Supporting Documents for Demurrage — A Risky Venture

April 27, 2015

Many documents are needed to support a demurrage claim and if the wrong documents are submitted the claim can be barred. Thus the question that often arises is, exactly what documents should be filed with a demurrage claim?

Sometimes the required documents are explicitly spelled out in the governing time bar clause. However, if the contract simply states, “all documents necessary to support a claim” then what exactly does that mean? This is not always an easy issue to resolve as it’s been disputed at arbitration and in the courts numerous times, each case with their own nuances and results.

Minimally, the Notice of Readiness (NOR) statement and vessel’s Statements of Fact (SOF) are required. In The Eagle Valencia [2010], the English court ruled that a valid NOR document is considered “an essential document of every demurrage claim”. In addition to NORs and SOFs, oftentimes many additional documents are required; depending on the governing contract and circumstances of the event.

Recently the English court ruled in “The Adventure” (2015) that the demurrage claim was barred for failing to provide the free pratique statement. The charter party was fixed on BPVOY4 and the dispute hinged on the Owner’s failure to prove that free pratique was granted within six hours of tendering NOR. In particular, in BPVOY4 form the time that free pratique is granted is tied to the commencement of laytime and therefore is an integral piece of information. The court ruled that without mention of the time of free pratique in the Vessel’s SOF, the Owner’s late submitted free pratique statement barred the claim in its entirety (not just demurrage at that port).

Whether or not a claim is barred in its entirety owing to missing documents is not conclusive. In 2007 the English court ruled in “The Sabrewing” that the BPVOY3 requirement to provide signed pump logs was not de minimis and resulted in the entirety of the claim being barred. Conversely, the following year the English court ruled in “The Harriette N” [2008] that failure to provide the requisite supporting documents for one part of a claim would not discharge the entirety of the claim. And along those same lines, in 2012 New York arbitrators held that lack of the terminal’s signature and Master’s failure to issue a requisite letter of protest (LOP) invalidates demurrage at that port only [M/T Negotiator, SMA No. 4165].

In addition to ship documents, sometimes a claim is required to be supported by terminal time logs. As evidenced in N.Y. arbitration, “Chembulk New York”, SMA No. 3868, the claim was barred due to Owner’s failure to provide any terminal time logs as stipulated in Charterer’s time bar clause stating, in relevant part, “…along with supporting documents (including, but not limited to vessel time sheets signed by ship’s agent and terminal time log)…”

Unfortunately, if a claimant fails to provide required document(s) the risk lies entirely with them. In “The Yellow Star” [2000], the English court ruled that there’s no duty for the defendants to study and review documents and to inform the claimants that their claim was insufficiently documented — that risk lay with the claimants.

Given the plethora of documents that are required to support demurrage claims, why not simplify this burden and minimize the risk of your claim being barred?

Haugen Voyager, an SaaS solution, simplifies the complexity of document management in the cloud that enables demurrage analysts to work efficiently and confidently. Voyager provides document storage within each voyage and claim record for ship logs, agency logs, survey reports, terminal logs, bills of lading, sale contracts, etc.

Singapore delegates learn demurrage with hands on exercises in Voyager.

Singapore delegates learn demurrage with hands on exercises in Voyager.

Everyone on the team (locally, regionally, globally) can readily access documents without having to hunt and peck. Immediately know what documents you have and what’s missing. When sharing claims through Voyager, selected documents are shared together with the demurrage calculation enabling the counterparty to view and work within the same platform.

Being organized is integral in filing complete demurrage claims that get paid instead of barred. Simplifying the demurrage workflow is something that Haugen Software is passionate about.

We invite you to see how we’re changing the world one demurrage claim at a time. Check out what Voyager can do for you!