In Tricon Energy Ltd v MTM Trading LLC  EWHC 700 (Comm), the English High Court granted a rare successful appeal against an arbitral award pursuant to section 69 of the Arbitration Act 1996 and held that the arbitral tribunal had been wrong to conclude that the claim was not contractually time barred.
MTM Trading LLC (the “Owners“) were the owners of a vessel which was charted to Tricon Energy Ltd (the “Charterers“) under a charterparty dated 13 February 2017 (the “Charterparty“). As a result of delays at both the load port and the discharge port, the Owners brought a claim against the Charterers for demurrage, a charge payable to the owner of a chartered ship for failure to loan or discharge the ship within an agreed time period.
In accordance with Clause 10 of the Charterparty:
“(e) If load or discharge is done simultaneously with other parcels then laytime to be applied prorate between the parcels.
(g) In the event of Vessel being delayed in berthing and the Vessel has to load and / or discharge at the port(s) for the account of others, then such delay and/or waiting time and /or demurrage, if incurred, to be prorated according to the Bill of Lading quantities“
In this case, there were two parcels of cargo, the Charterers’ cargo and a second parcel for a third party. As a result, the Owners’ claim for demurrage had to be apportioned between the Charterers and the third party, pro-rated by reference to quantity shipped in accordance with the bill of lading quantities.
The formal claim against the Charterers for demurrage of US$55,841.16 (later amended to US$56,049.36) was submitted on 9 June 2017, and was supported by the demurrage invoice, laytime/demurrage calculations, the notices of readiness tendered at the load port and discharge port, a statement of facts, hourly rate and various letters of protest.
The Charterers alleged that the claim was time barred pursuant to Clause 38 of the Charterparty. In accordance with Clause 38, the Charterers’ liability was fully discharged and released “unless a claim/invoice in writing and all supporting documents have been received by Charterer within  days after completion of discharge of the cargo covered by this Charter Party or after other termination of the voyage, whichever occurs first“.
The claim was submitted in time, but the Charterers contended that they had no liability because the Owners did not provide copies of the bills of lading for the two parcels of cargo, the Charterers’ parcel and the second parcel, within the 90 day time period. As a result, the Charterers were unable to confirm whether the demurrage claim was accurately apportioned between the Charterers and the third party, and had to rely on the statement of facts produced by the Owners.
In the arbitration, the tribunal determined that it was not necessary for the Owners to submit the bills of lading and held that “The statement of facts which records the bill of lading figure is in reality all that Charterers need to check that the apportionment of waiting and discharging time has been correctly calculated.” The tribunal further stated “We were not persuaded by the Charterers’ argument that they needed to see the bill of lading to satisfy themselves that the cargo quantity figures recorded in the statements of facts had been calculated on the same basis, namely measured in air or in a vacuum; since the statements of facts were prepared by ship’s officers in the knowledge that they would be required to pro-rate discharging time, they would have used the cargo quantity figure recorded by the same method in each bill of lading.”
The tribunal (which the judge described as “experienced”) also recorded that in its recollection in disputes involving the discharge of different parcels of cargo, the parties have only ever adduced in evidence statements of facts and never any bills of lading.
Accordingly, the tribunal found in favour of the Owners and awarded demurrage of US$56,049.36.
The Charterers appealed the award on a point of law pursuant to section 69 of the Arbitration Act 1996 and the question upon which the Charterers were granted permission to appeal was:
“Where a charterparty requires demurrage to be calculated by reference to bill of lading quantities, and contains a demurrage time bar which requires provision of all supporting documents, will a claim for demurrage be time-barred if the vessel owner fails to provide copies of the bills of lading?“
The Charterers argued that the wording “all supporting documents” in Clause 38 included the bills of lading, i.e. the primary documents pursuant to which the Charterers could determine whether the claim for demurrage was well-founded.
The Owners argued that the tribunal was correct and that Clause 38 only required presentation of “essential” documents, which generally meant the statement of facts. A signed statement of facts is an essential document in a demurrage claim and the purpose of Clause 38 was not to require the Owners to provide the bills of lading, which simply duplicated information contained in the statement of facts.
The Court held that the Charterparty made it clear that pro-rating for demurrage purposes had to be calculated by reference to the bill of lading quantities and that the Charterparty in this case referred not simply to “supporting documentation” but to “all” such documentation. As such, the Court concluded that the bills of lading fell within the requirements of the documentation that the Owners were required to provide under Clause 38. The failure to provide the bills of lading therefore rendered the claim for demurrage time-barred.
This case presents a rare example of a successful appeal against the decision of an arbitral tribunal on a point of law. Section 69 of the Arbitration Act 1996 is not a mandatory provision and most major institutional rules expressly prevent the parties from appealing on a point of law. Even where the parties have not contracted out of their right to appeal of a point of law, the English courts are cautious in granting parties leave to appeal. Section 69(3) provides that leave can only be granted where the court is satisfied that:
- the determination of the question will substantially affect the rights of one or more of the parties;
- the question is one the tribunal was asked to determine;
- on the basis of the findings of fact in the award:
- the decision of the tribunal on the question is obviously wrong; or
- the question is one of general public importance and the decision of the tribunal is at least in doubt; and
- despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in the circumstances for the court to determine the question.
This test is notoriously difficult to satisfy and, accordingly, successful appeals pursuant to section 69 are rare.
The Court was clear in its judgment that this case was confined to its facts and the particular wording in the Charterparty. It nonetheless provides a useful reminder that in the right circumstances it is open to the parties to appeal decisions in arbitral awards on a point of law.