The Court has considered which time zone applies to determine the date of completion of discharge for the purposes of deciding whether notification of a demurrage claim was made too late.
In this podcast, Monika Humphreys-Davies reviews the decision and explains why the Court held that it was the time zone at the place of discharge.
Hello, I'm Monica Humphreys Davis and I am a Senior Associate at Ince in our Dubai office.
The Court has confirmed that, in the absence of express provision in a voyage charterparty stating how time should be computed in calculating the period for the notification of demurrage claims, the local time and date at the place of discharge determines the date of completion of discharge. Such a conclusion reduces the risk of confusion where different time zones may be in play. In this case, the result was that the Owners’ demurrage claim was time-barred.
The background facts
This was a dispute between the Belgian Owners of the Vessel and the Spanish Charterers arising out of a voyage charterparty on an amended Shellvoy 6 form. The charterparty provided for English law and the exclusive jurisdiction of the English courts. The voyage was for the carriage of a cargo of crude oil from Brazil to one or two ports on the West Coast of the USA, from Los Angeles to San Francisco. In this instance, the cargo was discharged in Long Beach, California.
At the time of disconnection of hoses, it was 21:54 on 24 December 2019 in Long Beach, California, or 06:54 on 25 December 2019 in the CET time zone and 05:54 on 25 December 2019 in the GMT time zone. The Vessel spent a total of 151 hours and 48 minutes on demurrage, which equated to the sum of US$ 487,183.12.
Clause 15(3) of the charterparty dealt with the presentation of demurrage claims and provided that:-
“Owners shall notify Charterers within 60 30 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully and correctly documented and received by Charterers, within 90 days after completion. If Owners fail to give notice of or to submit any such claim with Documentation provided available, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished.”
The charterparty further provided for the notification of demurrage claims and supporting documents to be served on the Charterers’ (Brazilian) brokers. However, there were no general provisions dealing with the computation of dates and time.
On 24 January 2020 (in any conceivably relevant time zone), the Charterers received an email from the brokers putting forward the Owners’ demurrage notice.
The Charterers asserted that the claim for demurrage was time-barred on the basis that the notification of the claim had not been made in accordance with clause 15(3). They submitted that discharge was completed on 24 December 2019, as per the local time at the place of discharge, and that the time for notification started counting from 25 December 2019, meaning that the last date for notification was 23 January 2020 and the Owners were, therefore, one day late in presenting their demurrage claim notice.
The Owners argued that discharge was completed on 25 December 2019 according to one of the European time zones (CET or GMT). CET should apply as the time zone of the recipient of the notice (the Charterers), alternatively of the giver of the notice (the Owners). Otherwise, GMT should apply because the charterparty was governed by English law. On this analysis, the Owners would have had until 24 January 2020 to make the notification and, therefore, the demurrage claim was presented in time.
The Commercial Court judgment
The Court found in favour of the Charterers and held that the date of completion of discharge should be determined according to the time zone of the place where the discharge had occurred i.e. California. The demurrage claim was, therefore, notified out of time.
The Court explained that the ordinary and natural approach was to allocate to an event the date that was current in the place where the event occurred. Furthermore, the discharge of cargo was a tangible physical event, which occurred at a specific location and in a particular local time zone and it was customary for this date and time to be recorded in contemporaneous documents, such as the Statement of Facts and any laytime calculations.
The Court also recognised that the date of discharge was significant not only for the purposes of notification of demurrage claims, but it also: (i) represented the end of the contractual service to the shipper; (ii) ended the running of laytime or demurrage; and (iii) was generally the starting point for the time limit for cargo claims under the Hague-Visby Rules (which applied to any cargo claims under this charterparty). In the Court’s view, therefore, it would be illogical if there were more than one date of discharge used for different purposes. The use of local time at the place of discharge provided a single, clear and easily ascertainable date and time which promoted certainty and reduced the risk of confusion.
Parties are free to agree express provisions dealing with the computation of time in their charterparties and some standard forms, such as BP Time 3, already provide that a specific time zone should be used for all calculations. Where there is no such express clause, this decision helpfully clarifies how the date of completion of discharge should be determined.
The dispute also serves as a timely reminder to owners not to leave notification of a demurrage claim to the last minute, particularly where different time zones are involved. Had notice been given at least a day earlier in this case, the Owners might have recovered almost US$ 500,000 in demurrage and avoided the time and expense of litigation.