Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd (Ocean Neptune)

Where a voyage charter treats waiting for charterers’ orders as laytime or demurrage, and its payment clause covers all charterers’ purposes so counted, any resulting claim for time exceeding the laytime allowance is demurrage. A contractual time bar covering demurrage claims and requiring supporting documents applies to that claim. Re-labelling cannot avoid those requirements.

A requirement to provide specified documents whenever possible does not require documents which never existed. Documents from loading and discharging operations may be required to establish the laytime component of a waiting-time claim, even when the vessel waited outside port limits. The occasional requirement to supply irrelevant documents does not justify departing from clear contractual wording on grounds of commercial common sense.

Lukoil Asia Pacific Pte Ltd, the charterer, voyage chartered the tanker Ocean Neptune from Ocean Tankers (Pte) Ltd, the owner, to carry petroleum products from Taiwan to Australia. The charter allowed 84 hours’ laytime for loading and discharging together. Its incorporated LITASCO terms required demurrage claims, with specified supporting documents whenever possible, within 90 days after final discharge. The vessel was delayed at Gladstone after Caltex, the cargo receiver, refused delivery because the cargo was allegedly contaminated or off specification.

In a Partial Award dated 25 April 2017, an arbitral tribunal determined the charterer’s time-bar defence as a preliminary issue. It held that the owner had failed to provide statements of facts countersigned by the terminals or, where countersignature was impossible, the required letters of protest. It consequently held the demurrage claims time barred, except for the Gladstone delay, which the owner had re-labelled as waiting for orders under LITASCO clause 4. The tribunal treated that claim as outside the documentary requirements of clause 2B.

The charterer appealed on the question whether the waiting-for-orders claim was itself a demurrage claim subject to those requirements.

The appeal was allowed. The waiting-for-orders claim was a demurrage claim subject to the documentary requirements of LITASCO clause 2B and the time bar in clause 2A.

1. The payment obligation in ExxonMobil VOY2005 clause 13(d) covered time exceeding the permitted laytime for loading, discharging and all other charterers’ purposes which counted as laytime or demurrage. LITASCO clause 4 expressly made waiting-for-orders time count in that way. The claim was therefore demurrage, rather than a separate claim merely quantified at the demurrage rate. This use of time-counting language was a familiar charterparty drafting technique, illustrated by Dias Compania Naviera S.A. v Louis Dreyfus Corporation [1978] 1 WLR 261 ([10]–[11]).

2. The waiting-time claim necessarily accounted for laytime used elsewhere during the voyage and any remaining allowance. It formed part of the overall demurrage calculation. By contrast, other charter provisions expressly used the demurrage rate only as a measure of compensation, without requiring a laytime calculation. The different wording carried weight in these detailed, carefully drafted terms ([12]–[13]).

3. Documentary time bars sought prompt accounting and investigation while the facts remained fresh. That rationale, reflected in Babanaft International Co S.A v Avant Petroleum (The OLTENIA) [1982] 1 Lloyd’s Rep 448, applied equally to waiting-time claims. The requirements gave effect to contractual clarity and certainty, as discussed in National Shipping Company of Saudi Arabia v BP Oil Supply Co (The ABQAIQ) [2012] 1 Lloyd’s Rep 18. The qualification whenever possible accommodated documents which never existed, but existing documents could assist investigation of waiting time. Documents from other ports could also be essential to establish the laytime component of that claim ([16]–[19]).

4. An occasional requirement to provide irrelevant documents did not justify disregarding clear wording. The prescribed classes were limited and, if the documents existed, they should be readily available without undue difficulty or expense. The limits on commercial common sense discussed in Arnold v Britton [2015] AC 1619 were pertinent. Equally, the ability to change the legal label of a compliant claim did not permit re-labelling to cure documentary non-compliance ([20]–[21]).

5. The drifting clause similarly made time count as laytime or demurrage, with the resulting claim reduced or extinguished by unused laytime. That comparison supported the construction of the waiting-for-orders clause. Whether the detailed laytime exceptions, including half-rate demurrage provisions, applied to waiting time was left open because the issue did not arise on particular facts ([14]; [22]).

The court would hear the parties on the appropriate form of relief ([23]).

• High Court (Commercial Court): In [2018] EWHC 163 (Comm) , the court allowed the charterer’s appeal against the treatment of the Gladstone waiting-time claim and would hear the parties on the appropriate form of relief.
• Arbitral tribunal: A Partial Award dated 25 April 2017 upheld the documentary time-bar defence to the demurrage claims except for the Gladstone delay. The tribunal treated that delay, re-labelled as waiting for orders, as outside the demurrage documentary requirements.