Demurrage time-bar clauses are common, their rationale is well understood and they are regularly invoked, but it is not often that the identity of the claim is the key to the contest. That though was the focus in two recent UK cases. The defendant was successful in the first but thwarted in the second by an unusual ruling.

In Lukoil Asia Pacific PTE Limited v Ocean Tankers (PTE) Limited [2018] EWHC 163 (Comm) (the “OCEAN NEPTUNE”) the relevant provisions were that:

  1. Demurrage was payable “ … for all time by which … laytime … is exceeded by the time taken for [cargo operations] and for all other Charterer’s purposes and which … counts as laytime or as time on demurrage.”
  2. Time waiting for orders was “to be for Charterers’ account and [counted] as laytime or demurrage … .”
  3. As normal, demurrage claims were barred if not presented by the deadline.

Charterers said that a claim for time waiting for orders under (2) was for demurrage and thus time-barred under (3).

The Judge agreed. It was normal to say that time was to count as laytime or demurrage, and the fixture wording did not just say that a claim for time awaiting orders was to be evaluated like a demurrage claim – it said it was a demurrage claim.

The decision in Glencore Energy v OMV ([2018] EWHC 895 (Comm)) was under a sale contract and went the other way.

Facing disport congestion, the parties agreed that the vessel should wait offshore until a berth was free, but when the sellers claimed for the resulting time and the extra bunkers the buyers retorted that this was a claim for demurrage.

They said this was because what had happened came under the existing sale contract or an agreed variation, and either way it was for demurrage and the unchanged time bar applied.

But the court rejected that and ruled in the sellers’ favour, finding that the waiting and payment for it came under an implied contract. It was necessary to imply a contract because the arrangements were neither under the existing one nor a variation, and it gave business reality to the sellers’ clear expectation that they would be paid. As an implied contract it was separate, so the time bar did not apply and the sellers succeeded.

Both these cases offer a reminder to act protectively by checking time limits alongside continual awareness of the nature of any claim, and also if possible by securing clear agreement to cover any operational change. In particular, implied contract is most certainly not a routine thing and claimants should never rely on it being established.

If you would like to discuss anything arising from this commentary please contact Ed Floyd at ed.floyd@floydzad.com and +1 (917) 999 6914 or Luke Zadkovich at luke.zadkovich@floydzad.com and +1 (917) 868 1245 / +44 (20) 8068 6844.  This article is to be considered general commentary only and not to be relied upon as legal advice for any particular circumstances.

Subscribe for our updates

If you need guidance on any legal or commercial issues, then please contact us.