The recent decision of Tricon Energy Ltd v MTM Trading LLC [2020] EWHC 700 (Comm) (available here) provides a rare example of the English Court allowing an appeal on a point of law under section 69 of the Arbitration Act 1996 (“s69”).
The Court held that, on the basis of its interpretation of the relevant clauses, and without suggesting that there is a requirement to provide bills of lading where these are not available, in this case the failure by MTM Trading LLC (the “Owners”) to produce bills of lading in support of their demurrage claim barred the entire claim.
Background
Clause 38 of the charterparty between the parties (“cl38”) barred any claim which had not been received by Tricon Energy Ltd (the “Charterers”) with “all supporting documents” within a 90-day period. The Charterers' case was that the Owners’ claim was time-barred because they had failed to provide copies of the bills of lading. Without such documents, they argued, they could not determine whether the claim for demurrage was well-founded.
The arbitral tribunal held that the Owners’ claim succeeded in full. It found that the Owners’ claim was sufficiently documented for the purpose of cl38 by the statement of facts, which recorded the bill of lading figure and was “in reality all that Charterers need[ed] to check that the apportionment of waiting and discharging time ha[d] been correctly calculated”.
The question of law on which the Charterers were granted permission to appeal by Popplewell J was framed as follows: “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 Court’s decision
The Court answered “yes” to the question as formulated, but only on the basis of its interpretation of cl38, and without suggesting that there is a requirement to provide bills of lading where these are not available in a particular case.
The drafting of the charterparty in this case “made it clear” that pro-rating for demurrage purposes had to be calculated by reference to “Bill of Lading quantities”, and required the provision of “all” supporting documentation, not simply “supporting documentation”.
In the Court’s judgment, in the circumstances it was not possible to treat the bills of lading as outside the requirements of cl38. If a bill of lading was not available, then cl38 required that a proper explanation of that fact be provided alongside what was available. In this case, the Owners’ case was not that the bills were unavailable to them, but that they were confidential, which in the Court’s view was not an answer; any sensitive elements could simply be redacted.
Comment
As we reported last month (see here), there has only been a handful of successful s69 challenges in the last few years. While the findings of the Court are likely to be of direct relevance to the shipping industry rather than of wider application, the case is of interest as an example of a rare successful challenge. It remains the case, however, that s69 applications present a high hurdle for success and should not be undertaken lightly.
For more information, please contact Craig Tevendale, Partner, Naomi Lisney, Senior Associate, or your usual Herbert Smith Freehills contact.
