Charterer’s Defences

It has already been stated that unless the charterer is able to bring himself within one of the exceptions set out in the charterparty he cannot interrupt the running of laytime. Similarly, it has been held repeatedly by the English courts that if an exception clause is to apply to demurrage it must expressly say so, otherwise it will be held not to apply. There are, therefore, relatively few occasions on which a charterer can mount a defence to a claim for demurrage. However, there are several points which may come to the assistance of a charterer wishing to defend or otherwise reduce a demurrage claim submitted by the owner. The most commonly encountered arguments are described below. In addition, the charterer may also be able to time bar a demurrage claim as a complete defence depending on the terms of the charterparty. FAULT OF THE OWNER: Where laytime or time on demurrage is incurred as a result of a default on the part of the owner, laytime or time on demurrage will stop running. The charterer will be able to defend that part of the owner’s claim for demurrage which is attributable to the default. This may substantially lower or even reduce to zero the amount of demurrage payable depending on the particular circumstances. OWNER USING THE VESSEL FOR HIS OWN PURPOSES: Similarly, following the decision in The Stolt Spur (2002) 1 LLR 786, where the vessel is taken away for the owner’s purposes, laytime or time on demurrage will not count against the charterer even if it does not actually lose any time. The charterer can defend a claim using this principle and, if it does so successfully, this may significantly reduce the amount of demurrage paid the owner. INVALID NOR: a charterer may be able to lower or eliminate a claim for demurrage on the basis that the NOR tendered by the owner is invalid. A NOR may be invalid for several reasons. In those circumstances, laytime may not start to run at all or it may start running at the commencement of cargo operations (which may be much later than the tender of the invalid NOR) if the requirements of the Happy Day case (discussed earlier) are satisfied. Arguing that a NOR is invalid is one of the most common arguments raised by a charterer to defend an owner’s demurrage claim. BREACH OF PUMPING WARRANTY: With oil cargoes it is very common for laytime to be expressed as a fixed number of days but for that period to be qualified by a pumping warranty limiting the time spent actually discharging the cargo. Breach of a pumping warranty may extend the time allowed to the charterer and therefore reduce the amount of the owner’s demurrage claim. For example, there may be three-and-a-half days allowed for the entire loading and discharging operations of which a maximum of 24 hours would be allowed for that part of the loading and discharge operations taken up with physically pumping the cargo from the vessel to the receiving facility. Usually, this pumping warranty is expressed in alternative terms such that the owner warrants that the full cargo can be pumped off the vessel within 24 hours or, alternatively, that the vessel will maintain a minimum discharge pressure throughout the operation. The warranty is generally subject to the proviso that the owner will only be held to it if the receiving facility is capable of receiving the cargo at the specified rate. Where the time specified for pumping is exceeded, it is very common for the master to lodge a note of protest to the effect that the shore facility was not capable of receiving the cargo at the required rate. This will frequently be on the basis that, while the vessel has the facility to use, for example, four hoses of relatively large size, the shore facility has only offered two smaller hoses. The case of The Nikmary [2004] 1 Lloyd’s Rep 55 has established that the vessel does not have a right to demand more lines. The owner’s obligation is either to discharge the cargo within 24 hours or to maintain a minimum pressure. The number of lines has no bearing on the vessel’s ability to maintain that minimum pressure. Indeed, it could be said that the alternative warranty as to pressure is designed to avoid any disadvantage to the owner arising out of the terminal’s failure to provide sufficient lines. Discharge may be slow but so long as the pressure is maintained, the pumping warranty is met. However,  if the  owner  is in breach  of the  pumping  warranty,  the  charterer   is entitled  to  a credit  for  a proportion   of  the  excess  time  used.  In this  way, the charterer  can reduce  a claim for demurrage.