Time Bars

Although there are numerous arguments which the charterer can deploy to try to reduce the demurrage it pays to an owner, it may be able to completely and wholly defend the claim if the owner falls foul of a time-bar provision agreed in the charterparty.

In the absence of an express time-bar clause in the charterparty, the only time limit in English law that applies to the owner’s claim is the 6-year time limit for contractual claims contained in the Limitation Act 1980. H

owever, it is very common, particularly in tanker charterparties, to find express time-bar clauses dealing with the period of time in which the owner must submit his demurrage claim. If he fails to comply in full with the time-bar clause, the charterer may have an absolute defence to the owner’s claim for demurrage. Case Example: In The Oltenia [1982] 2 Lloyd’s Rep 99, the charterparty stated: “charterers shall be discharged and released from all liability in respect of any claim owners may have under this charter party … unless a claim has been presented to charterers in writing with all available supporting documents within 90 days from completion of discharge of the cargo concerned under this charterparty”. The court confirmed that, if these provisions were not complied with, the claim was time-barred and the charterer would have no liability to the owner.

The English courts will only uphold the validity of time-bar clauses if the words used are clear and unambiguous. They will also be construed strictly against the person relying on them. Where a clause requires ‘all supporting documents’ to be submitted, this will include all those documents which support the owner’s claim on liability and which allow the charterer to assess properly the claim which is being made against it: The O/tenia. Where a time-bar clause lists the documents which must be submitted with the owner’s claim, those documents must be provided if the claim is not to be time-barred. Care must be taken to comply fully with the particular clause in each case.

In The Sabrewing [2008] 1 Lloyd’s Rep 286, the relevant provision (clause 23 of BPVOY 3) said that the demurrage claim would be time-barred unless documents “substantiating each and every constituent part of the claim” were presented within 90 days of discharge. The owner had failed to provide signed pumping logs to prove excess pumping time. The court decided that the entire demurrage claim, not just the claim for excess pumping time, was time-barred.

However, a later decision on an identical clause may cast doubt on whether the decision in The Sabrewing is correct. In The Eternity [2009] 1 Lloyd’s Rep 116, the court took the owner’s view and decided that only the part of the claim not properly supported by documents should be time-barred, leaving valid the remainder of the claim. This reflected an earlier decision of a lower court in The Minerva in which the judge had only disqualified the part of the claim which was not properly documented. In some instances, the owner may not be able to submit certain documents in support of the demurrage claim because their production may be out of his control.

For example, the owner may try (but fail within the time limit) to obtain a statement from the port authority confirming particular weather conditions. As this may cause the owner potential hardship, the English courts may decide that supporting documents need only be produced ‘if they exist’. Of course, if the production of a document is within the control of the owner, then the owner can itself bring the document into existence. It is not always necessary for the charterer itself to receive the demurrage claim and documents within the time period.

It is sufficient if the charterer’s broker receives the claim and supporting documents before the expiry of the time limit. This will be the case even if the broker subsequently fails to pass the claim to the charterer until after the time bar has lapsed. Some demurrage time-bar clauses provide that a claim should be ‘notified’ within a shorter period, say 30 days, with full supporting documents to be submitted within 60 or 90 days from the bill of lading (B/L) date or the final date of discharge. Under English law, both these steps must be taken if the claim is not to be time-barred.