X v. Y [2011] EWHC 152

The Commercial Court has recently given a judgment in the case of X v. Y (where, unusually even for an appeal from an arbitration award, the identity of the parties has been kept anonymous).

The case concerned the question of when time begins to run under a demurrage time bar clause containing two trigger points. The clause in question required that arbitration be commenced "within 12 months of final discharge or termination of this Charterparty". The court found that time ran from both trigger points.

The Facts

The owner (Y) and the charterer (X) agreed to a consecutive voyage charter (a "CVC") covering three voyages. Discharge of the cargo carried on the first voyage was completed by 08 February 2008. The owner submitted a claim for demurrage incurred on this first voyage and commenced an arbitration in respect of that claim on 23 February 2009. A dispute arose as to whether the 12 month time limit for commencing claims ran from the completion of discharge on the first voyage (i.e. 08 February 2009) or 12 months from the end of the CVC (14 June 2009).

The Commercial Court

Meaning of "final discharge"

The judge went through the authorities concerning the meaning of the term "final discharge" under a CVC. In The Simonburn (1973), the Court of Appeal had determined that, under a CVC, the requirement to submit claims within a defined period after "final discharge" meant final discharge of the cargo on the voyage in respect of which the claim arises.

The judge in this case followed the decision in The Simonburn and held that, in the present case, the trigger point for the 12 month period from "final discharge" was the discharge of the first cargo (since the demurrage claim arose out of that voyage).

This point was decided on the basis of settled law. Had this been the only trigger point, then the owner's claim would have been time barred. The judge then had to decide the effect of the additional words "or termination of this Charterparty", which were not included in the time bar provision considered in The Simonburn.

Meaning of "termination of this Charterparty"

The judge agreed with the owner that there were two trigger points for the commencement of the 12 month time limit. Arbitration either had to be commenced within 12 months of the "final discharge" or, alternatively, the termination of the charter. The judge rejected the charterer's argument that the clause required an arbitration to be commenced by the earliest trigger date.

Although the judge found that, on the true construction of the clause, time ran from both trigger dates, the effective result in the case was that the arbitration had to be commenced within 12 months of the latest in time of "final discharge" and the end of the charter. In the present case, the owner had commenced its arbitration well within the 12 month period following the end of the CVC.

Comment

The case is a timely reminder of the existing law where a charter contains a time limit running from "final discharge". This will be relatively easy to ascertain in the case of a single voyage charter. In the case of a CVC, "final discharge" will be read as meaning discharge of the cargo on the voyage in respect of which the claim arises and not the discharge of the last cargo carried under the CVC.

Where a clause is expanded to provide that the time limit runs from "final discharge" or the termination of the charter, and both events occur (it should be borne in mind that both events might not occur, for example where there is no discharge), the effective time bar period will run from the later of the two dates. The result would of course be different if the clause also used wording to the effect of: "whichever comes first".

An owner may nonetheless wish to be prudent and take a cautious approach. When there are two trigger dates under a time bar clause, an owner would be well advised to protect time from the earliest possible date and not to simply rely on the possibility of an alternative later trigger date.

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.