apparent validity or investigate the circumstances and formulate any defence.
Listed documents
Even if in fact irrelevant, any documents listed as necessary had to be provided. By such wording, they are deemed to be supporting documents. There is no de minimis exception.
Does everything have to be sent in one message, and what if charterers already have some of the material?
Charterers said that the clause required one single, simultaneous package, with the claim and its supporting documents all together, and that they should not have to check for anything that may have come in before.
But the judge ruled that:
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the wording did not mean that the supporting documents had to be sent at the same time as the claim, or even at one time;
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"with all supporting ... documents” just meant that everything had to be received before the deadline; and
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a "single claim" meant that just one demurrage claim could be submitted, rather than separate claims; and moreover
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the vital thing was that, by the deadline, charterers should have both the claim and the supporting documentation and “must be in a position to know that the one relates to the other [and] it must objectively speaking be apparent that the documentation is that which supports the claim".
The Disputed Documents had been sent three weeks earlier. However, they were among those that the charterparty had identified as needed, and when the claim was made later on it should have been obvious that charterers already had them. So owners did not have to refer back to that, or resubmit the Disputed Documents with the claim, so it was not time-barred.
On an additional point the judge said that, on the above wording, any failure as regards documents would have invalidated the entire claim, not just some part of it that was confined to the missing material.
Commentary
All will depend on the precise wording, but this decision (which probably favoured owners) should not be misconstrued as carte blanche to make multiple attempts at presenting a claim. The more communications used, the greater the risk of charterers successfully arguing that they did not and could not be expected to know of the intended linkage between a claim and supporting material sent before, or perhaps after.
If you would like to discuss anything raised in this article please contact Chris Potts on +(852) 9461 4377 or at chris.potts@crumpslaw.com or Peter Lau on +(852) 9683 7439 or at peter.lau@crumpslaw.com.