Nigeria: Charterparty And Extra-Charterparty Delay Claims – An Overview

Last Updated: 9 June 2017
Article by Victor Onyegbado

Introduction

Time is money in business and even more so in the maritime industry, where the question of which party bears the risk of delay is a crucial component of the contract of carriage. In the tanker trade in particular – which is tied to the volatility of the petroleum market – charterparty terms that provide compensation in the event of delays (eg, laytime and demurrage) are key negotiation points and are regularly the subject of litigation or arbitration. However, claims for delay are not limited to the terms of a charterparty. Another class of claims can be founded on tort, negligence or contract and brought by or against parties not named in a charterparty. Extra-charterparty delay claims are important in a jurisdiction such as Nigeria, where factors that result in delays (eg, port congestion, suboptimal infrastructure and malpractice) are frequent and may not be adequately handled by claims founded on a charterparty.

Charterparty delay claims

The general principle of charterparty delay claims are that once laytime commences (ie, the agreed timeframe in which the charterer must unload cargo after being issued a notice of readiness), it generally runs without interruption unless the charterer can establish exceptions (eg, a force majeure event, fault with the vessel or a specific clause in the charterparty excluding the delay-causing event). When laytime ends, the charterer must compensate the owner for each day of delay under the pre-agreed demurrage rate.

The Asbatankvoy charterparty form provides the following in the context of laytime and delays:

  • Clause 6 provides that where delay is caused to a vessel getting into berth after giving notice of readiness for any reason over which the charterer has no control, the delay will not count as laytime;
  • Clause 7 provides that any delay due to the vessel's condition or breakdown or the inability of the vessel's facilities to load or discharge cargo within the time allowed will not count as laytime; and
  • Clause 8 provides that that if demurrage is incurred at ports of loading or discharge by reason of explosion, strike, stoppage or restraint of labour or by breakdown of machinery or equipment ashore, the rate of demurrage will be reduced by half.

For claimants vested with the requisite privity, claiming compensation for delay under the above regime is straightforward. A court or arbitration tribunal is called on to interpret the provisions of the relevant charterparty only – with regard to the particular facts of the case – if a demurrage claim is disputed.

Extra-charterparty delay claims

Delay-causing events have far-reaching liability effects on parties not named in a charterparty. A charterer may be able to avoid claims for demurrage where the port authority caused delay through the wrongful grant of berthing precedence to another ship. However, the shipowner that is the victim in this situation may seek compensation for the delay from the port authority. A charterer liable for delay caused by an unsafe berth may seek an indemnity for losses caused by the resulting delay from the terminal or berth operator.

The Fotini case is an example of a compensation award for a delay claim founded on an implied contract rather than a charterparty.1 The defendant entered into a contract of sale with a foreign supplier for the supply of bagged cement from Spain to Lagos. The supplier hired the plaintiff's vessel to transport the cargo from Spain to Lagos. However, on arrival at the Port of Lagos, the ship could not be discharged as the defendant was unable to provide a berth due to congestion. At the defendant's request, the ship was discharged in Ghana and demurrage was incurred for the period of delay. The defendant paid the demurrage charges to the foreign supplier for the delay caused in Lagos. No one was paid for the demurrage charges incurred in Ghana. As a result, the plaintiff sued the defendant for payment of the outstanding balance and interest accrued. The defendant denied any privity of contract between itself and the plaintiff and argued that the contract was with the foreign supplier. Further, the defendant claimed that by accepting the demurrage charges paid through the supplier, the plaintiff had waived its right to demand demurrage directly from the defendant.

In allowing the plaintiff's appeal – which had been dismissed by an appeal court and a trial court – the Supreme Court held that although the contract containing the demurrage clause had been executed by the defendant and the foreign supplier, an independent contract had been created through the defendant's use of the plaintiff's vessel to sail to Ghana – an offer that the defendant accepted. Thus, a contract had developed between the two parties that was enforceable. Compensation for delay regarding the deumurrage charges incurred in Ghana was awarded to the plaintiff on a quantum meruit (ie, a reasonable value of services) basis.

Challenges of extra-charterparty delay claims

Extra-charterparty delay claims present unique challenges which claimants must overcome to be successful. Finding the duty of care when negligence is sought may not be straightforward. In an as yet unreported case, a claimant relying on the Evidence Act argued that the customary practice of granting berthing precedence on order of arrival at a particular Nigerian port imposed a duty on the berth operator to spare itself from the losses arising out of not following said customary practice.2

Comment

The starting point in extra-charterparty claims for delay is to identify their basis in tort or contract (implied or otherwise). This may not be immediately apparent and can present numerous challenges. Potential claimants are nonetheless advised to consider extra-charterparty claims in detail.

Footnotes

1 Alfortrin Limited v The Attorney General, Volume 6, 327 to 366.

2 Section 16(1) of the Evidence Act 2011. A custom may be adopted as part of the law governing a particular set of circumstances if it can be judicially noticed or proven to exist by evidence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions