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: In the Matter of Arbitration :
: :
: --- Between --- :
: :
: MITRE SHIPPING CO. Ltd. :
: Owners of M/V EUROSPIRIT :
: :
: --- and --- :
: :
: CONNELL RICE & SUGAR EXPORT CORPORATION :
: as Charterers, under :
: Voyage Charter Dated 8 August 178 :
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No. 2212
March 7, 1986
PANEL: Leonard T. Butler;
Captain Evangelos N. Rigos;
Captain Charles H. Preusch,
Chairman
COUNSEL: Freehill. Hogan & Mahar
Attorneys for Owner
Peter J. Gutowski, Esq.
of counsel
Healy & Baillie
Attorneys for Charterer
Raymond A. Connell, Esq.
of counsel
DECISION: FINAL AWARD
This arbitration was convened to hear disputes arising from a voyage made
by the M/V EUROSPIRIT (vessel) under a North American Grain Charterparty
(1973) (Norgrain) executed on 8 August 1978 by Trans Mediterranean Maritime
(N.Y.) Inc. (Transmed) as agents for owners Mitre Shipping Co. Ltd. (Mitre)
and Connell Rice & Sugar Export Corporation (CRS) as charterers. The
EUROSPIRIT was fixed to load a full and complete cargo of bagged rice
( 10,500 M/T more or less at owner's option ) at one or two safe berth Vera
Cruz, Mexico for discharge at one or two safe berths Dar Es Salaam, Tanzania.
Pursuant to clause 44, the standard Norgrain arbitration clause, owner
appointed Captain Evangelos N.Rigos and charterer appointed Leonard T. Butler
as arbitrators. These two appointed Captain Charles H. Preusch as third
arbitrator and chairman. The initial hearing was convened on 31 January 1985
and the second and final hearing on 23 April 1985. Briefs and reply briefs
were exchanged. Hearings were closed on 17 December 1985 upon receipt of the
reply briefs. The clauses of the charter pertinent to this dispute are quoted
in Appendix "A" which is part of this Award.
BACKGROUND
The vessel completed loading a cargo of 10,256867 M/T tons of bagged rice
at Vera Cruz on 31 August 1978 and sailed for Dar Es Salaam where she arrived
on Sunday 15 October 1978 at 1500 hours. As there was no berth for the vessel,
she anchored in the roadstead and tendered a notice of readiness by radiogram
1700 hours on the 15th. The vessel was shifted into berth No. 6 at 1530
Saturday 28 October at which time the master retendered a notice of readiness
to receivers, National Milling Corporation(NMC). This notice was accepted at
0800 Monday October 30th in accordance with the terms of the chrter.
Discharging commenced at 1700 hours October 28 and completed at 1500 hours
November 12th.
THE CLAIMS
Owner claims $2,441.76 for 19 hours and 33 minutes on demurrage at Vera
Cruz and $29,129,17 for 9 days 17 hours and 2 minutes at Dar Es Salaam, at
total of $31,572.93 plus interest at a rate of 16% from 1 January 1979 until
date of this award and an allowance for attorneys' fees and arbitral costs.
Owner argues that the delay in berthing at Dar Es Salaam was soley due to
congestion of the port.
Charterer concedes demurrage at Vera Cruz in the amount of $2,364.57 but
counterclaims for $1,337.14 for funds advanced for owner's disbursements at
loading port.Charterer further claims $4,884.38 for despatch at Dar Es Salaam
contending that the delay in berthing was the result of an argument between
owners' managers in Greece, Thenamaris Maritime Inc. ( Thenamaris ) , and
vessels' agents in Dar Es Salaam, National Shipping Agencies Company Limited
(NASACO).NASACO refused to berth the vessel until they received an advance of
funds from owners including a sum of $2,103.00 to cover unpaid disbursements
for another vessel, the Gold Beach, operated by Madina Shipping (Madina) when
She sailed from Tonga, Tanzania in October 1976. The fact that NASACO
considered this outstanding amount as a responsibility of the owners or
managers of the EUROSPIRIT, and that an argument regarding advanced funds
arose, is not considered by charterers as their responsibility. Charterer
contends that owner's delay in providing me required funds resulted in the
loss of a priority berthing arrangement causing the delays to the vessel. In
the absence of this controversy, charterer would have earned despatch under
their contract with NMC, the receiver, who had arranged for a priority at
berth No.8 for the day of vessel's arrival. The vessel was not ready to berth
and discharge when notice of readiness was tendered on October 15th when
berth No.8 was available on October 16th, therefore, laytime cannot count
until after the vessel was in berth and retendered.
DISCUSSION & DECISION
1. LOADING PORT - The Panel has checked owner's calculation of demurrage
with reference to the charterparty and the statement of facts signed by the
master and by the agent on behalf of charterer. We find the owner's
calculation correct and unanimously award owner the sum of $2,443.76.
Charterer's claim for reimbursement of $1,337.14 for funds advanced for
owner's disbursements at loading port is denied. The agent sent owner an
accounting of disbursements on 18 October 1978 and on 22 November telexed a
recap of credits and debits between the agent and owner for several skips on
six separate voyages. The total account was settled by payment on 6 December
1978.This settled the entire account including the EUROSPIRIT. Owner had been
advancing funds to the agent during the vessel's stay in Vera Cruz and it has
not been made clear to the Panel why CRS should have advanced funds for the
owner. It is, therefore, CRS' responsibility to claim any refund it requires
from the agent.
2. DISCHARGE PORT - CRS appointed NASACO as agent at Dar Es Salaam
persuant to clause 28 of the charterparty. Although a copy of the grain sale
contract between CRS and the receiver NMC was not available, testimony and
evidence indicates that NASACO was also the agent designated by NMC.They were
then agents designated by CRS, the vessel and also the receivers.
NASACO is a company owned by the government of Tanzania and NMC and the
Port Authorities are owned or operated by the government. It is reasonable to
believe that these three organizations cooperate closely with the overall
interests of the regime. The F.I.O.charterparty is specific with reference to
the responsibility for the discharging operations and demurrage. These
remained charterer's responsibility, and where the charter might have read
"receivers", this word was deleted from the Norgrain form.
When CRS received owner's demurrage statement, it did not immediately
dispute it but forwarded it to NMC for payment to CRS under the terms of the
sale contract, which apparently made NMC responsible to CRS for any demurrage
accrued under that contract.
NMC denied that demurrage was due arguing that laytime did not commence
until after the vessel had tendered notice of readiness at the berth. On this
basis NMC calculated that despatch had been earned in the amount of $4,884.38.
CRS then passed the denial of demurrage and the claim for despatch to the
owner. CRS, as charterer, relied solely on calculations and arguments of NMC,
the receiver, who is not a party to this charterparty.
Shortly after the ship sailed from Vera Cruz, the owner telexed NASACO
asking for an extimate of disbursements and berthing prospects. NASACO
requested an advance of 495,000 Tanzania shillings (TS)-($65,131) and advised
discharging was dependent on transportation but priorities available. As the
charterparty was on F.I.O. basis,owner protested the inclusion of stevedoring
and other cargo expenses, which were the larger part of the estimate. NASACO
reduced the request to TS 160,000 ($21,000) which owner still considered
excessive.Owner then consulted BIMCO who advised that the current tariffs for
Dar Es Salaam would indicate that ordinary vessel's disbursements for a rice
cargo of this size would be less than half of the amount requested. On 6
October owner wired TS 70,000 ($9,200) advising that any cash funds required
by the master would be advanced when requested.NASACO replied that unless the
entire sum requested, TS 160,000, was received prior to vessel's arrival,they
would not handle the vessel nor arrange for her berthing. NASACO is the only
agent that could attend. On 12 October, owner wired the balance of TS 90,000
($11,900) under protest. It is noted that disbursements, including master's
requirements finally totaled $12,720 and the difference eventually refunded to
owner. In most of the telexes exchanged, owner requested advice of berthing
prospects without ever receiving a definitive answer.
CRS had also telexed NASACO for berthing prospects and also did not
receive a definitive reply. On 11 October owner advised CRS by telex of the
dispute with NASACO and asked CRS to intervene and convince the agent to
arrange for a turn in berth and owners denied responsibility for any resulting
berthing delay in that telex.
Then on 13 October, two days before the vessel arrived, NASACO telexed
owner that there was a sum of 15,774 ($2,103) due them for outstanding
accounts on a vessel, the Gold Beach, for a call she made in Tanzania in
October 1976. NASACO considered that the vessel was managed by one of the
companies of the Thenamaris Group and refused to handle the EUROSPIRIT until
this outstanding account was paid. Owner denied responsibility, as the Gold
Beach was not owned, operated or chartered to any of the Thenamaris companies
at the time of her call in Tanzania in October 1976. They requested the Gold
Beach owner to settle the account without success and then sent owner's port
captain to Dar Es Salaam with a bank check in favor of NASACO to settle the
matter if he couldn't convince NASACO that they were in error regarding
ownership and management of the Gold Beach.
CRS and NMC maintain that a priority berth had been arranged for the
vessel for 16 October and that the vessel would have berthed on that day if
the owner had advanced all the demanded funds to NASACO prior to the vessel's
arrival. The vessel's priority berth was lost due to this argument and the
resulting berthing delay was, therefore, owner's responsibility.
Owner maintains that the advance of funds for disbursements, although
protested, were received by NASACO by 13 October, two days before vessel's
arrival, and that the delay was solely due to heavy port congestion. The
request for funds on account of the Gold Beach was wrong and unrelated to the
delay.
While CRS appointed NASACO as vessel's agent pursuant to the charterparty,
the Panel does not hold them responsible for impropriety of the agents in Its
demands for funds from the owner. Even if CRS could have influenced the agent,
they did not know of the problem until several days before the vessel's
arriva. CRS, however, does remain responsible under the charterparty for the
application of laytime and any resulting demurrage. It is CRS' burden to
prove that the delay was owner's fault and that a priority berth had, in fact,
been secured for that vessel, and that she would not in any case have had to
wait a normal turn in berth on her date of arrival. We do not find that CRS
has carried this burden.
In reviewing the evidence before us, the Panel does not find that the
designation of a "priority berth"for this vessel for 16 October was mentioned
until after the vessel's arrival and after it appeared evident that there
would be a berthing delay.In a telex to CRS on 30 October,NMC first mentioned
that a berth had been allocated for 16 October by the port authority at the
request of NMC. In their letter of 19 March 1979 to CRS, NMC rejects CRS'
invoice for demurrage citing the fact that the allocated berth was lost
because the owner had not advanced funds for vessel's disbursements to NASACO.
They attached a berthing plan, date 10 October 1978, that showed the
EUROSPIRIT on berth 8 on 16 October. It was stated that this plan was a plan
which was revised daily. The Panel has no evidence to show that this was more
than a projection which might change daily with changes in eta's of other
arriving vessels or changing priorities of the port authority. There is no
evidence of a formal priority berthing plan being promulgated during periods
of congestion nor any document clearly showing that the berth was reserved.
The Panel gives more weight to a letter in evidence from Lloyds
Intelligence Service (an independent third party) quoting telex reports from
Lloyd's agents in Dar Es Salaam reporting on congestion delays during the
period 13-27 October 1978. During this period there was an average 9 to 16
vessels waiting in the roads. There were berthing delays of 1 to 2 days for
vessels with unitized cargoes and delays of 9 to 11 days for bulk cargo
vessels.
The unitized and palletized cargoes were obviously on the priority vessels,
and,if port priorities required,they could displace vessel's allocated berths
for break bulk cargoes. We have no evidence to show how firm the berth
allocation to the EUROSPIRIT was. If displaced by a priority vessel, the
defense against demurrage based on late advance of funds may easily have come
to mind.
The Panel does not find that CRS can be held responsible for the argument
regarding funds even though we find that owner was not responsible for the
money due on the Gold Beach. The vessel was not able to register for a berth
until the agent's demands were satisfied, regardless of the motives or
legality of the agent's demands. CRS did, however, remain responsible for the
time waiting for berth once this impediment was removed. Owner's port captain
presented NASACO with a bank check for $2,103 on 19 October 1978 at which time
we consider the vessel's notice of readiness was effective and that the vessel
was available and at the disposal of CRS; therefore laytime commenced at 0800
October 20th.Adjusting owner's calculations accordingly, we find that laytime
expired at 0824 hours, 8 November 1978 and the vessel on demurrage 5 days 06
hours 36 minutes, therefore $15,825 is due to owner as demurrage. Charterer's
claim for despatch is denied.
INTEREST
Owners have asked that interest be awarded on the claim from 1 January
1979 at a rate of 16%. The evidence before us indicates that there were
negotiations and correspondence between the Parties between t he time the
original statements were submitted and a final revised account submitted on
26 June 1979. Subsequent to that we wee no evidence of any further demands or
exchanges, and it has been stated that there was a period of some three years
of silence before owner made the move to arbitrate. While there is no
applicable time bar nor argument based on the doctrine of laches,the majority
of the Panel, Captain Rigos dissenting, finds that owner was not diligent in
persuing its claim and that the delay was unreasonable. The majority,
therefore, denies an award of interest. Captain Rigos' partial dissent is
attached and is part of this Award.SUMMARY of AWARD
Demurrage at loading port $ 2,443.76
Demurrage at discharge port $15,825.00
Charterer to pay Owner $18,268.76
A. If payment of the above sum of $18,268.76 is not made within 30 days of
the date of this Award, interest shall commence at the rate of 10% p.a. from
the date of this Award until the award has been paid or reduced to judgment
by a court of competent jurisdiction, whichever first occurs.
B. The Parties shall bear the cost of their own legal fees and share the
cost of the stenographic transcripts of the hearings.
C. The arbitrators' fees are set forth in Appendix B which is deemed part
of this Award. The liability for the fee shall be the joint and several
obligations of the parties. Should either party fail to pay any or all of its
share within thirty days of the date of this Award, the other party shall
immediately pay same upon simple request by the Chairman. Thereafter, that
party shall have the right of recovery against the defaulting party for the
amount paid, plus interest at the rate of 10% p.a. from the date of payment
until reimbursement.
The arbitration clause provides that judgment may be entered upon any
Award made thereunder in any court having jurisdiction in the premises.
DISSENT: PARTIAL DISSENT by CAPT. E. N. RIGOS
Although I agree on the majority points with the Panel's ruling, I have a
different opinion concerning the matter of interest.
The amount of demurrage, awarded by the Panel, was due to Owners by the
Charterers after presentation of the claim and after a reasonable period of
time. The demurrage claim represents expenses of Owners incurred during the
period covered under Charter Party. The Owners had covered these expenses
with the understanding that they will be reimbursed upon presentation of their
claim.
In my opinion the awarded amount is the property of the Owners retroactivly
since the claim was presented. Therefore, with all respect to the majority's
ruling. I feel that interest is due on the awarded amount commencing three
months after the presentation of claim until the award is paid.
New York, New York
February 1986
ATTACHMENT-1: Appendix "A"
M/V EUROSPIRIT C/P 8/8/78
The following are the clauses, or parts thereof, pertinent to the matters
in dispute:
Clause 10 (a) Cargo is to be loaded, stowed, trimmed (to Master's
satiffaction in respect of seaworthiness) free of expense to the vessel.
Cargo is to be discharged free of expense to the vessel (to Master's
satisfaction in respect of seaworthiness).
Clause 11 Stevedores at loading Port(s) are to be appointed by Charterers
and paid by Charterers.
Stevedores at discharging port(s) are to be appointed and paid for by
charterers.
In all cases, stevedores shall be deemed to be the servants of the Owners
and shall work under the supervision of the Master.
Clause 17 (a) Notice of Readiness and Commencement of Laytime.
Discharging time to count 24 hours after serving of notice of readiness by
ship during normal working hours at the Receivers' office in Dar-Es-Salaam on
completion and passing all port, health and custom's formalities *.
Notification of vessel's readiness to load and/or discharge at the first
or sole loading and/or discharging port shall be delivered in writing at the
office of Charterers/Receivers (or their Agents) between the hours of 0900 to
1700 on all days except Sundays and holidays,and between the hours of 0900 to
1200 on Saturdays.Charterers/Receivers shall not be required to accept notice
of readiness to load or discharge on Saturdays after 1200 or on Sundays or
holidays. Such notice of readiness shall be delivered when vessel is in the
loading or discharging berth and is in all respects ready to load/discharge,
including Free Pratique where applicable. If the loading or discharging berth
is unavailable, Master may tender vessel's notice of readiness from a lay
berth or anchorage within the commercial limits of the port subject to the
provisions of Clause 17 paragraph (b).
Following receipt of notice of readiness to load or discharge as above,
laytime will commence at 0800 on the next day, Sundays and holidays excepted
(for Saturdays see Clause 18 (c).
One half of time actually used before commencement of laytime shall count.
Clause 17 (b) Waiting for Berth
Time to count 24 hours after reporting at outer anchorage. Steaming time
between outer anchorage and inner commercial port area not to count.
If the vessel is prevented from entering the commercial limits of the
loading/discharging port(s) because of the first or sole loading/discharging
berth or a lay berth or anchorage is not available, or on the order of the
Charterers/Receivers or any competent official body or authority, and the
Master warrants that the vessel is physically ready in all respects to load
or discharge, the time spent waiting at a usual waiting place outside the
commercial limits of the port shall count against laytime. Such laytime shall
count from vessel's arrival at such usual waiting place and will continue to
run as per clause 18 until ally of the aforesaid conditions cease to be
operative and vessel is so notified by Charterers/Receivers or their Agents
or any competent authority. . .
. . . Once the vessel has reached a place within the commercial limits of
the port, notice of readiness is to be tendered in accordance with the
provision of lines 130 to 135 and laytime is to begin to count in accordance
with lines 136 to "137".
(Note-lines 130 to 135 aIrd 136 to 137 are the provisions of Clause 17a
quoted earlier)
Clause 18 (c) Laytime
Time from 1300 Saturday to 0700 Monday and local/public holidays not to
count, even if used.
Vessel is to be discharged at the average rate of 750 metric tons per
working day of twenty-four (24) consecutive hours (weather permitting),
Sundays and Holidays excepted (SHEX) even if used on the basis of the Bill of
Lading weight.
Clause 18 (d)
Laydays shall be non-reversible
Clause 19 Demurrage Despatch Money
Demurrage at loading and/or discharging ports, if incurred, to be paid at
the rate of U.S.D. $3,000.00 per day or pro rata for part of a day and shall
be paid by Charterers in respect of loading ports, and by Charterers in
respect to discharging ports. Despatch money to be by Owners at half the
demurrage rate for all Laytime saved at loading and discharging port(s)
Any time lost for which Charterer Receiver are responsible which is not
excepted under the charterparty,shall count as laytime until same has expired,
thence time on demurrage. Demurrage/despatch to be settled directly between
Owners and charterers.
Clause 28 Agents
Charterers are to appoint agents at loading port(s) and Charterers are to
appoint agents at discharging port(s)
In all instances, agency fees shall be for Owners' account but are not
to exceed customary applicable fees.
Clause 34 Lien
The Owners shall have a lien on the cargo for freight, deadfreight,
demurrage, and average contribution due to them under this Charterparty.
Charterer's liability under this Charterparty is to cease on cargo being
shipped except for payment of freight, deadfreight, and demurrage at loading,
and except for all other matters provided for in this Charterparty where the
Charterer's responsibility is specified.
Clause 44 Arbitration
New York. All disputes arising out of this contract shall be arbitrated at
New York in the following manner, and be subject to U.S. Law:
One Arbitrator is to be appointed by each of the parties hereto and at
third by the two so chosen.Their decision or that of any two of them shall be
final, and for the purpose of enforcing any award, this agreement may be made
a rule of the court. The Arbitrators shall be commercial men.Such Arbitration
is to be conducted in accordance with the rules of the
Society of Maritime Arbitrators, Inc.
Clause 68 (Rider)
Receivers are: National Milling Corp., Government Agency
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