Ocean Tankers fails in Lukoil demurrage claim

UK court rules that bid to recover cash for delays was time-barred, despite "re-labelling".

Singapore tanker owner Ocean Tankers has had a claim for demurrage against Lukoil turned down by the UK high court.

The company had won an arbitration award in a row over the charter in 2013 to the Russian major of the 50,000-dwt Ocean Neptune (built 2005).

It claimed $772,000 in demurrage due to delays arising from a cargo dispute between the charterer and the receiver.

International law firm Hill Dickinson said most of the amount had been incurred after a delay at Gladstone in Australia.

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After tendering a notice of readiness on 2 December, 2013, and berthing for a day, the vessel was sent back to anchorage where it waited for orders for more than 40 days, the company said.

Ocean Tankers had to submit a claim within 90 days, with documents including a certificate of notice of readiness, letters of protest and statement of facts.

Although the owner made the time limit, it did not provide a countersigned statement of facts for each of the four ports, or letters of protest as an alternative.

On this preliminary issue, the tribunal found that the demurrage claims was therefore time-barred.

Re-labelling bid

But because Ocean Tankers had re-labelled the delays at Gladstone as time lost waiting for orders, the claim was allowed.

Lukoil appealed to the high court on the basis that the claim was for demurrage, whether it was termed "waiting for orders" or not.

Justice Andrew Popplewell allowed this appeal, agreeing with Lukoil that the language of the charter provided in clear terms that a Litasco clause 4 claim was a demurrage claim.

The claim was therefore time-barred.

Hill Dickinson said: "The arbitrators had found that owners had failed to provide sufficient documents to justify the demurrage claims relating to loading and discharging operations and the court could see no reason why owners should be entitled to supply less rigorous documentation for the load port merely because the delay at Gladstone was a claim under clause 4."

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Demurrage financing company C Demurrage added: "As well as clarity on the nature of a claim under a familiar structure, this decision is a reminder that it is vital to comply with barring clauses, and ingenious retrospective argument will not readily deflect the courts from giving effect to plain words.

"While, as the judge observed, owners who have met their documentary requirements can usually validly change the legal description of their claim, non-compliance will bar them and attempted re-labelling will not avoid that."